June 3, 2021

Katerra to lay off staff in Seattle Friday — reports indicate business will close

Photo by Benjamin Benschneider [enlarge]

Katerra built the Catalyst building in Spokane with mass timber.

High-flying technology-enabled construction company Katerra looks like it may be grounded for good.

On Tuesday, a WARN notice was filed with the state showing 117 Katerra workers in Seattle will be permanently laid off starting Friday due to closure. The Silicon Valley Business Journal on Tuesday cited an article by The Information that reported the company told employees it plans to cease operations. Bloomberg also reported on Tuesday that Katerra is shutting down.

Katerra was formed in 2015 in Menlo Park, California, with a plan to revolutionize the industry by using prefabricated and mass timber construction components that it would design and make in-house. It has since been involved in a number of projects around the country, including The M luxury student housing tower in Seattle's University District and Catalyst, a 150,000-square-foot building in Spokane using cross-laminated timber.

Katerra in 2019 opened a $150 million CLT manufacturing plant in Spokane Valley equipped with extensive automation technologies and what it describes as one of the largest CLT presses operating in the world. Its website says this 270,000-square-foot plant is “the largest single-use CLT facility in North America, producing 30% of the current North American mass timber manufacturing capacity — two times any comparable manufacturer.”

Edelman, the public relations firm representing Katerra, declined to comment. Kris Beason, who was hired late last year to head up Pacific Northwest construction operations for Katerra, referred comment to Katerra vice president of marketing Trevor DeWitt.

DeWitt didn't respond to an email and a phone call seeking comment.

Beason, a local industry veteran, was brought on to scale up delivery of factory-built multifamily and mass timber projects in Washington, Oregon and Idaho. In a DJC interview in February, Beason said Katerra was continuing its growth into additional market sectors in the Northwest, including health care, life sciences, industrial, education, tenant improvements and corporate commercial projects.

Katerra lists these Pacific Northwest projects as “under construction” on its website: Founders Hall, an 85,000-square-foot mass timber building at the University of Washington; oN5, a 9,000-square-foot mass timber commercial building in Vancouver, B.C.; a 10,000-square-foot mass timber warehouse and showroom for EMCO in Langford, B.C.; the 135-unit Alexan Highlands apartment complex in Issaquah; and the 352-unit Amberglen South apartment complex in Hillsboro, Oregon.

It's unclear when this list was last updated. For some of these projects, Katerra provided materials. For others, it was the designer, builder and/or construction manager.

Founders Hall is being built by Hoffman Construction, with Katerra supplying the mass timber.

Hoffman project executive Dave Johnson said the Katerra news happened quickly and his company is now figuring out how to deal with it. Crews have been installing cross-laminated timber that will make up the building. Hoffman may have to find another CLT supplier to finish the job.

The Puget Sound Business Journal reported that over 290 cross-laminated timber panels arrived at the UW jobsite in May.

Founders Hall was expected to open in early 2022. There is no word at this point if that date will be affected.

Just off campus, Landmark Properties broke ground last summer on a massive housing complex for UW students with Katerra on board as the general contractor. This project at 4220 12th Ave. N.E. will have two 25-story towers and two midrise buildings that will contain 1,545 student beds in total. It was slated to open in fall 2023.

A spokesperson from Athens, Georgia-based Landmark didn't respond by deadline.

In press releases, Katerra has described itself as: “... on a mission to transform construction through innovation of process and technology. As a new breed of company within industry, Katerra is powered through vertical integration and technology investment to provide a range of services and products to clients across the construction value chain.”

The DJC reported in February that Katerra was aiming to break even in 2019, which was a boom year for construction, and in 2020 began taking cost-cutting measures, including reducing staff by over 7%. It then got a $200 million cash infusion from the SoftBank Vision Fund and made a commitment to “refocus” the company.

New CEO Paul Kibsgaard explained in a December press release that Katerra “became overcommitted and spread itself too thin,” while “growing numerous businesses in parallel — ultimately more than we could fully develop and maintain all at once within this very capital-intensive industry.”