USG builds California wallboard plant.

USG Corp. has announced that its United States Gypsum Co. subsidiary is building a gypsum plant in Stockton, Calif. Additionally, the company's L&W Supply distribution subsidiary agreed to acquire California Wholesale Material Supply Inc.

The new wallboard plant, expected to cost around $220 million, will be operational by 2010.

CALPLY is a building materials distribution company with annual sales approaching $600 million, 30 operating locations in seven Western states and Mexico and almost 900 employees. The acquisition of CALPLY is expected to enhance L&W Supply's ability to serve its West Coast and Southwest customers. The acquisition has been approved by USG's board of directors, but remains subject to usual and customary regulatory reviews and other customary closing conditions.

"These two initiatives complement one another, fit perfectly into our long-term vision to strategically grow USG and will enhance the company's earnings per share," says William Foote, chairman and CEO of USG Corp. "Over the long term, we are committed to replacing our older, higher-cost wallboard manufacturing capacity with new, low-cost capacity, thus solidifying our position as the industry's low-cost producer. When it is completed in 2010, the new Stockton plant will replace two high-cost manufacturing lines in California that were closed previously. Most importantly, the new Stockton plant will support the growth of USG's customers in one of the largest markets in the U.S., where wallboard demand over the last decade has been growing considerably faster than the rest of the country."

The wallboard plant will have the capability of producing 1 billion square feet of wallboard per year. The facility will use 100 percent recycled paper for the surfaces of the finished wallboard products and recycle 100 percent of its production scrap. The new plant will feature a closed-loop liquid effluent system, which translates to zero discharge into nearby waterways, according to USG.