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United States Gypsum

From WikiMesothelioma — Mesothelioma Knowledge Base
Company Profile
United States Gypsum Company (USG Corporation)
Founded December 27, 1901
Headquarters Chicago, Illinois
Industry Building materials (gypsum)
Signature Product Sheetrock brand drywall (1917)
Asbestos Products Joint compounds, textures (to ~1977)
Chapter 11 Filed June 25, 2001
Plan Effective June 20, 2006
Asbestos Trust $3.95 billion (USG Asbestos PI Settlement Trust)
Current Owner Knauf (since 2019)

Executive Summary

United States Gypsum (USG, later USG Corporation) is one of the largest building-materials manufacturers in North America, best known for inventing and popularizing Sheetrock brand gypsum drywall. The company was incorporated on December 27, 1901, in Chicago through the merger of about 30 gypsum and plaster firms, and it became the dominant U.S. supplier of wallboard after acquiring the Sackett Plaster Board Company in 1909; its flagship panel became known as Sheetrock in 1917.[1][2] A 1985 reorganization created USG Corporation as a holding company, with United States Gypsum Company as its principal operating subsidiary. This page covers the company; for trust-claim specifics see the USG Trust page.[1]

USG's asbestos exposure stems chiefly from joint compounds — the "mud" used to finish drywall seams. About half of the consumer patching and joint compounds sold in 1977 were formulated with asbestos, and the U.S. Consumer Product Safety Commission banned respirable free-form asbestos in those products effective 1977–1978.[3][4] Because the dust from sanding and mixing these compounds was readily inhaled, drywall finishers, carpenters, renovators, and do-it-yourself homeowners faced exposure.[5]

Mounting litigation — more than 250,000 claims since 1994 — pushed USG into Chapter 11 on June 25, 2001.[6] The company's reorganization plan became effective on June 20, 2006, funding the USG Asbestos Personal Injury Settlement Trust with $3.95 billion under Section 524(g) of the Bankruptcy Code; all creditors were paid in full and shareholders retained their equity.[7][8] Knauf completed its $7.0 billion acquisition of USG in April 2019.[9][10]

At-a-Glance

United States Gypsum at a glance:

  • Incorporated December 27, 1901 — formed in Chicago through the merger of roughly 30 gypsum and plaster companies, creating the first nationwide gypsum manufacturer.[1]
  • Sheetrock since 1917 — USG's gypsum wallboard panel became known as Sheetrock, a brand that reshaped American building practice.[1]
  • Asbestos in joint compounds — USG added asbestos to certain joint compounds and texture products from roughly the 1920s until the late 1970s.[11]
  • ~50% of 1977 patching compounds contained asbestos — the Consumer Product Safety Commission's basis for banning respirable free-form asbestos in those products.[3]
  • CPSC ban phased in 1977–1978 — products made after January 16, 1978 were banned, and all such products were banned after June 11, 1978.[4]
  • 250,000+ asbestos claims since 1994 — the litigation volume USG cited when it sought bankruptcy protection.[6]
  • Chapter 11 filed June 25, 2001 — In re USG Corp., No. 01-2094, U.S. Bankruptcy Court for the District of Delaware.[6]
  • $3.95 billion asbestos trust — funded on USG's June 20, 2006 emergence under Bankruptcy Code §524(g).[8]
  • Acquired by Knauf in 2019 — the German gypsum group closed its $7.0 billion purchase in April 2019.[9]

Key Facts

Measure Detail (Source)
Incorporation December 27, 1901, Chicago, IL — merger of ~30 gypsum companies[1]
Holding company formed January 1, 1985 — USG Corporation created above United States Gypsum Company[1]
Asbestos product class Joint compound / patching compound — classed by OSHA as drywall "finishing material"[11]
Federal product ban CPSC banned respirable asbestos in patching compounds, 16 CFR Part 1304 (1977–1978)[4]
Chapter 11 filing June 25, 2001 — No. 01-2094, Bankr. D. Del.[6]
Pre-bankruptcy claims 250,000+ personal-injury claims since 1994; $450M+ paid before insurance[6]
Plan effective date June 20, 2006 — $900M first payment; $3.95B total in three payments[8]
Trust claim intake USG Asbestos PI Settlement Trust began accepting claims in 2007[12]
Acquisition Knauf, $7.0 billion, closed April 2019[9][10]

What is the history of United States Gypsum?

United States Gypsum Company was incorporated on December 27, 1901, when about 30 independent gypsum and plaster companies combined into a single nationwide producer headquartered in Chicago, Illinois.[1] The consolidation gave the new company mines, calcining plants, and distribution across the country at a moment when gypsum plaster was the dominant interior wall material in American construction.

