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ATLANTA-Commercial and shelter developers heard the worst news of the year today as locally-based Georgia-Pacific Corp. announced it is reducing gypsum wallboard manufacturing capacity by 45%; closing three plants; and selling its recycled plant at Delair, NJ.

The decision will cost Georgia-Pacific $75 million on its bottom line, the company says in a prepared statement.

The decision is also expected to drive up the cost of most new shelter and commercial projects over the next 12 months, area building suppliers tell GlobeSt.com. “It can’t have any other affect,” says one wholesaler who spoke to GlobeSt.com on condition of anonymity.

Low prices for the wallboard, used in the construction of walls in homes and commercial projects, forced Georgia-Pacific to make the cutbacks, the company says in a prepared statement.

Current average asking retail prices for a 4 x 8 sheet are $6.98 for quarter-inch; $5.25 for half-inch; and $6.75 for five-eighths inch, according to a preliminary check of area stores by GlobeSt.com.

The plants being closed are in Savannah, GA; Long Beach, CA; and Winnipeg, Manitoba, Canada where an estimated 270 jobs will be eliminated. Staggered layoffs at 13 other plants will account for a total 500 employee dismissals. The company employs 85,000 worldwide.

The global distributor of building and paper products is also shuttering commodity wallboard production lines in Acme, TX; Sigurd, UT; and Blue Rapids, KS.

“Current market conditions for wallboard are forcing us to take action now to close these facilities and reduce our overall production,” Pete Correll, G-P’s chairman/chief executive, says in a prepared statement. “These steps are critical for the long-term viability of our wallboard business.”

Correll says “current capacity and pricing levels in the wallboard business are unsustainable and operating our plants at full production is unprofitable for Georgia-Pacific.”

The Delair, NJ recycling plant is being sold because there is little demand for face paper used on the company’s wallboard, the G-P statement says.

David Fleiner, president of G-P Gypsum, the corporation’s gypsum products subsidiary, says in the statement the layoffs were a difficult decision. Nevertheless, he says, “We cannot continue at the current level of production, given the weak market conditions, surplus capacity and increased energy costs, especially in California.”

Fleiner says the capacity reduction “allows G-P Gypsum to meet commitments for our new ToughRock wallboard product line, as well as our Dens-Glass portfolio of products and our industrial plaster and door components businesses, while maintaining our market presence across North America.”

Based on current economic forecasts, Fleiner says the company’s limited production schedule will continue until the markets turn around again.

Georgia-Pacifc expects to take a charge against earnings in second quarter 2001 of about $75 million to cover all costs associated with these actions, including severance and other related costs.

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