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Same thing happened to BAKUSA that just closed down acouple of weeks ago when the government's handouts ran out . It's nearly impossible to get any kind of bank loan to build anything in most of Buffalo because the economy is so bad and most of the land is worthless.
Bak USA officially closed its doors today – four years after it came to Buffalo with the vision of a socially conscious, U.S.-based technology hardware company.
Bak raised tens of millions of dollars in private capital and once employed more than 100 people in Buffalo during that time, but ultimately could not solve the complex financial equation that involved competing with the world's largest technology corporations., company sources said. Each of the company's 77 employees were notified today of the company's imminent shutdown.
A statement from co-founder JP Bak sent to other local media members said the company never reached "the point of profitability to sustain itself."
In his statement, JP Bak also said tariffs involving Chinese electronic components by President Trump added "additional, unanticipated expenses" and were a "deciding factor" in the decision to close.
Bak came to Buffalo in 2014 and grew quickly on the back of tens of millions of dollars in investment cash, becoming a regional beacon for high-tech companies in Buffalo. The company hired many people from the minority and refugee communities to assemble its tablets, and spoke about opening similar assembly operations in other cities around the U.S.
Bak raised more than $30 million in private capital after coming to Buffalo in 2014 and built out a gleaming headquarters and production space in the Compass East development – the former Sheehan Memorial Hospital on Michigan Avenue.
Bak was recruited to the region by Invest Buffalo Niagara and participated in the Start-Up NY tax breaks program.
“It’s a shame they couldn’t get past this (financial) point,” said Thomas Kucharski, Invest Buffalo Niagara president and CEO. “But, things like this are unfortunately the risk when dealing with startups. It is tough being a startup in that industry, especially going up against the big boys.”
Fueled by capital from B. Thomas Golisano, a billionaire who founded Rochester-based Paychex, Bak reached a number of significant milestones during its time in Buffalo. The company was ultimately accepted into the Microsoft distribution network. It developed tablets built for industry-specific uses, including educational, healthcare and industrial settings.
Bak even completed a major expansion last year, adding 20,000 square feet that included a production clean room, where "cobots" (collaborative robots) assisted people in assembling the devices.
JP and Ulla Bak are Danish entrepreneurs and retired attorneys who came to the United States in 1998 and lived in California and then Pittsburgh. They got involved in relief efforts in Haiti after that country’s 2010 earthquake and opened a PC tablet manufacturing company there.
That experience was the model for Bak USA. Their children, Christian and Eva Bak, played a high-level role in shaping company products and strategies in the new company.
Business First reporter James Fink contributed to this story.
Changes Coming to Bak USA
Bak USA, a computer tablet company founded in Buffalo, was one of the first accepted into Governor Cuomo's state's Start-Up NY tax-free zone program, which itself has had a less than desired record of success.
BUFFALO, NY – Changes May Be Coming to Bak USA, the Buffalo based tablet maker, which was one of the first to be accepted by Governor Cuomo’s Start-Up NY tax-free zone program in 2014.
In a statement to 2 on Your Side, the company confirmed that “shareholders today reached an agreement in principle for a management buyout of the company. These are all the details we are sharing at this time. We will issue a formal announcement in the future once the deal is finalized."
Bak USA finally met a promise to have 100 employees early in 2018 (two years after the original deadline set by the state) in order to operate virtually tax free under the Start Up NY program.
However, as of now, it is far short of its promise to have 267 workers employed by the end of 2019 at its facility in the former Sheehan Hospital on the outskirts of downtown Buffalo.
Bak USA cut its staff by almost 10 percent in June, and then later missed payroll for half of its employees, which it blamed on a delay in receiving a $2.1 million payment on a large order from Africa.
The largest shareholder, Former Buffalo Sabres Owner Tom Golisano, was in town today for the meeting, and told WGRZ-TV that rumors that the company is in dire financial straits and in danger of folding were not true.
The company also said as much in its statement, a portion which read: “the rumors that Bak USA is shutting its doors are patently false. Bak USA is and will continue to be in operation as a social enterprise building computers in Buffalo.”
I've never been to Buffalo and have a high interest in visiting there because i hear how awesome the architecture is there the people and food. I'm from St.Louis a city thats always known for being bashed and bearer for bad news however theres been so much positive happening in the entire region since the big recession when we lost both the chrysler and ford plants including famous-barr etc. however i think we've gained so much more since and learned so much.. The one thing i believe the leaders of St.Louis are learning are finding those companies that actually want to be in St.Louis not for a HQ but to have satellite offices here and that seems to be working. By far the worse critics are its own native people or people that always looking for a reason to cheer the failures of another city..
Anyways from what i been reading Buffalo is on resurgence and the job market is almost best that its ever been even with a slight population gain is better than negative...
I hope Buffalo continues its comeback doubting the naysayers. The most important is Buffalo leaders need to find companies that want to be there.. The days of finding that world HQ through relocation is about all but gone the best way is grow organically...
Does Buffalo have a key big innovation district for local start ups to blossom?
Seems most cities are going that route..
