Although the failure of this high-profile company comes as a shock to many, there are reasons to be optimistic about our industry’s future.
Entekra, a leading offsite construction technology company based in Modesto, Calif. has now entered the history books as another failed venture that was more flash than profit for its investors. This is the second such blow our industry has felt in recent years, the other being when Katerra ended up on the chopping block.
Entekra was scheduled to cease operations at the end of June. According to a statement from LP, which invested $45 million in the company in 2018 and became a majority owner in 2021, the decision was made after a careful review of the past year’s financial performance. Entekra had struggled to maintain profitability, despite having secured several large contracts.
The news has been met with mixed reactions from industry experts. Some have expressed sadness at the loss of what had been considered an important innovator, while others believe that the company’s struggles may be indicative of broader challenges facing the offsite construction industry as a whole.
One factor that may have contributed to Entekra’s difficulties is the relatively slow adoption of offsite construction methods in the United States, when compared to other parts of the world.
A perhaps bigger challenge is that new factories need large upfront investments in infrastructure and technology. They need specialized facilities and equipment. And in their current form, they also need skilled workers.
Despite these challenges, many in the industry, including myself, remain optimistic about the potential for offsite construction methods to transform the building industry. Companies like Entekra have shown that it’s possible to reduce construction time and costs, while also improving quality and safety.
The question is how to do it profitably.
While Entekra’s closure is a setback for the industry, it is important to remember that innovation is a process of facing challenges, and that setbacks are a necessary part of progress and growth.
Every month, this magazine profiles new factories — panel factories, modular factories, CLT factories — that use new technologies and are attracting investment dollars. These new players will study and learn from Entekra’s mistakes.
In fact, as I say in this month’s Editor’s Note, I believe that we will see more and more high-tech offsite companies come online. They will use automation and AI to streamline operations and increase profits, and will come to dominate the industry over the next decade.
Yes, the demise of a high-profile company like Entekra is disappointing, but in the end, I believe we will look back on it as part of our industry’s growing pains.
Gary Fleisher is Editor-in-Chief of Offsite Builder magazine.
