Toshiba Enlists Unlikely Allies in Battle : U.S. Firms Fear They Will Lose Millions if Import Ban Is OKd

It started not so innocently in 1983 with the illegal sale of sensitive submarine technology by a subsidiary of the Japanese giant Toshiba Corp. to the Soviet Union.

Four years later, as Congress moves to punish all of Toshiba with a strict ban on its U.S. imports, literally hundreds of American electronics companies--both large and small, important and unknown--have mobilized to plead for leniency.

The reason? The proposed sanctions, the most serious ever threatened against a single foreign company, would potentially harm many American electronics companies far more seriously than Toshiba, whose American sales of $2.6 billion in 1986 accounted for just slightly more than 10% of its worldwide revenue of $22 billion.

“The immediate impact would be billions of dollars of lost sales for American companies. Literally hundreds--I’m tempted to say thousands--of companies would be hurt,” said Edward Black, vice president of the Computer and Communications Industry Assn., one of the many trade groups lobbying Congress for a lighter punishment. “And it could trigger billions and billions more in lost sales in the future.”

Giants Would Be Hurt

For its part, Toshiba claims that its U.S. operations, which employ about 4,100 workers at five major manufacturing plants and several other smaller facilities, would be wiped out for at least the duration of the ban.

Beyond Toshiba are untold numbers of U.S. companies which could lose access to imported equipment and parts. Trade association and Toshiba officials say these ranks include such giants as IBM, AT&T;, Honeywell, Unisys, Bell & Howell, General Electric, Hewlett-Packard, Motorola, United Technologies and Xerox, all of which purchase parts from one or more of Toshiba’s more than 600 subsidiaries and affiliates.

In addition, Westinghouse, which jointly operates a television tube manufacturing plant with Toshiba in upstate New York, is potentially affected, as is Apple Computer, which buys its Apple Laser Writer printer from a Toshiba subsidiary.

Less visible, but equally concerned are much smaller companies, such as Sun Microsystems, a Mountain View, Calif., personal computer maker that buys disk drives and semiconductors from Toshiba, and Dataproducts, a Woodland Hills printer manufacturer that uses a Toshiba engine in its laser printers.

“Without the Toshiba engine,” said a Dataproducts spokeswoman, “we wouldn’t have a laser printer.”

At the heart of the threat is an amendment to the massive trade bill awaiting congressional approval that would prohibit all imports of Toshiba products from two to five years.

The amendment, initiated and approved by the Senate, is being considered by a House-Senate conference committee that was recently named to reconcile conflicting portions of the bill. Final passage of the measure could come later this year or early in 1988.

But whether the final bill includes the import ban is unclear.

Electronics industry officials say the prospect of U.S. companies suffering as a result of Toshiba’s transgression has apparently prompted Congress to reevaluate the amendment.

“Congress is increasingly realizing that the potential impact to U.S. business is far in excess of what it is trying to achieve,” Black said.

In late June, when the Senate approved the import ban amendment, revelations of the sale of eight submarine propeller milling machines to the Soviet Union by Toshiba Machine Co., were still fresh.

And the Senate, which voted 92 to 5 in favor of the ban, was angry. Not only had a Japanese company violated Japanese export laws, but it had aided the Soviets by selling them equipment that allowed their submarines to escape detection by U.S. forces, allegedly eliminating a U.S. tactical advantage.

However, in the months since the Senate vote, tempers have cooled, the Reagan Administration has moved to extract greater export cooperation from the Japanese and American business leaders have realized just how much they have at stake if the punishment sticks.

Admittedly, it took a while for the full effect of the proposed import ban to sink in. At first, even Toshiba didn’t appreciate its total impact and downplayed its potential effect, telling reporters in early July that few, if any, of its U.S. operations would be affected.

But in the last month, Toshiba has launched a major public relations campaign detailing how much it and American electronics companies have at stake.

According to Toshiba officials, all of its United States operations depend to some degree on Toshiba components imported from Japan.

“Basically our American operations would be wiped out,” said Duane J. Bazzett, vice president-administration for Toshiba America in Irvine, one of Toshiba’s seven subsidiaries operating in the United States.

Effect on Workers

However, Toshiba’s American operations account for a small part of its total 1986 revenues of $22 billion. Toshiba officials said the total value of all Toshiba imports to the United States was $2 billion in 1986, while the total value of sales in the United States was $2.6 billion.

A potentially greater impact would be felt by domestic companies depending on the imported goods for their own manufacturing and distribution operations. For example, Toshiba officials estimate that as many as 100,000 workers at the dozens of wholesale and retail companies handling Toshiba products could be affected by the import ban.

And there are thousands more jobs in the line of fire at companies using Toshiba parts.

Although some companies, such as Apple Computer, have been particularly prominent in their opposition to the proposed ban, electronics trade association officials said other firms have taken a lower profile to keep from tipping off the competition to their vulnerable position.

“There are companies for which the import ban would be so serious that their financial stability would be threatened,” said Black of the Computer and Commerce Industry Assn.