A pivotal step came in 1909, when USG acquired the Sackett Plaster Board Company. Augustine Sackett had patented gypsum wallboard — layers of gypsum plaster sandwiched between paper — and the machinery to produce it.[2] USG refined the product, and by 1917 its panel had become known as Sheetrock, the brand that would make drywall the standard replacement for wet plaster across the twentieth century.[1] Demand surged during the post-World War II housing boom, when fast, inexpensive drywall construction displaced labor-intensive plaster.

On January 1, 1985, the business reorganized: USG Corporation was created as a holding company, with United States Gypsum Company continuing as its principal operating subsidiary alongside other building-products units.[1] Through the 1980s the company fended off takeover attempts and took on substantial debt in a 1988 recapitalization, but its core wallboard franchise remained intact.[2]

Which USG products contained asbestos?

USG's asbestos liability centers on joint compound — the paste, also called "joint cement" or "tape joint mud," that drywall finishers use to fill seams between wallboard panels and produce a smooth surface. From roughly the 1920s through the late 1970s, USG and other manufacturers added chrysotile asbestos to certain joint and patching compounds to improve workability, sag resistance, and crack control.[11][13] Related texture and surfacing products of the era could also contain asbestos.

The exposure hazard was unusually direct. Unlike sealed-in pipe insulation, joint compound was mixed, sanded, and swept on the job — every step releasing respirable dust into the breathing zone of the worker and anyone nearby. The U.S. Consumer Product Safety Commission estimated that about half of the patching compounds sold in 1977 were formulated with asbestos, with annual shipments of 30–50 million packages.[3] Workers most affected were drywall finishers, tapers, carpenters, painters, remodelers, and do-it-yourself homeowners, because the compound was a consumer as well as a commercial product.[5]

Federal regulators eventually removed the product from the market. Acting under the Consumer Product Safety Act, the CPSC banned consumer patching compounds containing intentionally added respirable free-form asbestos: products manufactured or first introduced into commerce after January 16, 1978 were banned outright, and all such products were banned after June 11, 1978 (codified at 16 CFR Part 1304).[4][14] Because asbestos joint compound remains in millions of older walls, OSHA's construction asbestos standard still treats its disturbance during renovation or demolition as regulated Class II asbestos work.[5][11]

Why did USG face asbestos litigation?

USG was named in asbestos personal-injury suits because its joint compounds were used in nearly every type of building for decades, and the dust they generated reached a very large population of tradespeople and bystanders. Although asbestos was a minor ingredient that the company had discontinued roughly 40 years before its bankruptcy, the long latency of mesothelioma and other asbestos diseases meant claims continued to accumulate long after the products left the market.[6]

The numbers grew quickly. By the company's own account, USG was named in more than 250,000 asbestos-related personal-injury claims beginning in 1994 and had paid over $450 million (before insurance) to manage and resolve that litigation. Its annual asbestos costs rose from about $30 million in 1997 to more than $160 million in 2000, with more than 22,000 new claims arriving in early 2001 alone.[6] A typical claimant was a construction-trade worker — a drywall finisher, carpenter, or renovator — who had inhaled joint-compound dust over years of work.[13]

What happened in USG's Chapter 11 bankruptcy?

On June 25, 2001, USG Corporation and its principal U.S. subsidiaries filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware (In re USG Corp., No. 01-2094), citing the unsustainable and accelerating cost of asbestos litigation.[6] Unlike many bankrupt manufacturers, USG remained operationally healthy and profitable throughout the case; the filing was a tool to resolve present and future asbestos claims through a single court-supervised process rather than a response to insolvency.[7]

The turning point came in January 2006, when USG agreed to pay as much as $3.95 billion to settle its asbestos liabilities and fund a trust to handle current and future claims.[15][7] The reorganization used Section 524(g) of the Bankruptcy Code, which lets a company channel all asbestos claims into a dedicated trust and obtain a court injunction barring further direct suits. The plan became effective on June 20, 2006, when USG made an initial $900 million payment to the new trust, with the balance of the $3.95 billion to follow in two further payments.[8] Because the company's value held up, the confirmed plan was unusually favorable to stakeholders: all creditors were repaid in full and existing shareholders retained their equity.[6]

What is the USG Asbestos Personal Injury Settlement Trust?

The USG Asbestos Personal Injury Settlement Trust was created as part of USG's 2006 reorganization to compensate people who developed mesothelioma or other asbestos-related diseases from USG products. Funded with $3.95 billion under Section 524(g), the trust began accepting claims in 2007 and continues to pay eligible mesothelioma and asbestos-disease claimants at a published payment percentage.[12][8] For trust-specific detail — eligibility criteria, the current payment percentage, and how to file — see the dedicated USG Trust page.

What is USG's status today?

