Off-site construction start-up Entekra will wind down its operations by June 30, 2023, according to a statement released on April 24 by the company's board of directors and obtained by The Builder's Daily. The company expects that by the end of June, it will have fulfilled its final obligations to builders that had ongoing projects in the Northern California region.
Pushing Home Building Toward Off-Site Construction
Founded in Ireland in 2015, Entekra launched its U.S. operations in 2016 in Ripon, Calif., operating a manufacturing plant there. The company debuted its first home in August 2017, and its prefabricated panelized construction systems promised to be a game-changer for the residential construction industry. By leveraging engineering, technology, software, and modern construction techniques, Entekra aimed to eliminate on-site stick-framing's inefficiencies.
Northern California home builders such as A.G. Spanos, Beazer Homes, Van Daele Homes, and Wathen Castanos, among others, used Entekra's fully integrated off-site solution (FIOSS), which was becoming a driving force in the residential construction industry's move toward automated off-site wood framing for homes.
Unlike existing off-site construction solutions in the U.S. market, which concentrated on providing home builders with off-site building components, Entekra's European-inspired approach delivered a whole-house concept, providing all of the structural elements of a building—prefabricated wall and floor panels, roof trusses, and all relevant materials—ready for on-site assembly.
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In a 2017 interview with Pro Builder, Entekra's founder and the CEO at the time, Gerard McCaughey, discussed this "European perspective of off-site construction that looks at building from a holistic point of view," and he had the experience and success to back it up, having built more than 8,000 units a year in the U.K. using off-site methods before selling his company, Century Homes—Europe’s largest off-site building manufacturing company—to Kingspan Group in 2005.
In fact, Entekra's management team at the time of the start-up's launch consisted of key executives from Century Homes who had deep experience in FIOSS and held a number of patents in Ireland for the manufacturing process and related equipment.
In that interview with Pro Builder, McCaughey also stressed how important the design and engineering aspects of the off-site process were to the company: "We think of ourselves as a design and engineering company that happens to have manufacturing bolted on. We don’t think of ourselves as a manufacturing company. Our value is in our design and engineering."
Plenty of Support, Initially
In May 2018, building materials giant Lousiana-Pacific (LP) invested $45 million in Entekra, and then became a majority owner in 2021. A reorg followed in October 2021, and Neil Sherman, LP's EVP and general manager of LP Siding, transitioned to lead Entekra as its president, while founder Gerry McCaughey continued as chairman.
Among its accolades, The National Association of Home Builders' Leading Suppliers Council named Entekra its 2019 Manufacturer of the Year and the company won the 2020 Ivory Prize for Housing Affordability.
In the April 24 statement obtained by The Builder's Daily, Entekra’s board of directors pointed out that the company's long-term success required "scalable operations through regional expansion and greater capacity." That, in turn, necessitated increased capital investment, but the off-site manufacturer couldn't summon sufficient external investment interest, resulting in the board's decision to cease Entekra's operations and dissolve the company.
LP says it will now focus on investing in its own core businesses such as LP Structural Solutions and LP Smartside Trim & Siding.
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Entekra Facilities and Layoffs
In 2018, Entekra opened a new European headquarters and training facility in Monaghan, Ireland, while its U.S. base in California was in Ripon. It then built a $35 million headquarters and 200,000-square-foot U.S. manufacturing facility in 2019 in nearby Modesto, Calif., that the company said was capable of producing 3,000 homes per year.
The shutdown will affect up to 240 Entekra associates; 200 of those in the U.S. in the Modesto manufacturing and distribution center, and 40 in Monaghan.
The board's statement specified: "To demonstrate the company’s appreciation of its employees, all employees will be provided severance benefits based on their tenure and position and will be eligible for unemployment benefits. Employees will also be provided with health insurance coverage for two months after leaving the company and offered job placement services at no charge."