Report: Katerra suffers growing pains

Construction Drive

Dive Brief:

Construction prefab startup Katerra, most recently valued at $3 billion, has reportedly experienced production-based delays, high executive turnover and design errors that could potentially derail its mission to revolutionize the construction process, according to The Information. The company 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 and former Katerra employees told The Information that there is a “lack of construction experience” at the executive level, which has supposedly seen managers across all disciplines come and go, and that “every day is a fire drill.” The anticipated efficiencies of being able to prefabricate components of buildings have reportedly not materialized because the company has not yet been able to automate some construction processes such as installing windows in wall panels, which now have to be done manually. This has created delivery delays, and sources told The Information that some materials have been leaving the Katerra plant in Phoenix only to be returned unused because of errors made during manufacturing. Sources have also reported that the company has sent under-skilled workers to perform onsite building.

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