Backed by over $1 billion in venture capital money, Katerra aims to become a disruptive presence in the multifamily construction industry. But where its disruptive power will be most keenly felt is not yet clear.
Katerra is a construction company
Katerra seeks to disrupt the construction industry business model. The company offers the ability to handle all aspects of a construction project from the building design through material sourcing to actual construction.
The company built a factory in Phoenix which produces wall panels, roof and floor trusses, cabinets and counter-tops for the buildings they construct. By building modules in a factory, Katerra expects to decrease costs by reducing waste and by achieving economies of scale in their material purchases. The company’s architects optimize their designs for factory construction, further reducing costs.
Katerra is currently focused on multifamily construction but also targets the student, senior and hospitality markets. Bloomberg reported that the company had about $1.3 billion in bookings for new construction projects as of January, 2018.
Katerra is a materials manufacturer
Katerra seeks to disrupt the building materials market through their production of mass-timber products. They are building a 250,000 sq. ft. factory in Spokane Valley, Wash. to produce cross-laminated timber (CLT) and glue-laminated timber (glulam) products. These products have been used in Europe and Canada to replace steel and concrete in construction and Katerra is planning for their wider use here.
Current building codes generally limit the use of mass-timber construction to buildings of 6 stories or less. This is being reviewed for change when the international building code is revised in 2023.
Katerra is a distributor
Katerra seeks to disrupt the distribution of construction fixtures by leveraging the economies of scale achieved by the company’s construction business. Katerra has a procurement arm in Shenzen, China and a distribution center in Long Beach, Calif. The company intends to open other distribution centers around the country.
The founders of Katerra were largely drawn from the tech world and they are fond of comparing what they are doing to the construction industry to what Uber did to the transportation business. That’s great if you are a passenger but not so good if you are Yellow Cab. In either case, Katerra is a company to watch.