Companies predominately employed in manufacturing plaster, plasterboard, and other gypsum products constitute the gypsum products industry. The manufacturers in this industry make products such as acoustical plaster, wallboard, cement, insulating plaster, orthopedic plaster (for casts), plaster of paris, and gypsum rock, lath, and tile.
327420 (Gypsum and Gypsum Product Manufacturing)
Gypsum product manufacturing is nearly synonymous with wallboard production, which represents more than 90 percent of industry sales. As such, the gypsum industry's fortunes are closely tied to those of the construction business.
The late 1990s construction boom carried the otherwise mundane gypsum industry to record production levels, topping 29 billion square feet of board in 1999. That figure amounted to a 7.4 percent increase over 1998's record level. During the period, demand was so furious that manufacturers couldn't keep pace, leading to minor shortages and driving prices up sharply in places. However, a slowdown in new construction in the early 2000s promised to decelerate growth down to more sustainable rates. Shipments in 2000 declined to $4.93 billion from a record $5.73 billion in 1999. Ironically, because wallboard makers raced to add new capacity—a potential 30 percent boost between 1999 and 2002—supply may outpace demand in the early 2000s.
Gypsum, or hydrated calcium sulfate, has been an important construction material for centuries. It is mined from hardened ocean and saline-lake brine deposits. Natural supplies of the material are abundant, particularly in the United States, Canada, France, Italy, and Britain. The largest U.S. gypsum-producing states are Oklahoma, Iowa, Texas, Michigan, Nevada, California, and Indiana. In 1998 these states contributed 73 percent of domestic gypsum production. Companies that only mine gypsum without producing finished or semi-finished goods aren't considered part of this industry, however.
In 1998 just 10 U.S. companies calcined, or dehydrated, gypsum for use in wallboard manufacturing. Calcining is an intermediate process that occurs after grinding gypsum into a powder. The process is necessary in order to reconstitute a mineral paste for use in wallboard. The activity was spread among 65 plants in 28 states, often close to sites where the material was mined or quarried. The top four companies (USG Corp., National Gypsum Co., Georgia-Pacific Corporation, and Celotex Corp.) supplied almost 80 percent of U.S. calcined gypsum.
Gypsum is used as a fertilizer, a filler in paper and textiles, and a retarding agent in cement. About 80 percent of total gypsum output, however, is used to make plaster that is formed into building products. When combined with water and additives, plaster becomes a white cementing material that sets and hardens by chemical reaction. It is an excellent construction material for interior walls because it is inexpensive, easy to install, fire retardant, and acts as a noise insulator.
The United States remains the world's largest producer and consumer of wallboard. About 75 percent of the gypsum consumed in the United States is used in wallboard. Forty percent of wallboard products are used in new residential construction. Another 35 percent of industry output is used for remodeling and repair, while 10 percent goes into new commercial construction. The remaining 15 percent of the market consists of numerous miscellaneous applications, such as mobile home walls.
Gypsum-based wallboard was first developed around 1900 in the United States. Strong housing markets during the post-World War II U.S. economic expansion pushed industry sales close to $2 billion in the late 1970s. But a housing slump in the early 1980s kept revenues to $2.3 billion in 1982.
A recovery in housing starts boosted gypsum industry sales to a peak of nearly $2.7 billion in 1987. A U.S. economic recession and depressed housing markets in the late 1980s and early 1990s, however, pummeled industry participants. Receipts plunged below $2 billion a year in the early 1990s, and wallboard prices crashed from $127 per thousand square feet in 1985 to $67 in 1992. Prices recovered in the mid- to late 1990s as construction picked up and as wallboard manufacturers held the line on adding new capacity. From a plateau of $110 in 1995 and 1996, prices edged upward from 1997 to 1998, nearing $130 by 1998. In 1999 prices peaked around $160, lifting wallboard makers' profits handsomely. Over the period of 1994 to 1999, output had climbed 30 percent, crossing 29 billion square feet in 1999. The value of gypsum product shipments in 1999 was estimated at $4.5 billion.
USG Corp., formerly United States Gypsum Co., of Illinois, is the largest U.S. wallboard maker. Aftershocks from financial hurdles that beset the firm in the 1970s and 1980s, which ranged from antitrust matters to a hostile takeover bid to lawsuits over asbestos-contaminated products, forced the company to retrench under Chapter 11 bankruptcy protection. By the late 1990s, USG emerged triumphant. As of 1999, USG commanded a third of the U.S. wallboard market. Approximately 80 percent of its $3.6 billion in sales that year came from its North American Gypsum unit, its wallboard arm. USG also markets ceiling tiles and commercial ceiling systems.
National Gypsum Co., the second-largest U.S. producer, also had a brush with bankruptcy in the early 1990s. The erstwhile public company was recapitalized with private financing in 1995. Delcor Inc., an investment concern owned by C.D. Spangler, then National Gypsum's chairman, became the parent company. Since being taken private, National Gypsum hasn't released detailed financial and production figures, but it is widely regarded as the industry's number-two player, and its 1999 revenues were estimated at upwards of $1.2 billion. In 1994, its last full year as a public company, the firm recorded annual sales of $630 million.
Other participants in the gypsum industry include forest-products giant Georgia-Pacific Corp., Celotex Corp., Temple-Inland Inc., Republic Gypsum Co., James Hardie Gypsum, and Lafarge Corporation.
According to 2000 figures from the Census Bureau, the industry employed nearly 15,000 people, compared to 13,500 people in 1997. The average hourly wage for production workers was $16.07 in 2000, compared to the manufacturing average of $13.91. Production laborers averaged a 44-hour work week that year.
Balazik, Ronald F. "Gypsum." Mineral Industry Yearbook. Washington, D.C.: U.S. Geological Survey, 1999. Available from http://www.minerals.usgs.gov .
Gypsum Association. "Another Record Setting Year for Wallboard Production." Washington, January 2000. Available from http://www.gypsum.org .
Tejada, Carlos, James R. Hagerty, and Carl Quintanilla. "World-Trade Wallflower, Drywall Is Rare Example of Scarce Commodity." Wall Street Journal, 15 March 1999.
Tejada, Carlos, and Patrick Barta. "Drywall Demand Eases, But Prices Remain High." Wall Street Journal, 17 January 2000.
United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .