1 00:00:03,000 --> 00:00:06,400 Speaker 1: Global business news twenty four hours a day at Bloomberg 2 00:00:06,440 --> 00:00:09,520 Speaker 1: dot Com, the radio plus mobile lact and on your radio. 3 00:00:09,760 --> 00:00:13,960 Speaker 1: This is a Bloomberg Business flag BOM Bloomberg World Headquarters. 4 00:00:14,080 --> 00:00:17,439 Speaker 1: I'm Charlie Pellett. The Dow, the SMP nez dak at 5 00:00:17,560 --> 00:00:20,280 Speaker 1: or near their best level of the day. The SMP 6 00:00:20,400 --> 00:00:23,720 Speaker 1: up eighteen points to two thousand ninety four, signs of 7 00:00:23,720 --> 00:00:28,480 Speaker 1: a stronger economy, spurring speculation that can withstand higher interest rates. 8 00:00:28,920 --> 00:00:32,360 Speaker 1: SMP five d indecks up nine tenths of one percent. Down, 9 00:00:32,400 --> 00:00:34,879 Speaker 1: Industrial is up one eight one now a gain of 10 00:00:34,960 --> 00:00:38,200 Speaker 1: one percent. Naztan cop forty points, a gain of eight 11 00:00:38,200 --> 00:00:41,640 Speaker 1: tenths of one percent. Ten year yield one point eight 12 00:00:41,720 --> 00:00:44,199 Speaker 1: six percent. It is down one thirty second right now, 13 00:00:44,320 --> 00:00:47,160 Speaker 1: Gold dropping five ten the ounce to twelve twenty four, 14 00:00:47,479 --> 00:00:51,200 Speaker 1: a decline there of point four percent. Crude oil rallying 15 00:00:51,240 --> 00:00:54,440 Speaker 1: two point two percent. West Texas Intermediate now at forty 16 00:00:54,680 --> 00:00:57,840 Speaker 1: nine seventy of barrel. It is hired by a dollar eight. 17 00:00:58,160 --> 00:01:02,440 Speaker 1: I'm Charlie Pellett, and that's a Bloomberg business flash. You're 18 00:01:02,480 --> 00:01:05,880 Speaker 1: listening to taking stock with Kathleen's and pim Flos on 19 00:01:05,920 --> 00:01:09,480 Speaker 1: Bloomberg Radio. You know, one of the benefits of broadcasting 20 00:01:09,560 --> 00:01:12,319 Speaker 1: live from the Bloomberg Breakaway Summit, which is a two 21 00:01:12,400 --> 00:01:16,440 Speaker 1: day conference springing together a variety of executives select group 22 00:01:16,480 --> 00:01:19,199 Speaker 1: actually of high growth companies as they get to hear 23 00:01:19,319 --> 00:01:23,720 Speaker 1: directly from chief executives of companies that have really made it, 24 00:01:23,760 --> 00:01:26,240 Speaker 1: that have made some kind of major transformation. And so 25 00:01:26,319 --> 00:01:28,840 Speaker 1: here's a little quiz. All right, the stock of the 26 00:01:29,640 --> 00:01:31,480 Speaker 1: company of the chief executive we're going to talk to 27 00:01:31,600 --> 00:01:33,840 Speaker 1: the stock of the company is of twenty so far 28 00:01:33,959 --> 00:01:37,480 Speaker 1: this year. They're based in Chicago. And everyone listening, Kathleen, 29 00:01:37,680 --> 00:01:41,919 Speaker 1: everyone listening has been in close proximity to this company's 30 00:01:42,040 --> 00:01:46,399 Speaker 1: product today, probably and certainly for their lives. Who do 31 00:01:46,400 --> 00:01:48,880 Speaker 1: you think it is? Well, go ahead, you can tell it. 32 00:01:49,560 --> 00:01:53,840 Speaker 1: Scalfe's chairman, president, CEO of us G Corporation. And there 33 00:01:53,880 --> 00:01:59,720 Speaker 1: are a construction materials manufacturer that basically Jim helped turn 34 00:01:59,760 --> 00:02:02,440 Speaker 1: the putting around with a new kind of wall board. 