Best of luck to Buffalo a city i seem to love but not ever visited but soon.
So True,American Axle closed all 3 Buffalo area plants and 5,000 high paying jobs were lost, Yet American Axle has plants in Michigan, Indiana & Ohio that are growing
So True,American Axle closed all 3 Buffalo area plants and 5,000 high paying jobs were lost, Yet American Axle has plants in Michigan, Indiana & Ohio that are growing
I've been to the factory in Fort Wayne, and it's awful. It's a former metals processing facility which opened around 1980, it was owned by a company out of Japan.
American Axle treats their employees like total garbage, now. The two facilities in Indiana are poorly-run, with high-turnover and horrid management. The one in Fort Wayne has equipment from facilities in Buffalo and Detroit which were shut down, machinery which is falling apart and should have been sent to a recycler a long time ago. So they refuse to invest in new equipment and people, same as so many other companies within corporate America.
Basically they're trying to do the same amount of work they did in Buffalo and Detroit, with 1/5 of the people, and with no union protections. throw in some control freaks in management, and you can see it's a bad situation.
AA was bankrupt 10 years ago, I predict they won't be in the U.S. much longer, or at least they'll get bought out and will be under a parent company out of India or something along those lines.
I've been to the factory in Fort Wayne, and it's awful. It's a former metals processing facility which opened around 1980, it was owned by a company out of Japan.
American Axle treats their employees like total garbage, now. The two facilities in Indiana are poorly-run, with high-turnover and horrid management. The one in Fort Wayne has equipment from facilities in Buffalo and Detroit which were shut down, machinery which is falling apart and should have been sent to a recycler a long time ago. So they refuse to invest in new equipment and people, same as so many other companies within corporate America.
Basically they're trying to do the same amount of work they did in Buffalo and Detroit, with 1/5 of the people, and with no union protections. throw in some control freaks in management, and you can see it's a bad situation.
AA was bankrupt 10 years ago, I predict they won't be in the U.S. much longer, or at least they'll get bought out and will be under a parent compaksny out of India or something along those lines.
So people REALLY think a company with $1 Billion in revenue and a growing international demand is going to close a plant because they had to pay $63,000 more in taxes.
No, try they are making a business move to consolidate their plants to reduce the expense of an extra building, administrative staff, transportation cost, etc. Only 2% of the 65,000,000 caps they produced came out of Derby. And now they plan to only produce the caps needed to supply the MLB, to fulfill their contract requirement of caps being made in the US until 2030. All other cap production will be contracted out to plants internationally, like everyone one else has been doing for years.
So people REALLY think a company with $1 Billion in revenue and a growing international demand is going to close a plant because they had to pay $63,000 more in taxes.
No, try they are making a business move to consolidate their plants to reduce the expense of an extra building, administrative staff, transportation cost, etc. Only 2% of the 65,000,000 caps they produced came out of Derby. And now they plan to only produce the caps needed to supply the MLB, to fulfill their contract requirement of caps being made in the US until 2030. All other cap production will be contracted out to plants internationally, like everyone one else has been doing for years.
I think you are missing the point. Here is a quote from the CEO:
"This is extremely difficult for me," said New Era CEO Chris Koch. "I grew up in Derby and worked in the facility, which has a long, productive history with the company. Even as other sports apparel brands moved away from running their own manufacturing plants, we continued making caps at our facility in Derby. But I have an obligation to our employees, partners and customers to ensure the long-term success of this company and we need to keep pace with changes in our industry."
I don't think the company really wanted to close the plant. When $63,000 is added to the expenses of a marginally profitable plant it made the decision easier. NYS tax and business climate may not have directly lead to the decision, but it certainly was a factor. I made a similar difficult decision in my business. We were located downtown for 60 years and moved to the Elmwood strip to try and maintain a city presence. The business was marginally profitable, but the combination of no parking, labor issues (union mandated generous benefits) and high overhead forced me to close. I felt guilty and that I had an obligation to the city that had given us a start, but in the end I couldn't afford to lose money.
Last edited by Thundarr457; 11-18-2018 at 08:49 AM..
Sean Kirst: Employees at New Era in Derby 'just wish that this wouldn’t end'
Buffalo News 11/18/18:
In all their years of marriage, Candace Bobik had never called her husband, a corrections officer, while he was on the job.
She made that call with some hard news last Tuesday. When a colleague told Don Bobik who it was, he was afraid that someone the couple loved had died.
In a way, he was right.
His wife has worked for 32 years at the New Era Cap Co. plant in Derby. Buffalo-based executives, whose headquarters remains in the city, last week announced plans to close the plant in March and move some jobs to Miami.
The shutdown will affect more than 200 employees who typically produce millions of caps each year, including the ones worn by baseball players in the major leagues.
Candance Bobik operates the machine that does the stitching encircling a cap. Her colleagues speak with admiration of the way Bobik, 50, works at high speed while performing a task that demands relentless skill and concentration.
It is always intense, but she said she takes pride in the product, in the way she makes her living. The workers are paid by piecework, meaning their salary depends on the number of caps they produce.
