At Woodrise 2019, Katerra CEO Michael Marks wows the wood world.
A decade ago, after the Great Recession and the failure of many of the new wave of prefab companies, I wrote that "housing is an archaic industry; it has never been properly organized, Deminged, Taylorized, or Druckered," adjectives named after the three gods of productivity and management.
I have written previously that Katerra, the four-year-old instant construction giant, might actually be changing this, as they note, "applying methods and tools such as digital technology, offsite manufacturing, and fully-integrated teams in an effort to improve construction productivity."
After seeing Katerra CEO Michael Marks in Quebec City at Woodrise, I realized that the industry is also being Carnegied – applying new technologies, collecting architecture, engineering and construction firms into one corporation that builds in modern digitally driven wood frame, Cross-Laminated Timber (CLT), and precast concrete. It's a vertically integrated conglomeration that could change the industry.
Marks notes that "people are naturally conservative and in the construction industry even more conservative." Katerra is not being conservative at all. "It takes a lot of investment, a lot of technology to get this done, end-to-end management of entire projects."
One of their biggest investments is a new CLT production facility in Spokane, Washington. Marks, who has a background in venture capital and private equity, says it is "the riskiest thing he ever did in his career," putting $130 million into it, $60 million over budget. As Marks notes, "That's the construction industry!" He describes how 20 trucks of lumber arrive every day, with the wood being stitched together at a rate of 1800 linear feet per minute, which is then glued into CLT panels as big as 12 feet by 60 feet. According to the press release from its opening,
Katerra’s state-of-the-art CLT facility reflects the company’s technology-first approach, incorporating advanced geometric and biometric scanning of lamstock, an on-site kiln for precise moisture control and artificial intelligence to further improve safety and reduce waste. Katerra has deployed these innovations to result in a consistent, high-quality product. Katerra’s factory also features the largest CLT press currently in operation globally, offering customers unmatched design flexibility.
The wood comes from small-diameter logs, "certified by independent, non-profit organizations that promote sustainable forest management." (SFI, PEFC or FSC if requested.) Katerra calls CLT "an excellent low-carbon alternative and an essential component of a sustainable future."
We source Spruce-Pine-Fir lamstock from Canadian sawmills that purchase logs from sustainability managed forests in inland British Columbia and parts of Alberta, and our Canadian sawmill partners source wood primarily through long-term replaceable tenure agreements on publicly owned lands. These sawmills source 2×6 lumber from small diameter logs with an average log diameter of 7.5”-11” for Katerra’s CLT.
This is a very important point for those who worry that CLT production is going to destroy our forests. This is not first-growth wood; they are young trees from fast-growing species. CLT was actually invented by the Austrians because they had all these little trees or leftover pieces that they didn't know how to use. It is more like a crop than a forest.
The output of the factory is prodigious: "At full capacity, the factory will produce the highest volume of CLT in North America – 185,000m3 or the equivalent to 13,000,000ft2 of 5-ply panels annually on a 2-shift, 5-days a week operation." The first output is going into a 159,000 square-foot office building in Spokane.
As CEO Marks noted, the construction industry is conservative. The concrete industry is fighting back, and putting fear into the hearts and minds of prospective clients. Canadian wood is subject to the vagaries of the American government's love of tariffs, which might well throw us all into another recession. Marks says it is the riskiest thing he has ever done, and he isn't exaggerating.
On the other hand, this factory might well drive the cost of CLT down to where it could be the most economical way to build, especially in the earthquake-prone west (it's terrific in seismic zones). At some point, governments might take the climate crisis seriously and put a carbon tax on concrete and steel, which together produce about 12 percent of the world's CO2. This is likely a risk that is going to pay off, both financially and environmentally.