35 00:02:02,480 --> 00:02:04,680 Speaker 1: I love this story, you know, I think you and 36 00:02:04,760 --> 00:02:08,240 Speaker 1: Jim no, Jim metcalf thanks very much for for being here. 37 00:02:08,320 --> 00:02:11,919 Speaker 1: Much appreciated. Um do we do you justice? I mean, 38 00:02:11,960 --> 00:02:14,440 Speaker 1: have we kind of wonder for us story a little 39 00:02:14,440 --> 00:02:16,080 Speaker 1: bit here. Well, we don't have enough time for the 40 00:02:16,200 --> 00:02:19,919 Speaker 1: entire year. All right, Well, I will say, you know, 41 00:02:19,960 --> 00:02:23,920 Speaker 1: everyone knows our product rock rock. So there's one of 42 00:02:23,919 --> 00:02:27,760 Speaker 1: our one of our brand that uh we been. So 43 00:02:27,880 --> 00:02:30,640 Speaker 1: we're going to take a little closer look at that 44 00:02:30,720 --> 00:02:32,280 Speaker 1: kind of thing. You know. It' funny. Can I remember 45 00:02:32,360 --> 00:02:33,639 Speaker 1: as a kid, al when I got to think of 46 00:02:33,680 --> 00:02:36,760 Speaker 1: sheet rock wall board, I could think of my uh 47 00:02:37,120 --> 00:02:42,000 Speaker 1: dad who was the home handyman putting it up, cutting it. 48 00:02:42,080 --> 00:02:43,919 Speaker 1: I just I could just and you know that it's 49 00:02:43,960 --> 00:02:46,680 Speaker 1: kind of gotten. Was a sper at one point. I 50 00:02:46,760 --> 00:02:49,919 Speaker 1: remember the smell. He was a good customer. He started 51 00:02:49,960 --> 00:02:51,840 Speaker 1: way back in the day when I started with us. 52 00:02:51,880 --> 00:02:54,079 Speaker 1: She but you know, we're more than just sheet rock. 53 00:02:54,280 --> 00:02:56,680 Speaker 1: We're building products. And I like to say what we 54 00:02:56,840 --> 00:02:59,520 Speaker 1: do is we build shelter. It's where you live, it's 55 00:02:59,520 --> 00:03:01,799 Speaker 1: where you were. Can you play like you said, everyone's 56 00:03:01,840 --> 00:03:06,720 Speaker 1: everyone's around it and U uh more than just walboard, 57 00:03:06,760 --> 00:03:11,520 Speaker 1: we make ceiling tile, we make steel. We really build shelter. 58 00:03:12,040 --> 00:03:15,440 Speaker 1: Uh for for the environment. You started at us G 59 00:03:15,680 --> 00:03:21,600 Speaker 1: as a trainee. When was that? And what was yes? 60 00:03:22,080 --> 00:03:25,840 Speaker 1: Started thirty five years ago? Uh right out of school. 61 00:03:26,240 --> 00:03:29,160 Speaker 1: I grew up in Ohio and western Pennsylvania area and 62 00:03:29,160 --> 00:03:33,400 Speaker 1: and drove out west and US Gypsum Company was kind 63 00:03:33,520 --> 00:03:35,040 Speaker 1: enough to offer me a job in the middle of 64 00:03:35,040 --> 00:03:39,120 Speaker 1: a recession and started out. What's great about that, I'd 65 00:03:39,120 --> 00:03:41,480 Speaker 1: like to tell young employees that you can start out 66 00:03:41,520 --> 00:03:44,120 Speaker 1: at the ground floor and be a trainee and work 67 00:03:44,120 --> 00:03:45,880 Speaker 1: your way all the way up to be and be 68 00:03:45,960 --> 00:03:47,560 Speaker 1: honored to be the CEO of a wonder of a 69 00:03:47,560 --> 00:03:51,200 Speaker 1: wonderful company. Tell us a little bit about the technology 70 00:03:51,240 --> 00:03:54,600 Speaker 1: that you're employing. Because you're making board, you know, you're 71 00:03:54,600 --> 00:03:59,280 Speaker 1: making the stuff lighter, lighter, easier to use, and you're 72 00:03:59,280 --> 00:04:02,240 Speaker 1: making it more vironmentally friendly. Doesn't necessarily come to top 73 00:04:02,240 --> 00:04:04,600 Speaker 1: of mind, but actually it's that's why it's so difficult 74 00:04:04,640 --> 00:04:08,560 Speaker 1: to do it. We we really we reinvented a product 75 00:04:08,640 --> 00:04:11,360 Speaker 1: that's actually today and this year is a hundred years old. 76 00:04:11,800 --> 00:04:14,760 Speaker 1: So walboard was invented sheet rock. Walboard was invented a 77 00:04:14,800 --> 00:04:17,760 Speaker 1: hundred years ago, and it was a replacement for plaster. 