expanding its scope and geographical range. Katerra
says it has about 1,000 employees in four countries
and already is among the top 25 general contractors in
the U.S.
“Katerra is bringing fresh minds and tools to the
world of architecture and construction,” the company
says in its corporate outline. “We are applying systems
approaches to remove unnecessary time and costs
from building development, design, and construction.”
“With the latest technology at our fingertips, effi-
ciency no longer has to come at the expense of quality
or sustainability. Led by a team that combines expert-
ise from the most groundbreaking technology, design,
manufacturing, and construction companies, we are
transforming how buildings and spaces come to life.”
“The way we think about a construction site is to
turn it into an assembly site and make it a factory like
we used to do at Flextronics,” CEO Michael Marks said
in a published report. (Marks led Flextronics in the
1990s and early 2000s.) “The thing that is so messed
up in the real estate business is how many different
parties are involved in getting anything done.”
In his weekly newsletter, Mitchell – who provides
marketing consultancy services to a diversity of build-
ing product manufacturers – says the coming construc-
tion technology/manufacturing revolution envisaged by
Katerra will take place when the company approaches
“builders and developers with an offer they can’t re-
fuse – to design and build for them at a lower cost with
higher quality, and to do it faster.”
“What if the builder could eliminate the need for de-
signers, estimators, installation labor, and materials
sourcing,” he writes. “Just like Nike or Apple, builders
will become brands who don’t need to actually make
anything themselves.”
Mitchell suggests the integrated, technology-based
modular construction process will uproot the tradi-
tional new construction market with these changes:
6 — Winter 2018 — The North Carolina Construction News
• The builder, Katerra, will be ordering truckloads of
products to be delivered to their factories. No more
need for distributors, dealers or contractors;
• Labor shortages and installation errors will be a
thing of the past;
• The builder will be taken out of the equation when it
comes to product sourcing. There will be no more
rebates. Katerra will want the best bottom line price,
period; and
• Katerra will be able to look at making really big
changes in how homes and buildings are built. Be-
cause of their scale and process, it will be easy for
Katerra to consider big changes like changing to
metal framing in residential construction.
Mitchell predicts Katerra’s industry changes will
happen fast. “And just like the taxi industry, the Na-
tional Association of Home Builders (NAHB) and some
builders may try to push back with legislation that may
slow but won’t stop this change,” he writes.
Writing to building products manufactures, Mitchell
says: “In two to three years, or sooner, you will feel the
effects of this change as your larger builders will no
longer be buying from you. It will also happen to you in
the commercial area.”
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Mitchell also predicts there will be some high level
competition to Katerra, just as Lyft competes with
Uber. “Look for people like Elon Musk or others to cre-
ate new companies designed to compete with
Katerra.” Katerra and other high-level integrated technol-
ogy/modular builders will gain traction in part because
of an increasing number of successful completed proj-
ects, coupled with pressures on labor supply caused
in part by increasing immigration restrictions in the
U.S., says another consultant.
“In 2018, I believe we will see a perfect storm of
factors – an aging global workforce, a lack of new en-
trants and growing restrictions on free movement of
labor - begin to decisively accelerate the uptake of
construction integrated manufacturing,” writes Kenny
Ingram, global industry director at IFS, a software de-
veloper. “Government, regulatory bodies and the industry
alike will start to realize that, while getting more peo-
ple into the industry is important, as well as trying to
increase the number of people onsite, the most strate-
gic solution would be to fundamentally change the
way we build in the first place.”
“New technology is making it easier to work prof-
itably on a global level as well,” he writes. “With 3D
printing, for example, costs for both material and long
transports are decreasing substantially. Using tech-
nologies such as these, the partnerships will focus
more on global competence exchange rather than
long-haul transports.”
“All three of these trends are woven tight together.
Contractors need to work hard to ensure that the right
competences are secured while considering how to
implement new business models for modular build-
ings and construction integrated manufacturing — all
this in a construction industry that is becoming more
global and offers new forms of partnerships. The play-
ers who master this balancing act will be the winners
in 2018.”
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