Construction startup Katerra closing Phoenix factory

The announcement comes weeks after the SoftBank-backed firm’s co-founder left

TRD NATIONAL /
Dec.December 03, 2019 06:15 PM
Katerra CEO Michael Marks and its factory in Pheonix, Arizona (Credit: Katerra, Google Maps)

Katerra CEO Michael Marks and its factory in Phoenix (Credit: Katerra, Google Maps)

Katerra, a Silicon Valley startup backed by SoftBank, has closed a large factory in Phoenix, weeks after one of its co-founders left the firm.

The Menlo Park–based firm, which is valued at more than $4 billion, says it uses tech to deliver construction projects inexpensively. But it has a history of delaying or abandoning projects and in recent months has laid off hundreds of employees.

The Phoenix factory, which was the company’s first, had been used to prefabricate building components for Katerra’s construction projects. In an email sent to staff Tuesday and obtained by The Real Deal, Katerra’s CEO Michael Marks wrote that the factory would close at the end of the month and its employees would be let go.

“We learned a lot from that factory,” Marks wrote. “We learned what we were doing right, and we also learned about lots of improvements that could be made.”

Bloomberg, which first reported the closure, said the company lay off 200 employees. Katerra did not return messages seeking comment.

The Phoenix factory had a series of hiccups. Soon after opening in 2016 it was closed for a week, reportedly for lacking proper building permits.

Katerra has since opened a mass-timber factory in Spokane, Washington, and is in the process of building a facility in Tracy, California.

The Tracy factory will be used to build added lines of prefabricated components, including windows, steel walls, and bathroom and kitchen kits, Marks wrote in his email.

He also announced that Katerra would begin building a second factory in Texas.

“It’s natural for a growing company like Katerra to make some changes in strategy,” Marks wrote. “But I want to thank our employees at the Phoenix factory for their participation in this journey.”

Following a $700 million funding round earlier this year led by SoftBank, the firm is valued at more than $4 billion, with some estimates closer to $5 billion. It has made a flurry of acquisitions, primarily of construction and architecture firms, which it has used to build and design projects. Since its founding in 2015, the company has seen considerable executive turnover and been dogged by reports of delays and cost overruns at some of its projects.

Last week TRD reported that its co-founder, Fritz Wolff, had departed the firm. While it remains unclear why Wolff left, his eponymous family construction firm is one of Katerra’s biggest customers. Katerra has indicated that it will continue to work with the Wolff Company and that Fritz Wolff remains a shareholder.

According to Marks, Katerra is slated to become profitable sometime next year. The company has not yet released specific plans to go public, though the CEO has indicated that an IPO would not happen until at least 2021.


Related Articles

arrow_forward_ios
Robert Reffkin and Kristen Ankerbrandt

Compass to lay off marketing, IT and M&A staffers

WeWork executive chairman Marcelo Claure (Credit: iStock, Getty Images)

SoftBank-backed Gympass signs big WeWork office deal

Softbank Vision Fund senior managing partner Deep Nishar (Credit: SoftBank, Wikipedia)

“We are still in it”: SoftBank still believes in WeWork’s core business

Crown Prince Sheikh Mohammed bin Zayed Al Nahyan of Abu Dhabi, Softbank CEO Masayoshi Son, and former British Prime Minister Tony Blair (Credit: Getty Images)

Masa Son, the crown prince of Abu Dhabi and Tony Blair walk into a bar and decide to build a $34B city in Asia

Katerra CEO Michael Marks and one of the company's prefabrication homes in Saudi Arabia (Credit: YouTube, iStock) 

Katerra signs $650M contract with Saudi Arabia to build 8,000 homes

WeWork co-CEOs Sebastian Gunningham and Artie Minson (Credit: Getty Images and Twitter)

WeWork co-CEOs will land $17M if they leave

Oyo CEO Ritesh Agarwal (Credit: Getty Images)

Future City newsletter: Struggles at SoftBank’s $10B hospitality startup, the death of CrediFi & more

(Illustration by Tim Peacock)

Warped lumber, failed projects: TRD investigates Katerra, SoftBank’s $4B construction startup

arrow_forward_ios
Loading...