U.S. Gypsum Company to Establish Wallboard Manufacturing Plant in Pennsylvania

CHICAGO -- United States Gypsum Company, a subsidiary of USG Corporation, announced plans to build a new SHEETROCK(R) Brand Gypsum Panel manufacturing plant in Washingtonville, Pennsylvania. The state-of-the-art facility, valued at approximately $180 million, will enable the company to maintain its position as the market leader by keeping pace with its customers' growing demand for wallboard products in the Northeast U.S.

Located in North Central Pennsylvania near Danville, the new plant is designed to operate the world's largest wallboard manufacturing line, with the capacity to produce approximately one billion square feet of SHEETROCK Brand wallboard annually. The facility will be built on a 186-acre site, and initially employ about 150 people. Construction of the new plant is scheduled to begin in 2006, with completion set for the first half of 2008.

USG Chairman, President and CEO William C. Foote said, "This new plant represents another element of our strategic plan to grow with our customers and deliver superior products and services to them when and where they are needed. Many of our key customers in the region are experiencing consistently high rates of growth related to the robust housing and construction markets, and the Washingtonville plant will help serve that growth in the years ahead."

Strong growth in the region was cited by Foote as the key factor in the company's decision to locate in Washingtonville. U.S. Gypsum also chose this site to leverage the availability of recaptured, or synthetic, gypsum - a byproduct of flue gas desulfurization, the process that removes sulfur dioxide from the emissions generated by PPL Corporation's adjacent Montour power plant. This material would have otherwise been sent to a mine reclamation facility or landfilled. The Washingtonville location also offers convenient highway and rail loading access.

"Adding low-cost capacity in one of our highest-growth markets is a vital part of our company's long-term vision," said Foote. U.S. Gypsum Company currently operates more than 40 manufacturing plants in North America.

Since 1996, U.S. Gypsum has implemented several strategic growth initiatives, including new state-of-the-art wallboard plants in Aliquippa, Pennsylvania; Bridgeport, Alabama; Rainier, Oregon; and Monterrey, Mexico. In addition, the company rebuilt wallboard manufacturing lines at its plants in East Chicago, Indiana, and Plaster City, California, and currently is rebuilding its manufacturing plant in Norfolk, Virginia.

The new facility will be an outstanding example of environmental responsibility. It will produce wallboard using recaptured gypsum, use 100 percent recycled paper for the surfaces of the finished wallboard products, recycle 100 percent of its production waste and feature a closed-loop liquid effluent system, which translates to zero discharge into nearby waterways.

United States Gypsum Company is a subsidiary of USG Corporation, a Fortune 500 company with business units that are market leaders in their key product groups: gypsum wallboard, joint compound and related gypsum products; cement board; gypsum fiber panels; ceiling panels and grid; and building products distribution.

USG Corporation and its principal domestic subsidiaries (collectively "USG") filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code on June 25, 2001. This action was taken to resolve asbestos claims in a fair and equitable manner, protect the long-term value of the businesses and maintain their market leadership positions.