78 00:04:18,120 --> 00:04:20,760 Speaker 1: And you think there's still buildings with plaster in and 79 00:04:20,839 --> 00:04:23,360 Speaker 1: it was it was a new invention. So we really 80 00:04:23,600 --> 00:04:26,839 Speaker 1: re revitalized the line because it was heavy. It was 81 00:04:26,839 --> 00:04:29,840 Speaker 1: hard to cut um. It was not. We used too 82 00:04:29,880 --> 00:04:32,880 Speaker 1: much energy. We drive off the water. So we made 83 00:04:32,880 --> 00:04:37,040 Speaker 1: it thirty lighter, made it stronger, and also we're using 84 00:04:37,160 --> 00:04:40,640 Speaker 1: less water. One of our strategies is used fifty less 85 00:04:40,640 --> 00:04:44,040 Speaker 1: water and all of our manufacturing to really reduce the 86 00:04:44,160 --> 00:04:46,960 Speaker 1: carbon footprint of of construction. But you know, there's to 87 00:04:47,040 --> 00:04:49,000 Speaker 1: me that is that's such a dramatic and in human 88 00:04:49,040 --> 00:04:51,920 Speaker 1: element of this story because when the housing market collapsed 89 00:04:51,920 --> 00:04:54,120 Speaker 1: in two thousand and eight, that hit us g really 90 00:04:54,160 --> 00:04:57,520 Speaker 1: hard because all that's that that gypsum walbarb were gonna 91 00:04:57,520 --> 00:04:59,360 Speaker 1: call that you were selling all those building materials. Suddenly 92 00:04:59,400 --> 00:05:02,760 Speaker 1: demand just you lost of your demand. So you got 93 00:05:02,800 --> 00:05:05,840 Speaker 1: your people together, you had to downsize. You figured you 94 00:05:05,839 --> 00:05:07,839 Speaker 1: could make this new product. You guys, your your team's 95 00:05:07,839 --> 00:05:09,360 Speaker 1: told you about three years. He said, no, I've got 96 00:05:09,360 --> 00:05:11,520 Speaker 1: to do it in a year, right, right, Well, you 97 00:05:11,560 --> 00:05:13,200 Speaker 1: know we didn't have a lot of time because it 98 00:05:13,279 --> 00:05:15,160 Speaker 1: was in two thousand and eight. I'm sure every want 99 00:05:15,200 --> 00:05:17,599 Speaker 1: to remember it was a perfect storm in the financial 100 00:05:17,960 --> 00:05:20,200 Speaker 1: you know arena, but also it had a ripple effect 101 00:05:20,240 --> 00:05:22,840 Speaker 1: in all of our markets. You know, housing was one thing, 102 00:05:22,880 --> 00:05:25,080 Speaker 1: but we sell in the commercial buildings that was down 103 00:05:25,120 --> 00:05:27,760 Speaker 1: even more than housing, and then repairing the model. The 104 00:05:27,839 --> 00:05:30,440 Speaker 1: home depots quit building stores, which he had never done. 105 00:05:30,480 --> 00:05:33,240 Speaker 1: They're always building stores. So each one of our markets, 106 00:05:33,560 --> 00:05:36,000 Speaker 1: really I called it, you know, it was a tsunami. 