Gypsum Wallboard Manufacturers Shut Down Capacity in Response to Weak Demand

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Researched by Industrial Info Resources (Sugar Land, Texas)--Weak demand during the second and third quarters of 2008, coupled with the current financial crisis, is severely affecting the gypsum wallboard industry globally. The wallboard market is very regionalized. Some markets, such as Texas and those in the western U.S., are not fairing as badly as the eastern U.S. from a demand standpoint. As a result, manufacturers of gypsum wallboard are shutting down capacity. In a third-quarter conference call, U.S. Gypsum executives said that the company had idled 5 billion feet of capacity so far in 2008 from plant closings, curtailments and shift reductions at operating wallboard plants, including those in Jacksonville, Florida; Santa Fe Springs, California; Norfolk, Virginia; and Boston, Massachusetts. This mainly is due to weak demand for wallboard nationwide. Other gypsum wallboard manufacturers have closed a total of seven plants in 2008, including plants owned and operated by CertainTeed, Georgia Pacific, Lafarge, and National Gypsum.

Cutbacks in capacity expenditures have also been announced. U.S. Gypsum will reduce capital expenditures in 2009 to less than $100 million. After completing two new gypsum-wallboard manufacturing plant projects in the U.S. recently, including a new synthetic gypsum wallboard plant in Washingtonville, Pennsylvania, U.S. Gypsum has delayed construction of a new plant in Stockton, California, until at least 2010.

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