Katerra closing Phoenix modular building facility, laying off 200 workers

Dive Brief:

Katerra will close its 250,000-square-foot modular building "component and finish" factory in Phoenix and lay off 200 workers this month, a company representative confirmed.
In addition, co-founder Fritz Wolff stepped down from his position as a member of the Menlo Park, California-based firm's board earlier this month, to “concentrate on other professional pursuits.”
Despite what the company is calling a realignment, Katerra has grown from 6,000 employees at the start of the year to 8,000 and doubled its revenue to $1.7 billion in 2019, CEO Michael Marks said in a statement yesterday. Katerra simultaneously announced it will start building a 600,000-square-foot facility in San Marcos, Texas, early next year, with production that will employ 500 workers expected to begin in 2021. That’s the same scale as its Tracy, California, facility, which it says is ramping up production now.

Dive Insight:

Despite the news, Katerra is on a “path to operating profitably in 2020,” Marks’ statement reads, citing a “project backlog of $4 billon and a pipeline of over $15 billion.” The firm touted the imminent opening of its Tracy component and finish facility, which it claims uses more advanced, more highly automated manufacturing technology and robotics. It also has a 270,000-square-foot mass timber factory in Spokane Valley, Washington, which it opened in September.

Sentiment among some commercial real estate firms with whom Katerra has apparently dealt is less optimistic, however, according to an Oct. 31 report from The Information, which states that Katerra so far this year has “backed out of at least half a dozen apartment and hotel projects in the U.S. that it had committed to build,” according to its sources.

The Wolff Co., Wolff’s apartment developing firm, has reportedly stopped working with the firm, “scrapping an apartment project in Sacramento,” according to the report. Katerra spokeswoman JZ Rigney told Construction Dive, however, that Wolff Co. “continues to work actively with Katerra,” adding that Wolff is still a personal shareholder.

Other highlights of Mark’s end-of-the-year report include the announcement that Katerra will soon launch, as a separate company, its software, which is called Apollo and has been compared to Procore.

Marks had a great deal to say in his statement about the firm’s business overseas. “In India, our business model mirrors exactly what we’re doing in the U.S.,” the statement reads. ‘We have booked projects from the largest companies in the world, including Microsoft, Infosys, Lulu Malls, and many others. In Saudi, we have signed a [memorandum of understanding] for $40 billion to build affordable housing. We have already delivered the first units, and by Q2 2020 we expect to be delivering 10 to 15 homes a day, which has never been accomplished.”

Construction Dive named Katerra Dealmaker of the Year in 2018, a year in which the firm raised $865 million in venture capital funds from SoftBank Group’s Vision Fund and acquired at least six firms, including architecture and manufacturing entities in the U.S. and India.