Teri Buczkowski, president of CWA Local 14177 — which represents rank and file at the plant — said that during its peak years, the plant was turning out “10,000 dozen caps in a week.”
That meant 120,000 caps a week, made in greater Buffalo.
Bobik, secretary of the local, met last week at the CWA union hall in Buffalo with her fellow officers. She and Buczkowski, 58, were joined by Nga Ta, the vice president, and Barnabas Thuan, the treasurer.
They used the word “shock” to describe their response to the shutdown. Last Tuesday, they went to a meeting with management. They feared, at worst, it might involve layoffs or cutbacks.
New Era has an agreement with Major League Baseball to produce its hats within the borders of the United States. Union members believed that pact guaranteed a level of stability at a plant where the average salary is around $17 an hour. Western New York seemed like a natural home for what they do.
Nga, 46, who came to Buffalo as a young woman from Vietnam, said she was among many who wept, stunned, when the company said it would close the entire Derby operation and shift a piece of the work to Miami, amid an ongoing shift toward contracting out production to other manufacturers.
When Nga started, she recalled, she could barely speak any English. One of her co-workers in those years, a woman named Jennifer, befriended Nga and wondered why she was always silent.
Nga explained she was concerned, because of the language barrier, that people might laugh when she talked. Jennifer offered to help, word by word. Nga remembers Jennifer holding up a paycheck and sounding out each syllable, a moment that served as a breakthrough.
“I learned how to speak at New Era,” said Nga, who remains grateful for the way she felt welcome on the floor.
On Thursday, around 40 people from her extended family will gather with Nga and her husband for Thanksgiving dinner. While they will try not to worry amid the celebration, Nga said their grown children will probably be wearing New Era caps made by the company that employs their mom and dad helped create.
Their kids joke about their work, but Nga knows the international status of that product makes them proud.
Early each morning, the workers said, the atmosphere at the plant carries the kind of anticipation that almost feels like the moments before a competitive event. Bobik spoke of how she tapes up her hands, attaching a small blade for cutting cloth to one finger, before she leaves her car in the parking lot.
At exactly 7 a.m. a bell rings, and the workers throw themselves into their jobs as the machines start churning. It is a sound that becomes part of you once you grow accustomed to a factory, a heartbeat that slips into the way you move, think and measure time.
Union officers said the notion of family is no exaggeration. Almost everyone who spoke with me had a parent, spouse, grown child or relative who at some point worked at the New Era plant, opened almost 60 years ago. They suggested I contact a married couple, Rob and Mary Jane Thomas Bissell, whose courtship began on the floor.
Rob is from Sunset Bay, Mary Jane from Angola. Rob said “the first time I really had the guts" to talk to his future wife was during a cigarette break, outdoors.
Their earliest connection was built upon their work. Much of their conversation at home involves their lives at the plant.
Like his co-workers, Rob said he roots for baseball teams based mainly on the overall popularity of their hats. If the Yankees win the World Series, he said, sales typically pick up and so does production in Derby.
He said almost everyone in the place cheered for the Los Angeles Dodgers to capture the World Series against the Boston Red Sox. If Boston's win was great news for a passionate "Red Sox Nation," the workers believe the Dodgers would have sold a lot more hats.
While Rob is not especially a baseball fan, he said there is a certain power in seeing the television zero in on the greatest players in the game.
“I watch them,” he said, “and I wonder if maybe I touched the cap the guy is wearing.”
For some, New Era is the only adult job of any duration they have experienced. Bobik started there as a teenager. So did Robin Ferguson, who has been at New Era for 41 years. She took a job at 19, just after the Blizzard of ’77 swept across Western New York.
Nga recalls how she was laid off after she was first hired to work for New Era. She was eventually called back to work at a now-shuttered New Era plant in Buffalo before she ended up where she began, in Derby.
It was a relief, she said, because she could again ride to work with her husband. As for Thuan, a fellow refugee who arrived about nine years ago from Burma, he said the plant served for him as an early statement on something beautifully American.
On the job, doing piecework, he saw any success he achieved as a result of his own commitment, of his own discipline and choice.
“You are free,” said Thuan, who remains unsure of what he will do once his job is gone.
He and his friends are older workers in a region where manufacturing jobs are not easy to find. They believed they held jobs at the one place — a homegrown plant making caps for the national pastime — that could transcend the kind of pullouts that so often rock this region.
“I just wish that this wouldn’t end,” Bobik said.
Amid precise, high-speed and often tiring work, the cafeteria was one place where they could take a breath. On opening day of the baseball season, management would set up televisions while employees ate hot dogs and watched a few games.
Once, Buczkowski recalls, the plant received a visit from Hall of Fame pitcher Rich "Goose" Gossage. He did a demonstration in the cafeteria, throwing a baseball so hard it made a dent in the wall. Gossage signed his name by that point of impact, and a frame was placed around it as a kind of testament to what they do.
Buczkowski wonders if it will be left behind or painted over, once the plant shuts down.
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Bak USA shuts down; 77 lose jobs