107 00:05:36,120 --> 00:05:38,080 Speaker 1: And we were not in a recession. We were I 108 00:05:38,160 --> 00:05:41,560 Speaker 1: called a small d depression, and we had to create 109 00:05:41,560 --> 00:05:44,839 Speaker 1: our own recovery. Waiting for housing to come back, waiting 110 00:05:44,839 --> 00:05:46,760 Speaker 1: for the market to come back. We just didn't have 111 00:05:46,839 --> 00:05:49,440 Speaker 1: the time to do that. Our balance sheet was under 112 00:05:49,440 --> 00:05:52,960 Speaker 1: stress and we needed to change the rules. So we 113 00:05:53,080 --> 00:05:56,720 Speaker 1: put together our strategy, which I called the Plan to Win. 114 00:05:57,279 --> 00:05:59,960 Speaker 1: We wanted to strengthen our core businesses, which has made 115 00:06:00,000 --> 00:06:04,479 Speaker 1: manufacturing and distribution in North America. We wanted to diversify 116 00:06:04,520 --> 00:06:07,160 Speaker 1: our earnings, so we had to get out of some markets. 117 00:06:07,200 --> 00:06:09,440 Speaker 1: We got out of Europe, and I used the term 118 00:06:09,480 --> 00:06:12,599 Speaker 1: we weeded and feeded. We weeded some areas where you 119 00:06:12,680 --> 00:06:15,400 Speaker 1: can't win. And the definition that you heard it before, 120 00:06:15,920 --> 00:06:17,520 Speaker 1: you need to be number one or number two in 121 00:06:17,520 --> 00:06:20,800 Speaker 1: the market, and we were not that strong in Europe. 122 00:06:21,320 --> 00:06:23,920 Speaker 1: So we took those funds and reinvested in Asia and 123 00:06:23,960 --> 00:06:26,440 Speaker 1: Austro Asia. That helped us diverse fire earnings to a 124 00:06:26,520 --> 00:06:29,360 Speaker 1: joint venture which has been very, very successful called us 125 00:06:29,440 --> 00:06:32,159 Speaker 1: D Borrel. But the third element, which is the most 126 00:06:32,160 --> 00:06:35,480 Speaker 1: important element of getting everyone together kind of things you asked, 127 00:06:35,560 --> 00:06:38,719 Speaker 1: was we needed to differentiate to innovation. And that's where 128 00:06:38,720 --> 00:06:40,720 Speaker 1: I got our best minds together and said, what is 129 00:06:40,760 --> 00:06:43,160 Speaker 1: the one thing that we're working on that we can 130 00:06:43,279 --> 00:06:46,400 Speaker 1: rally the troops. And it was called ultra light and 131 00:06:46,440 --> 00:06:50,840 Speaker 1: this is taking less weight at taking weight out, keeping 132 00:06:50,880 --> 00:06:53,919 Speaker 1: it stronger. It doesn't sag, it performs and from a 133 00:06:53,960 --> 00:06:57,479 Speaker 1: productivity standpoint, to our contractors that were under stress, it 134 00:06:57,560 --> 00:07:00,000 Speaker 1: gave them an advantage in this recession because we weren't 135 00:07:00,000 --> 00:07:03,200 Speaker 1: the only ones that were suffering the contractors, the distributors. 136 00:07:03,520 --> 00:07:06,000 Speaker 1: Distributors didn't have to buy as much equipment, so it 137 00:07:06,120 --> 00:07:08,719 Speaker 1: had a big trickle down through the entire network. But 138 00:07:09,880 --> 00:07:11,600 Speaker 1: we couldn't do We didn't have three years to wait, 139 00:07:11,920 --> 00:07:16,600 Speaker 1: so focus. I focused the organization. We've had all hands 140 00:07:16,640 --> 00:07:19,200 Speaker 1: on deck. We quit doing some things, we stopped doing 141 00:07:19,240 --> 00:07:23,160 Speaker 1: other projects, and I was personally involved in the rollout 142 00:07:23,160 --> 00:07:25,760 Speaker 1: of this. If there was an obstacle, I want to 143 00:07:25,760 --> 00:07:28,440 Speaker 1: know who was on it. I'd like to use the 144 00:07:28,560 --> 