Spokane Journal of Business

Two Spokane Valley factories imminent

Katerra Inc., Progress Rail likely to announce plants

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Two Spokane Valley factories imminent
-—Mike McLean
Katerra Inc. is the contractor on the Riverhouse II Senior Living project in Spokane Valley.

Progress Rail Services, of Albertville, Ala., and Menlo Park, Calif.-based Katerra Inc. might be gearing up to announce soon their plans to construct plants that that could lead to hundreds of living-wage manufacturing jobs in Spokane Valley.

Progress Rail, a subsidiary of Peoria, Ill.-based Caterpillar Inc., is a supplier of railroad and transit system products and services to the global railroad industry. The company provides complete rolling stock and infrastructure services ranging from track fastening supplies to advanced locomotives.

Katerra is a design-build contractor that recently launched an initiative to prefabricate multifamily and commercial structures using an eco-friendly product called cross-laminated timber.

Katerra boasts on its website that it’s redefining the construction industry with a technological platform that integrates design, manufacturing, and construction.

Despite guarded secrecy enforced through nondisclosure agreements, the company identities have trickled out through public documents in the case of Progress Rail, and a smattering of other information about Katerra, much of it derived by the Journal from the company itself.

Progress Rail recently bought for $3.2 million a 40-acre parcel of land on the east side of Barker Road, just north of Euclid Avenue and the Union Pacific railroad mainline, tax information on file with the Washington state Department of Revenue shows.

The company acquired the land from Centennial Properties Inc., formerly known as Inland Empire Land Co., which also owns large tracts of land east and west of there.

The property is part of a 200-acre industrial park where landowners and the city of Spokane Valley are planning to attract major manufacturers.

Doug Yost, director of Centennial Real Estate Investments, which manages the Centennial Properties holdings, declines to comment about the land sale and prospective users of the property, but says he anticipates one or more announcements within a month.

Centennial Properties and Centennial Real Estate Investments, are subsidiaries of Cowles Co., which also owns the Journal of Business.

Barbara Jansen, an Alabama-based spokeswoman for Progress Rail, declines to comment on the company’s plans for the Spokane Valley property.

Katerra was cofounded by multifamily housing developer Fritz H. Wolff, who has strong ties to the Spokane area.

Wolff, who is a Katerra board member, also is executive chairman of Scottsdale, Ariz.-based Wolff Co., the apartment development company that relocated to Scottsdale from Spokane in 2000.

Wolff is the son of Alvin J. Fritz Wolff, another Wolff Co. executive known well in Spokane.

Calls to Wolff Co. regarding Katerra’s Spokane Valley plans were referred to the company’s Seattle office. A spokeswoman based there declines to comment about Spokane-area plans other than to say Katerra will make an announcement soon.

Katerra’s other co-founder is Michael Marks, who also is the founder of the Riverwood Capital private equity firm, and former CEO of the big technology company Flextronics International Ltd. He also served briefly as an interim CEO of Tesla Motors Inc.

Katerra’s leadership team includes talent from Google, Apple, and other groundbreaking technology brands.

Designs on Spokane

Katerra also recently acquired Spokane boutique design firm Nystrom+Olson Architecture, quietly posting word of the acquisition only to its website. The posting describes the acquisition as “part of a strategic expansion within the Pacific Northwest … with particular emphasis in Spokane.”

Renamed Katerra Spokane, the architectural office has 12 employees with plans to expand, the posting says.

Nystrom+Olson founders Sam Nystrom and Chris Olson couldn’t be reached immediately for comment.

Wolff Co., which is one of the largest multifamily housing developers throughout the West, has continued to develop apartment complexes in the Spokane area. The company currently is developing the $15.2 million, 132-unit Riverhouse II Senior living apartments in Spokane Valley, and the $16.3 million, 132-unit second phase of Pine Valley Ranch apartments, south of Spokane Valley.

Katerra is the contractor on both projects.

Katerra earlier this year opened a cross-laminated timber panel manufacturing plant in Phoenix, and announced it plans to “expand our manufacturing reach in the near future.”

CLT panels are solid engineered wood panels with a high strength-to-weight ratio. They’re typically made with five or more layers of wood cut from small-diameter timber, potentially making the panels more sustainable than conventional lumber products cut from larger-diameter timber.

The Phoenix factory is expected to employ more than 400 workers by the end of the year.

Katerra boasts on its website that the Phoenix plant enables the company to build a 24-unit apartment building every two weeks, cabinets and countertops for 15,000 apartments per year, and 12,000 door assemblies a year.

The company reported in April that it had raised capital investments totaling $130 million to invest in research and development, factories, and other corporate purposes.

Katerra also recently launched a 12-story multifamily high-rise CLT project in Portland.

Technological breakthrough

Brian Holecek, operations manager at the Spokane office of Graham Construction & Management Inc., says CLT could be the next technological breakthrough for the construction industry.

Graham recently completed a pilot project using CLT panels for the Washington state Department of Enterprise Services.

The $2.1 million project included constructing eight elementary school classroom structures for neighboring Toppenish and Wapato school districts, about 200 miles southwest of Spokane.

“The scope of the work was to provide design-build services for the design and construction of K-3 modular classrooms constructed with regionally-sourced CLT,” Holecek says.

Graham partnered with design firms NAC Architecture, of Spokane, and atelierjones LLC, of Seattle.

Holecek says the project was the first CLT project contracted in Eastern Washington by the Department of Enterprise Services, which manages centralized services for state agencies and municipal governments, including facilities and lease management and contracting.

The agency’s website says the purpose of the pilot CLT project is to measure the efficiencies of using the engineered wood product in construction, while achieving environmental and economic benefits, including reduced construction waste, quicker construction time, and local job creation.

“We’re really excited for future opportunities working with CLT,” Holecek says. “Six or eight months ago, you could only get it out of British Columbia or Eastern Oregon. Now, I’m hearing we’ll be seeing a couple of others shortly in Spokane.”

Proximity to rail, highways

Todd Mielke, CEO of Greater Spokane Incorporated, says the economic development and business advocacy group is bound by a nondisclosure agreement about potential employers looking at the Spokane Valley property.

“I couldn’t speak to any specific company under the NDAs,” he says. “We’re working with a number of companies.”

He says GSI is communicating with 42 companies. Some are looking more long range at the Spokane area’s potential. Others are in the process of deciding soon whether to locate here.

“Already established manufacturing companies looking to expand into the region, typically would bring 100 to 300 jobs,” Mielke says.

He says such manufacturers rely on proximity to transportation systems, such as rail and highway systems, to bring subcomponents and raw materials into the area and to put value-added products out.

“Spokane Valley and the West Plains have access to both BNSF and Union Pacific rail lines. Those mainlines get close together in Spokane Valley and on the West Plains.” Mielke says. “That makes Spokane attractive. If you’re going across the northern tier, you’re mostly going through Spokane.”

The Spokane area also has workforce training programs and one of the fastest-growing segments of 18- to 34-year-olds in the country, Mielke asserts.

No specific planning documents have been made public yet by the city of Spokane Valley for manufacturing plants for either company, with the exception of a request by the former landowner for an administrative interpretation verifying that rail manufacturing is a permitted land use at what is now the Progress Rail site.

Caterpillar Logistics Services, another subsidiary of Progress Rail’s parent company, Caterpillar Inc., opened a 562,000-square-foot distribution center on the West Plains five years ago. The plant employed 140 people after its first year in operation.

Mike McLean
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Reporter Mike McLean covers real estate and construction at the Journal of Business. A multipurpose fisherman and vintage record album aficionado, Mike has worked for the Journal since 2006.

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