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Microsoft contract is a boon for Buffalo tablet-maker BAK USA

It has been little more than a year since computer-tablet maker BAK USA started operations in Buffalo, setting up shop on the East Side and training disadvantaged neighbors to build its low-cost computers.

And now the socially focused business is ramping up its operations after signing a partnership with Microsoft. It has launched a new product, plans to increase hiring, and hopes to find local companies to supply parts.

Its success could have broader implications for the region. Buffalo’s business community believes BAK’s business model can put Buffalo on the map for the tech industry, revive manufacturing in the Queen City and improve the lives of residents.

It wouldn’t be the first time the Bak family has done it.

The Baks, from Denmark, are social entrepreneurs. Their previous low- cost tablet company, SurTab, was born of the family’s desire to stimulate economic development in Haiti after it was devastated by an earthquake in 2010. BAK opened a production plant where locals assembled tens of thousands of tablets it sold in impoverished African countries. Once that operation was successful and could sustain itself, they sold it to its Haitian partners to focus on BAK USA.

BAK brought the same mission to Buffalo – to create jobs in an economically depressed area, hire and train refugee and marginalized workers, and sell affordable technology to those who need it. Initially it thought its biggest market would be the same, oft-neglected African countries. But it soon realized there was an even greater need for affordable technology in the United States. The Buffalo school system, for example, purchased $75,000 worth of discounted tablets for its students last year.

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BAK has also set out to prove that product assembly could successfully be done domestically. In fact, the cost disadvantage of assembling products in Buffalo rather than in a Chinese factory turned out to be less significant than BAK USA thought.

“We knew we couldn’t compete with China, but we thought the Made in the USA label would compensate for the added cost,” said J.P. Bak, the company’s chairman. “What we found out is that the cost gap is actually much lower than people think.”

In its original calculations, the company figured it would cost about 20 percent more to produce here. The true cost ended up being less than 5 percent.

“There is no excuse not to produce here instead of China,” he said. “Zero.”

The company now employs 32 people – 20 in production – and it is about to begin producing 5,000 tablets per month. It is capable of quickly scaling up to producing 40,000 tablets monthly should demand increase. It has committed to hiring 250 employees over the next five years, including production, sales, marketing and customer service personnel.

“The fact that they’re doing it here validates that we can indeed be competitive in attracting opportunities like this,” said Paul Pfieffer, spokesman for Invest Buffalo Niagara (formerly Buffalo Niagara Enterprise). “We’ve got the tools; we’ve got the assets; we’ve proven now that we have a workforce that’s skilled and productive.”

Gov. Andrew M. Cuomo echoed that message.

“BAK USA has proven that local businesses can make a meaningful impact on industry, our economy, and technology in New York State, across the country, and around the world,” Cuomo said in a statement. “BAK USA’s success is a significant victory for the city of Buffalo, the StartUp NY program, and the future of American-made technology products.”

New partner

Much of the company’s growth is being fueled by its recent partnership with Microsoft. It is now an official Microsoft Original Equipment Manufacturer and can create devices around the Windows 10 platform.

“It has catapulted us one to two years ahead of where we would’ve been without them,” said Christian Bak, director of products, and one of the company’s founders with his mother, Ulla, and father, J.P.

The company also is working with local manufacturers to source components in Western New York instead of importing them from China. It plans to replicate its Buffalo business model in poor areas across the country.

The partnership gave BAK entree into Microsoft’s network, gave it instant credibility in the marketplace, and allowed the company to bring its newest tablet, the Seal 8, to market with incredible speed. Microsoft partner engineers in China worked alongside the BAK development team to produce the technology, Microsoft-vetted partners manufactured the parts, and BAK was able to assemble a finished product in Buffalo in just five months.

The new tablet is designed with commercial users in mind and is built tough for use out in the field. The basic model costs $450, the fully loaded model tops out around $700.

The rugged tablet market is now cornered by Panasonic, Mobile Demand, Getac and Xplore, but competing models have a much higher price point, starting at more than $1,000.

BAK’s previous tablet, the $199 BAK Board, ran on the Android operating system. But most business customers use Windows software – Outlook, PowerPoint, Excel – and told BAK they were looking for mobile hardware to support that.

Paying it forward

BAK’s mission statement focuses on two things: creating sustainable jobs and getting affordable technology to those who need it. The company has done both here.

It also focuses on improving the work environment. Rather than putting tablets together by assembly line, workers here assemble each tablet from start to finish individually. Instead of working in a crowded basement space like they might in China, employees work in a windowed space on the top floor of the former Sheehan Memorial Hospital building on Michigan Avenue.

J.P. Bak, smiling and warm with a charming Danish accent, glows when he talks about it.

“Can you imagine how good it would feel to build a tablet from A to Z and see it work?” he said.

And the company doesn’t want to stop at bringing jobs back to Buffalo – it wants to bring back manufacturing, too.

BAK is in talks with local manufacturing companies in an effort to source raw materials and components here rather than importing them from China, as it does now. The device’s camera could easily be made here, as could its housing and other parts, J.P. Bak said. The company uses Gorilla Glass by Corning, which is shipped from China even though it is produced by the New York company. BAK is working with Corning in hopes of one day sourcing that glass domestically. Its hope is that BAK USA will stimulate manufacturing and other economic development in Buffalo.

A beneficiary of StartUP NY tax abatements, J.P. Bak said the company will stay headquartered in Buffalo. But it wants to create roughly 100-person satellite production facilities in poor neighborhoods around the country – places where an influx of skilled production jobs could make a significant impact.

The idea is that tablet buyers in, say, California would rather reach for a product assembled in Inglewood or Oakland than one from China or even Buffalo.

“It is like a farmers market,” J.P. Bak said. “People want to buy local. It’s a big selling point.”

And because the products would be produced locally, it would make them an attractive option for schools and government entities whose contracts give preference to locally and domestically sourced goods.

As social responsibility becomes a more important feature of what consumers are looking for, BAK becomes a more attractive brand.

“The assembly process is as much a part of what we offer as the end product,” said Christian Bak.