System 76, a Denver-based maker of personal computers, is bringing its manufacturing here from China — a decision that has nothing to do with import tariffs, corporate taxes or political pressure to return jobs to America.
“The companies we’ve been working with (in China) to manufacture our products, we’re not entirely confident that they can build what we want them to build. And we also needed them to move more quickly,” said System 76 CEO Carl Richell. “And because we’re making the design, we can open-source the design. We hope this will lead to better hardware design in general.”
The move comes as an ongoing trade war between China and the U.S. — one in which President Donald Trump is proposing tariffs on steel and aluminum and China is fighting back with tariffs on soybeans, automobiles and aircraft. An earlier cut to the corporate tax rate had some companies paying employees unexpected bonuses.
But System 76, which sells Linux Ubuntu machines, began thinking about moving manufacturing to the U.S. two years ago because of frustrations such as a small design change taking four months to implement instead of what is now expected to be a few days. It took a year to find industrial space — a 23,000-square-foot facility near Interstate 70 and Peoria Street. And the first computer off the Denver line will be within six months.
Colorado has seen an increase in local technology manufacturing, although it hasn’t been on the iPhone end but, rather, specialty electronics, said Tom Bugnitz, the CEO of Manufacturer’s Edge, an organization representing Colorado manufacturers.
“What you’re seeing here is innovation on the electronics side, or those with a specific purpose like drones for aerospace,” Bugnitz said. “We’re finding that smaller niche manufacturing is growing pretty large.”
Ritchell said labor costs will probably rise, but that’s OK. He believes the computer price won’t.
“We think we can keep the same price because there is a huge number of middlemen in the computer business,” said Richell, who founded the company in 2005. “Essentially, what we’re doing is clearing a large number of them out.”
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Instead of hiring someone in China to cut metal, another to deliver it to a Chinese factory, another to build the computer, another to ship it to the U.S., and another to pick it up and take it to Denver, System 76 can now buy aluminum from a plant and make a computer case.
“While labor costs will be higher, this (is offset by) cutting out a lot of middlemen that don’t really contribute to the product,” he said.
Richell declined to share how many computers System 76 sells each year but said revenues are in the “tens of millions” of dollars for computers that cost between $589 to $8,000 on its site.
System 76’s team of nearly 25 people, based in downtown Denver, will move to the new facility in the summer. Another five to 10 hires are anticipated as manufacturing ramps up.