USG operated as an independent, publicly traded company until 2019. In June 2018, Germany's Knauf Group — a privately held global gypsum manufacturer — agreed to acquire USG in a deal valued at about $7.0 billion, or roughly $44.00 per share in cash.[9] After receiving regulatory clearances, Knauf completed the acquisition in April 2019, combining the two firms into the world's largest gypsum products company.[10][9] USG's Sheetrock and Durock product lines continue under Knauf ownership, and the USG Asbestos Personal Injury Settlement Trust continues to operate independently of the operating company, paying claims out of its dedicated fund.[12]

Frequently Asked Questions

Which USG products contained asbestos?

USG's asbestos exposure came chiefly from joint compounds (drywall "mud"), patching compounds, and certain texture and surfacing products manufactured from roughly the 1920s through the late 1970s. The hazard was greatest because these products were mixed and sanded on site, releasing inhalable dust.[11][3]

When did USG stop using asbestos?

USG and other makers phased asbestos out of joint and patching compounds during the 1970s. The Consumer Product Safety Commission's ban made the cutoff legally binding: products made after January 16, 1978 were prohibited, and all asbestos patching compounds were banned after June 11, 1978.[4][14]

Why did USG file for bankruptcy?

USG filed Chapter 11 on June 25, 2001 to manage more than 250,000 asbestos personal-injury claims whose annual cost had grown from about $30 million in 1997 to over $160 million by 2000. The company itself remained profitable; the filing was a mechanism to resolve asbestos claims through a court-supervised trust.[6][7]

How large is the USG asbestos trust?

USG funded its asbestos trust with $3.95 billion under Section 524(g) of the Bankruptcy Code, beginning with a $900 million payment on the June 20, 2006 effective date. The USG Asbestos Personal Injury Settlement Trust began accepting claims in 2007.[8][12]

Who can file a claim against USG for asbestos exposure?

People diagnosed with mesothelioma or other asbestos-related diseases who can document exposure to USG products — most often drywall finishers, carpenters, remodelers, and others who worked with joint compound — may be eligible to file with the USG Asbestos Personal Injury Settlement Trust. Eligibility and payment details are covered on the USG Trust page.

Does Knauf's ownership affect asbestos claims?

No. The USG Asbestos Personal Injury Settlement Trust was established in 2006 and operates as a separate, court-supervised fund. Knauf's 2019 acquisition of USG's operating business does not change a claimant's ability to file against the trust.[12][10]

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 USG Corporation, Wikipedia — corporate history, incorporation (1901), Sheetrock (1917), holding-company formation (1985), bankruptcy and Knauf acquisition
  2. ↑ 2.0 2.1 2.2 History of USG Corporation, FundingUniverse — Sackett Plaster Board acquisition, wallboard development, and 1980s recapitalization
  3. ↑ 3.0 3.1 3.2 3.3 CPSC Bans Use of Asbestos in Certain Consumer Products, U.S. Consumer Product Safety Commission (1977)
  4. ↑ 4.0 4.1 4.2 4.3 4.4 16 CFR Part 1304 — Ban of Consumer Patching Compounds Containing Respirable Free-Form Asbestos, Electronic Code of Federal Regulations
  5. ↑ 5.0 5.1 5.2 29 CFR 1926.1101 — Asbestos (Construction Standard), Occupational Safety and Health Administration
  6. ↑ 6.00 6.01 6.02 6.03 6.04 6.05 6.06 6.07 6.08 6.09 USG Settles Asbestos Claims for $4 Billion; Could Now Exit Bankruptcy, Insurance Journal (January 30, 2006)
  7. ↑ 7.0 7.1 7.2 7.3 USG Asbestos Agreement: Nearly $4 Billion, CFO.com (2006)
  8. ↑ 8.0 8.1 8.2 8.3 8.4 8.5 USG Corporation Form 8-K (2006) — Plan of Reorganization effective June 20, 2006; $900 million initial trust payment of $3.95 billion total, U.S. Securities and Exchange Commission (EDGAR)
  9. ↑ 9.0 9.1 9.2 9.3 9.4 USG to Be Acquired by Knauf in $7 Billion Deal, Crain's Chicago Business (June 11, 2018)
  10. ↑ 10.0 10.1 10.2 10.3 USG Corporation Form 8-K, Exhibit 99.1 — Knauf Completes Acquisition of USG Corporation, U.S. Securities and Exchange Commission (April 24, 2019)
  11. ↑ 11.0 11.1 11.2 11.3 11.4 Sheetrock and joint compound — standard interpretation, Occupational Safety and Health Administration (1997)
  12. ↑ 12.0 12.1 12.2 12.3 12.4 USG Asbestos Personal Injury Settlement Trust, official trust website
  13. ↑ 13.0 13.1 United States Gypsum Corporation (USG Corporation), Mesothelioma.net
  14. ↑ 14.0 14.1 U.S. Federal Bans on Asbestos, U.S. Environmental Protection Agency
  15. ↑ USG Makes $3.95 Billion Asbestos Pact to Emerge from Bankruptcy, The Daily Record (January 30, 2006)
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