National Gypsum Reports Signs of Recovery
In its semi-annual newsletter, National Gypsum has reported signs of recovery emerging for gypsum sales in domestic and imported product. Although sales are still down, it seems the lows have stabilized and a slight increase in sales points to a better year-end for the manufacturer and industry, in general, several of its staff reported.
“It would appear that we’ve pretty much bottomed out at this level,” wrote the company’s Kurt Withrock, director of demand planning and management. “While we do expect the numbers in the next few months will begin to show gradual improvement, the fundamentals for a strong recovery are lacking at this time. It’s likely the road going forward will exhibit some bumps as the economy struggles to recover.”
Sales for all producers of wallboard reached highs in 2006, followed by consistent drops year by year .Shipments for the entire industry were 18.1 billion square feet in 2009 (2006 was 35 BSF).
In his report, Withrock writes that 2009 sales were regionally equal, with all areas in the U.S. reporting depressed markets. The Southeast region was down 32 percent, while the Mountain region was down 36 percent. As he’s correct to note in the report, this begs the question: When will things begin to get better?
In some respects, the small but still improved reports from January and February company sales point to that. Withrock notes that housing affordability is at a very high level due to low prices and lower mortgage rates. Mortgage rates on average are around 5 percent for 30-year-fixed mortgages.
Also, “Inventories of single family homes for sale are at historically low levels. The last reading for February 2010 was reported at 236,000. This is approximately half of what it was in March 2008. The month’s supply now stands at 9.0 months. Historically, this is a high number (it was 11.3 months a year ago,” Withrock reports. “[B]ut as the economy improves and the job market recovers, this low level of new homes for sale will allow for new home construction to take place at an ever increasing pace.”
Citing various construction reports and forecasts, National Gypsum is encouraged by the projections that 2011 will be better and 2012, “we should be well on our way … back to the norm,” Withrock reports.
Although this report does address some reserve on how this year will end in terms of sales and materials shipped, the 12 month projection does look considerably improved since the recession hit in 2008.
National Gypsum’s Tom Nelson, chairman, president and CEO, also shared his optimism in his column. While he does not believe “we’re out of the woods,” he believes that the industry is on a path to recovery. He cites the Harvard Joint Center for Housing Studies (Withrock also referenced this study in his report) that forecasts new housing units to projected averages from 1.72 million to 1.97 million per year 2010 to 2019.
He is proud to reference that the company has maintained the launch of several new products, such as the SoundBreak XP Gypsum Board, e2XP Interior Extreme, e2XP Exterior Sheathing, e2XP Shaftliner and ProForm Quick Set Setting Compounds. Nineteen of the company’s products have achieved GREENGUARD Certification.
“All of us (National Gypsum and its customers) have fought through a rough down-cycle. The last quarter was particularly brutal,” writes Nelson. “I think we’ll all be winners when the recovery finally becomes a reality.”
To access a complete copy of National Gypsum’s Industry, visit www.nationalgypsum.com/resources/IndUpdate.pdf.
SoundBreak, XP, e2XP and ProForm are trademarks of National Gypsum Properties, LLC.