Company Analysis : Usg Corporation

1182 Words5 Pages
USG Corporation is a consolidation of thirty-five gypsum companies, dominated the highly competitive and price-sensitive gypsum with the lion share of 50% of the market. USG through its subsidiaries manufactured and distributed the building materials for residential construction (36% of sales), nonresidential construction (29% of sales), building repair & remodeling (25% of sales) and finally the industrial processes (10% of sales). USG operates under four major divisions, Gypsum, Interior Systems, Wood fiber and other products. All these divisions are strongly positioned in their respective market places typically first or second, excel in technology, design & innovations, extremely efficient operation with multiple geographically dispersed plant location and were highly integrated. Over a period of time, it grew steadily with vertical integration, expanding existing businesses and acquiring new businesses. They were able to keep the production cost low primarily due to economy of scale & size of the company. From the case exhibit 2, the company had a stellar performance from 1983 to 1987. As an industry leader in construction industry, their net annual sales increased significantly from 1.6B in 1983 to 2.9B in 1987 about 81% growth in 4 years. Their operating income before tax (EBIT) had a steady growth from 1983 except a dip in 1987 mainly due to changes in the overall industry primarily contributed by increased in cost. At the same time, the return on equity at end of
Open Document