Although the Senate-approved ban on imports of Toshiba Corp.'s products could deal an embarrassing setback to the Japanese electronics giant, officials said Wednesday that Toshiba's U.S. assembly lines should keep running at full speed.
In fact, several observers said congressional efforts to punish the Japanese company for selling sensitive technology to the Soviet Union could have the unintended effect of increasing Toshiba's manufacturing presence in America.
The future of Toshiba's U.S. operations, which generated $2.2 billion in sales last year, has been clouded by passage of the import ban Tuesday by the Senate.
The proposed ban was adopted 92 to 5 as an amendment to a trade bill that awaits final Senate consideration. The measure has not yet been addressed in the House.
If enacted in its current form, the amendment would prohibit U.S. imports of products produced by Toshiba, Japan's third-largest electronics firm, or any of its subsidiaries for a period of two to five years.
But the amendment contains several exceptions, including technology necessary for U.S. defense purposes, goods shipped under contracts signed before May 1 and, potentially more important, any Toshiba components "essential to U.S. production." Consequently, officials said, even under an import ban, as much as two-thirds of Toshiba's U.S. sales might be unaffected.
According to officials both inside and outside the company, the component exception apparently would allow Toshiba to continue manufacturing products in America even if subassemblies and individual components are made overseas.
Toshiba Corp., through its Toshiba America Corp. subsidiary and other affiliates, operates several manufacturing facilities in the United States, including a 500-employee division headquarters and an assembly operation in Irvine.
John Walsh, staff economist for the Senate Banking Committee, which handled the import ban amendment, said the Senate action reflected a desire "to protect production of equipment in the U.S. based on components from Japan. It might even be a spur to Toshiba to do more U.S. production."
Walsh said the Senate amendment not only would allow Toshiba to continue manufacturing products in the United States, but also would permit other domestic manufacturers to continue buying Toshiba components. Other manufacturers expressed concerns Wednesday that the proposed ban could disrupt production of their products containing Toshiba components.
Although Toshiba spokesmen said the company has not fully assessed the effect of the proposed import ban, other observers agreed that the company's U.S. assembly operations are likely to be spared if the ban becomes law.
"Basically, it says to me that their U.S operations can continue," said Mel Thomsen, a semiconductor industry analyst with Dataquest, a market research firm. "When you look at all these loopholes, even if it is passed, you could wind up with a law that is full of gum instead of teeth."
While Toshiba's U.S. factories are likely to continue operating if the ban takes effect, the measure would undoubtedly crimp the parent company's total U.S. sales.
Tokyo-based Toshiba Corp. reported $22.7 billion in revenue during its last fiscal year, about 10% of which was generated in the United States.
Toshiba markets and, in some cases, manufactures products sold in the United States through several subsidiaries and affiliates. Through those units, it employs about 4,000 U.S. workers, including an estimated 1,200 in California, 650 in Tennessee, 520 in Texas, 260 in New Jersey and 200 in Illinois.
Biggest Unit in New York
The largest U.S. subsidiary is Toshiba America Corp. of New York, which accounts for $1.5 billion of Toshiba's U.S. sales and 2,300 of its domestic employees. Toshiba America is responsible for marketing a vast array of products ranging from color televisions to CAT scan machines.
One of Toshiba America's three major segments, the Industrial Electronics Business Sector, is headquartered in Irvine. It oversees the operations of six divisions responsible for distributing and marketing products such as laptop computers, printers, copying machines, telecommunications systems and medical equipment.
The Irvine complex includes a manufacturing facility responsible for final assembly and testing of digital telephone switchboards, telephone sets, CAT scanners, magnetic resonance imaging systems and other medical equipment.
Earlier this month, Toshiba announced plans to begin U.S. production of its popular laptop computers at its Irvine facility. The move, which was accelerated by the Reagan Administration's recent trade sanctions against certain Japanese imports, was projected to increase employment at the Irvine plant by about 40 people.