Tuesday, August 3, 2010

USG Corp (USG) Subsidiary Being Sued Over Chinese Wallboard

USG has a contractor supply subsidiary called L&W Supply. It is being sued because during 2006 and 2007 it distributed some of the defective Chinese wallboard.

What's funny is this:

"We believe that the amount of Knauf Tianjin wallboard potentially sold by L&W Supply Corporation could completely furnish approximately 250-300 average-size houses; however, the actual number of homes likely is greater because some homes contain a mixture of different brands of wallboard and because some of the wallboard was used in condominiums, which typically are smaller than houses and use less wallboard. Our records contain the addresses of the homes and other construction sites to which L&W Supply delivered wallboard, but do not specifically identify the manufacturer of the wallboard delivered."
How telling - a product with so little differentiation, even the manufacturer can't tell the difference!

Industry capacity utilization at 50%, which is the key determinant of profit margin in a commodity industry.

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