00:07:30,720 Speaker 1: term one neck to choke, So who was involved with 145 00:07:30,760 --> 00:07:32,640 Speaker 1: that and what do they need to do and how 146 00:07:32,680 --> 00:07:35,400 Speaker 1: can we shorten that? And what we found was the 147 00:07:35,480 --> 00:07:39,080 Speaker 1: corporate immune system made it three years. When when I 148 00:07:39,120 --> 00:07:42,480 Speaker 1: gave everyone the open plane field to say you can 149 00:07:42,480 --> 00:07:44,240 Speaker 1: do You're so good, you can do this in the 150 00:07:44,320 --> 00:07:47,520 Speaker 1: less time. It gave them really the energy to say 151 00:07:47,600 --> 00:07:52,520 Speaker 1: why not. And for me, being the new CEO, I 152 00:07:52,600 --> 00:07:55,640 Speaker 1: needed a morale booster because we're letting people off. We 153 00:07:55,640 --> 00:07:58,800 Speaker 1: were closing down factories. That's not fun. I hate that. 154 00:07:59,520 --> 00:08:02,320 Speaker 1: So I needed something as a leader. And you know, 155 00:08:02,480 --> 00:08:05,760 Speaker 1: it wasn't a hail Mary. But we weren't sure it 156 00:08:05,840 --> 00:08:08,480 Speaker 1: was gonna work because, as you say, Pim, it's very 157 00:08:08,480 --> 00:08:13,120 Speaker 1: it's counterintuitive. You're taking mass out of a product. It's 158 00:08:13,200 --> 00:08:16,680 Speaker 1: just as strong, it's lighter. And we were We have 159 00:08:16,760 --> 00:08:19,840 Speaker 1: these wonderful scientists that came up with this invention. I mean, 160 00:08:19,840 --> 00:08:23,520 Speaker 1: it's really all about the bubbles, you know, the bubbles 161 00:08:23,560 --> 00:08:26,560 Speaker 1: in stucco. It's all about goes, how does this work? 162 00:08:26,600 --> 00:08:28,560 Speaker 1: What does We can't tell you. I like to say 163 00:08:28,600 --> 00:08:31,680 Speaker 1: we put like magic pixie dust in it, but it 164 00:08:31,720 --> 00:08:35,080 Speaker 1: makes the bubbles stronger. So when you say how they 165 00:08:35,080 --> 00:08:37,720 Speaker 1: get lighter, it's all about the bubbles. I gotta ask 166 00:08:37,720 --> 00:08:43,079 Speaker 1: you about age, not yours, not mine, but the buildings 167 00:08:43,320 --> 00:08:47,080 Speaker 1: in the United States, particularly residential and commercial, tell us 168 00:08:47,080 --> 00:08:51,360 Speaker 1: about that. That implies they're getting older like we are. Okay, 169 00:08:54,240 --> 00:08:56,320 Speaker 1: we're making them better because we can remodel those and 170 00:08:56,440 --> 00:08:59,480 Speaker 1: that falls half of our business is repairing remodel. So 171 00:08:59,640 --> 00:09:02,360 Speaker 1: the commercial buildings that we're looking around at the beautiful 172 00:09:02,400 --> 00:09:06,200 Speaker 1: city here are the average ages forty forty years old. 173 00:09:06,559 --> 00:09:08,760 Speaker 1: So you know you have to you know, there aren't 174 00:09:08,800 --> 00:09:14,080 Speaker 1: environmentally sensitive you know, the the attendants want uh different lighting, 175 00:09:14,400 --> 00:09:17,240 Speaker 1: you know, heat, I mean, everything's changed. So we come 176 00:09:17,280 --> 00:09:21,040 Speaker 1: in and we remodel a lot of these buildings. Housing. Uh, 177 00:09:21,120 --> 00:09:25,040 Speaker 1: the average house is forty plus years old. So that's 178 00:09:25,040 --> 00:09:27,720 Speaker 1: why we've really focused on repairing RAM model because our 179 00:09:27,760 --> 00:09:32,360 Speaker 1: products are a fairly inexpensive repairing m model in your home, 180 00:09:32,400 --> 00:09:34,560 Speaker 1: build a new home, get your kids out of the basement, 181 00:09:35,200 --> 00:09:37,800 Speaker 1: you know, hopefully they go get a job. So it's 182 00:09:37,840 --> 00:09:40,480 Speaker 1: a really important So we look at that that overall 183 00:09:40,800 --> 00:09:44,559 Speaker 1: demographics of you know, the demand of of our products. 