Monday, January 4, 2021

Is Katerra Prepared to Make the Tough Decisions to Avoid Bankruptcy?

News of the $200,000,000 bailout of Katerra by Softbank, the investment company that originally backed them with a one billion dollar investment, will most assuredly trigger more cost-cutting including a reduction in workers.


The company has had several rounds of layoffs in the past including more than 300 at the Phoenix component plant when it was shut down. 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.


At the same time, they were opening a mass timber plant in Spokane, WA. If layoffs occur, most will be at that factory. 


Katerra has failed to complete roughly a dozen projects. All the while, logistical and technology-based issues have chipped away at the company's image as a revolutionary tech startup.


Indeed, the job search website has many reviews by both present and past employees but this one from a former employee gives a quick overview of the company.

“The only thing good about them was their health insurance...No support from upper management what’s so ever. Not organized in any way. Superintendents are underpaid for the amount of responsibility you have and no help from management.”

The off-site construction industry is tough and surviving long enough to make a profit can take many years. That is why investors are needed to supply the lifeblood to keep it going until that happens, for a percentage of the company. It’s s sound strategy in theory but tends to come up short in reality as things always go wrong for even the best-intentioned construction companies.


The big question for Katerra is what to do with that $200,000,000? Will it be used simply to pay overdue invoices from vendors or will it be used to bolster their image for a sale to another investment firm?


Or will it finally sit down with people experienced in turning construction businesses around and actually listen to them instead of going from one market segment to another looking to be the “Big Dog” and losing even more money.


I really hope it’s the last one as the construction industry does not need a black eye right now.


“In my humble opinion” by Gary Fleisher, the Modcoach


He writes the Modcoach News and Modular Home Coach blogs as well as the best site for off-site consultants, Modcoach Connects.


Contact Gary at modcoach@gmail.com



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