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 05:17 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
SoftBank Group Corp Chairman and CEO Masayoshi Son attends a news conference in Tokyo, Japan, February 8, 2017. SoftBank Group Corp. holds its earnings results briefing on November 6, 2017 (JST), for the second quarter (April - September, 2017) of the fiscal year ending March 31, 2018.  (Photo by Alessandro Di Ciommo/NurPhoto via Getty Images)

Softbank is making splashy real estate plays. But will they pan out?

Obama Presidential Center rendering & Woodlawn housing (Credit: iStock)

Officials scale back housing plan near Obama Center

Rendering from Belgravia with CEO Alan Lev and COO David Goldman CATEGORY: Commercial Real Estate

Belgravia, Lennar land $69M loan for Triangle Square project

From left: 1220 W. Wrightwood Ave., 3030 N. Lake Shore Dr. and 1874 N. Burling St.

These were Chicago’s priciest resi sales sales of the week

Steel South Works Site (Credit: Google Maps, iStock)

Attention, developers: 415-acre South Works site could get split up

Seamless thumbs up background.

Mark your calendars: These are Chicago’s top real estate events next week

Chicago’s industrial market saw just 364,000 square feet of new supply come online in the last three months of 2019, a sharp drop. (Credit: Google Maps)

Chicago industrial market slams brakes on new deliveries in Q4

Windy City Rehab host Alison Victoria Gramenos and the home at 2308 W. Giddings (Credit: Getty Images, iStock)

“Windy City Rehab” saga keeps blowing: Host offers to buy back problem house

arrow_forward_ios
Loading...