184 00:09:44,679 --> 00:09:46,760 Speaker 1: So isn't that with driving your business. A lot of 185 00:09:46,760 --> 00:09:50,200 Speaker 1: concern about the economy is still the companies haven't been investing. 186 00:09:50,280 --> 00:09:52,160 Speaker 1: FED might raise interest rates because they want to get 187 00:09:52,200 --> 00:09:54,880 Speaker 1: off the dime. As a CEO of a company that 188 00:09:54,920 --> 00:09:56,760 Speaker 1: seems like it's doing very well, how does that How 189 00:09:56,800 --> 00:09:59,079 Speaker 1: does this all feel to you? You know when people 190 00:09:59,120 --> 00:10:00,760 Speaker 1: ask me about the ec on me, I say, it 191 00:10:00,800 --> 00:10:02,520 Speaker 1: depends where you are in the economy. If you're an 192 00:10:02,520 --> 00:10:05,400 Speaker 1: oil and gas, you're in the railroads business. I think 193 00:10:05,400 --> 00:10:07,200 Speaker 1: they're in a different spot. They kind of were where 194 00:10:07,200 --> 00:10:09,320 Speaker 1: we were maybe in two thousand and eight. If you 195 00:10:09,320 --> 00:10:12,360 Speaker 1: look at overall construction, if you look at the household, 196 00:10:13,360 --> 00:10:16,240 Speaker 1: household growth and the birth rate, you know, we should 197 00:10:16,280 --> 00:10:19,400 Speaker 1: have about a million four starts. That's kind of the mean, 198 00:10:19,559 --> 00:10:21,880 Speaker 1: that's the historic mean. Right now we're a million, one 199 00:10:21,920 --> 00:10:25,360 Speaker 1: million two if you look at the commercial repair and remodel. 200 00:10:25,480 --> 00:10:28,080 Speaker 1: So we think, you know, the next few years. You know, 201 00:10:28,160 --> 00:10:32,240 Speaker 1: we're cautiously optimistic. Um. You know what's great about the 202 00:10:32,320 --> 00:10:35,439 Speaker 1: United States? People are still having babies, population growth, Uh, 203 00:10:35,480 --> 00:10:37,800 Speaker 1: interest rates come up a little bit, they're at historic clows. 204 00:10:38,000 --> 00:10:40,960 Speaker 1: Doesn't matter. I mean, we really don't. We are not 205 00:10:41,080 --> 00:10:43,440 Speaker 1: as interest rate sensitive as a lot of people may think. 206 00:10:43,960 --> 00:10:45,760 Speaker 1: And you've got the bubbles under control. We got the 207 00:10:45,760 --> 00:10:48,120 Speaker 1: bubbles and they're stronger and faster than ever. All Right, 208 00:10:48,280 --> 00:10:50,200 Speaker 1: Jim mc if you're gonna have to come back, I'd 209 00:10:50,200 --> 00:10:54,200 Speaker 1: love to thank you. Harley, Wait, thank you. Jim mcalf 210 00:10:54,240 --> 00:10:57,320 Speaker 1: as chairman, president, and CEO of us G Corporation based 211 00:10:57,320 --> 00:11:00,200 Speaker 1: in Chicago. However, today he's in New York City, where 212 00:11:00,200 --> 00:11:03,800 Speaker 1: we're broadcasting live from the first ever Bloomberg Breakaway Summit. 213 00:11:04,160 --> 00:11:07,080 Speaker 1: I'm Kathleen Hayes along with Pim Fox, and this is 214 00:11:07,160 --> 00:11:09,040 Speaker 1: taking Stock on Bloomberg Radio.