US: Like other makers of building products, United States Gypsum Company (USG), the US's largest maker of wallboard thrived during the US housing boom. But the company fell into the red in the fourth quarter of 2007 and is yet to climb out. With the anticipated housing rebound remaining elusive, average home prices in the first quarter of 2011 dropped to back to 2002 levels. This weak housing demand has spurred fears the economy may yet return to recession, with further losses expected for USG in the coming months.
USG Chief Executive James Metcalf, joked in a recent interview at the company's headquarters that he was getting tired of being asked to speak at conferences about 'managing in turbulent times' and has declined to predict when his company will return to the black.
Metcalf said that the company was building more modern plants and couldn't have foreseen the precipitous drop in housing construction, currently running at around a quarter of the peak level. USG has cut its work force by about one-third, to about 9250, since the peak. It has shrunk wallboard production capacity by about 30%, closing eight wallboard plants and idling others. The company's prolonged slump shows the peril of relying heavily on any one part of the world, even a market as large as the US, which accounts for 77% of USG's sales.
That said, USG is trying to build up sales in China, parts of Latin America and a few other areas without going fully global. Metcalf said, "We're putting bets down now -- small bets." For now though, the company's top priority is surviving the US housing collapse.
