Insiders at Katerra, an ultra modern component manufacturer for the construction industry, say it has become a revolving door of executives, many of whom know little about the construction industry, an error-prone factory and persistent construction delays.
Katerra, founded in 2015, was recently valued at $3 billion but that may change as it has reportedly experienced production-based delays, high executive turnover and design errors that could potentially derail its mission to revolutionize the construction process.
A few years back Blu Homes was considered the ‘darling’ of component construction with their folding homes that could be shipped by conventional transportation, unfolded and finished at the job site.
Investors from around the world dumped millions of dollars on them allowing them to bring on a full staff of Architects in Michigan and open a huge factory in California. Wine and Cheese Open Houses across the country started to be known as “Whine and Cheese” parties as sales in any substantial numbers never materialized.
Then Blu Homes closed their Michigan offices and moved everything to CA. Shortly thereafter they closed their factory, changed leadership not once but twice in a very short period of time and announced that they were retreating to Northern California to build their homes.
Bill Haney, one of the founders, moved onto another industry where he is once again garnering investment money.
Katerra has raised more than $1 billion from major investors like Foxconn and SoftBank Group Corp., but has yet to complete a major project using its end-to-end design, manufacturing and construction model.
Current Katerra employees say that “every day is a fire drill” and that Katerra is trying to “hedge its bets” through side businesses including apartment renovations and selling China- and Mexico-sourced materials to developers.
Upstart ‘disruptor’ Katerra is trying hard to be successful but if the people actually driving the bus don’t have any hard core experience in large scale construction they may find themselves on the same road as Blu Homes.
There are other new ultra modern component manufacturers that have opened on both the East and West Coasts in the past couple of years after landing huge investments which begs the question if they are the real deal or are they as unprepared for the future as Katerra and Blu Homes appear to be?
Source Credit: Inside the Struggles of a Softbank-Backed Construction Company
