USG (USG)

USG corporate, blowing smoke for 3 years, ask gypsum material distributors what they think of USG.

USG manufacturers gypsum products but also distributes USG products by L&W Supply. USG is in direct competition with thier very own customers by way of L&W Supply. "The close eye on pricing" claim is nothing but a diversion...really happening USG is openly restricting trade!..board prices are high- very high "to all non-USG "Partners" USG Steers board sales to USG owned L&W Supply yards. by providing rock bottom prices on gypsum board and joint treatments. L&W goes out to the markets and basically buy's the business with a low baller bids on materials. know this in most markets a distributor will need to add at least $50.00 per thousand feet to make a profit on board sales. If Mom and pop distributor pays $175 a thousand ft (what USG refers to as a close Eye on pricing) but an L&W Supply yard one mile down the road is priced at $135 per thousand ft. who will win the bid? not to mention the great profits that an L&W yard will post from every job, remember L&W does not have to pass on the whopper savings to the customer he just has to be low enough to beat mom and pop distributors. the low prices offered to L&W Supply also allows L&W to expand thier market share they can now bid on jobs 100 miles further away than other distributors because they have the margins and still be profitable beating out the locals. True stuff, painful but very true. Why do I think USG is in trouble? thier strategy is non existant they move continue to implement this same strategy in a very troubled economy and are frozen with the only hope of getting out in one piece is if the economy picks up with in 24 months. I say dream on we are looking at a housing turnaround of at least 6 more years and it will never be what it was. I predicted the housing collapse two years prior and was on the money Usg felt the housing market bottomed out in 2008 I said dream on 5 more years I say today 4-6 years of flat - small upticks. other things have to dramatically chjange in this economy before we see a real impact on new construction forget about existing home sales We Want New Homes built! lastly, USG supreme quality products? guess again, wall board quality is the same across the board, ask any installer most prefer National Gypsum Products over USG, Look at market share period flat out who is selling more board and joint treatments, I can garuntee you that National gypsum is beating the snot out of USG in most regions, its not because customers are waiting for the market to turn around so they can go back to USG, insane. Distributors buy on trust, product quality, customer service and competetive price. American was built on this foundation. view price and market share using Georgia Pacific, National Gypsum, Lafarge, Certainteed, speak to thier customers and see the striking differences in response.

Few companies--including Home Depot (HD) or Bank of America (BAC)--are as exposed to a downturn in U.S. housing as USG Corporation. The company makes virtually all of its operating profit (70%+ in 2006) from drywall sales, which are used in new home and office construction. The company may have stellar operating improvements and Warren Buffett as the major shareholder, but the Oracle of Omaha got in at $17 per share in 2000. Around $40 per share these days, USG's stock has not priced in the entire effect of the subprime lending crisis yet. Wait for the price to go lower if you have an appetite for gypsum, the main component of drywall.

Many U.S. companies these days hedge against the particular up- and down-swings of the domestic economy by going global. Unfortunately, USG does not have that option. Drywall is very bulky (have you ever tried Sheetrock-ing a wall?) and cheap on a per pound basis making it non-ideal to ship overseas.