Since our initial coverage of the Silicon Valley-based construction start-up, Katerra has experienced several ups and downs over the past few years. While the company has grown significantly since it was founded in 2015, financial issues continued to rise.
Katerra's CEO Pall Kibsgaard shared with the Wall Street Journal, "I think we underestimated the complexity of executing self-perform projects at a large scale, including manufacturing and material sourcing and managing our own labor."
In 2019 Katerra faced flopped overseas expansions as well as layoffs and cutbacks for the company. However, their relationship with Japanese investment firm SoftBank continues as the company invests $200 million to bail out the start-up as they enter 2021. SoftBank is one of the earliest and largest investors in troubled co-working company WeWork.
Katerra's goal to revolutionize the construction industry, specifically with mass timber and modular construction, continues to make headway. Kibsgaard explains the additional investment will help bring the company back on track as it is projected to make "between $1.5 billion and $2 billion in revenue this year and expects to see positive cash flow in 2022."
9 Comments
The AEC industry is indeed confounding, even to the tech folks that want to disrupt its practices. Precision manufacturing can be mastered but construction in open sites, dealing with unique climate conditions, meeting code, handling material behavior in uncontrolled enviroments, working with unions and political figures - so many challenges. None of which are more difficult individually than, say, manufacturing wafers or assembling electric cars but the sum total of these little challenges makes AEC's inefficiencies a big hurdle to surmount. At the heart of it is the problem of razor thin profit margins - at some point, it just doesn't make economic sense to invest in so much R&D for something that doesn't yield economics of scale through vast production like other manufacturing industries do, such as fighter jets (Thank you, defense spending) to smartphones. In its heyday, WeWork was speaking of architcture as being easier than designing and assembling iPhones - architectural production and construction should be made simple through algorithms, automation, and modular fabrication. That dream never came true for them.
Mass production is about repeating the same thing over an over with the same circumstances, tools, sources, and designs. The first time it is hard, but after that people have it pretty well figured out, because everything is fine tuned and stays the same.
Construction is repeating similar things over and over again with different circumstances, tools, sources, and designs. And none of it ever gets fine tuned because they are never the same enough.
mass timber and modular construction is all about repetition, working with the same material, the same tools, pretty fine tuned if you ask me
The repetition within controlled conditions is not as big an issue as final assembly in the open and the need for tight coordination on site. The latter could be overcome with good scheduling and logistics management but the problems encountered during the construction of the modular tower at Atlantic Yards scared off a number of developers - the company that built those modules even backed out of the business. I think an analogy could be building cars out in the open - You could prefab as much as possible but the final pieces still need to be transported to an open location (Easier in the suburbs but tough in built up urban areas) at precise timing and assembled without a hitch.
I've worked on modular wooden buildings in city-like conditions...much easier to have a crane come in, put some things on their place and leave than have a messy and open construction site for weeks and months at a time, it's the future and it's already here!
I hope so! North America is way behind compared to Asian and European countries in this regard. The Singapore government has even mandated that most new housing construction are to be modular.
all done!
https://www.bloomberg.com/news/articles/2021-06-01/softbank-backed-katerra-to-shut-down?srnd=premium-asia&sref=H6ddn91U
Good.
Manufactured housing companies such as S2A and Boxabl are trying to fill this sucking void (marketing term) but run into permitting issues in many states, are extremely expensive, and have high transport cost - one problem is they continue to use traditional wood framing and not cold-formed light-gauge steel shapes such as trusses, tracks, studs, and headers which offer great advantages (environmentally and strength of materials for wind and gravity loads) - by using robotics, cobotics, and advanced assemble lines these factories could become "dark" manufacturing facilities in the short term ...
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