Bak USA, the Buffalo company that set out to prove it was possible to build tablet and laptop computers in the United States while trying to lift up disadvantaged workers at the same time, is shutting down immediately.
“It is with great sadness that I announce today that Bak USA will close its doors," company co-founder J.P. Bak said today in a statement. "Regrettably, the economic pressures on our young company have become too great to withstand."
Employees were notified of the decision today. The company said the shutdown affects 77 current workers. Employment peaked at nearly 130 workers this past spring before Bak USA undertook several rounds of layoffs.
"While we are beyond proud of Bak USA’s many successes, the business did not reach the point of profitability necessary to sustain itself," Bak said. "The additional, unanticipated expenses associated with the tariffs imposed by the White House were a deciding factor in our ultimate decision to close."
Despite the business failing, Bak said the venture in social entrepreneurship accomplished a lot.
"My family started this business nearly four years ago with a bold vision: to empower American students and workers by producing computers in the U.S.," Bak said. "Through the innovation and hard work of our talented team, we achieved more than we dreamed."
McGuire Development, Bak USA’s landlord, learned of the shutdown only about five minutes before the company released its statement, said McGuire President James F. Dentinger.
“We had no advance notice,” Dentinger said.
Bak USA takes up two floors in the five-story Compass East building, the former Sheehan Memorial Hospital, or about 23 percent of the leasable space, Dentinger said. The building is fully occupied.
He said the company is current on its rent, and he doesn’t know if and when Bak USA plans to vacate the space.
Bak USA’s lease runs for about another seven years, Dentinger said, and as far as McGuire knew the company was active in the space through Thursday morning.
“We’re waiting to get more information from J.P. directly,” he said.
Bak USA arrived in Buffalo to considerable fanfare as part of Gov. Andrew M. Cuomo's Start-Up NY program, which created tax-free zones connected to colleges and universities to spur economic development.
Cuomo announced Bak USA's acceptance into the program at a 2014 news conference on the University at Buffalo South Campus. Bak USA pledged to invest $840,000 in its Compass East space and to create 100 jobs.
The company announced it had met that goal this past January, but signs of trouble emerged in the following months.
The Buffalo News reported in June that Bak USA had cut 10 percent of its workforce and, later in the same month, that the company had not paid its salaried employees for a week. The company blamed a delay in an expected payment, and co-founder Ulla Bak expressed optimism about the company's future in an interview with The News.
But Bak USA announced in September that it was buying out the ownership stake of B. Thomas Golisano, the billionaire former owner of the Buffalo Sabres.
Golisano starting in 2015 had made three investments, totaling $30 million, in Bak USA, and he took a seat on the company’s board and was a strategic adviser. Golisano has not publicly commented on why he sought to sell his stake in the company.
And in October, the company announced another round of layoffs, this time blaming the effect of President Trump's tariffs.