More than a dozen representatives of the home building industry asked Rep. Gladys Noon Spellman (D-Md.) yesterday to investigate allegations of profiteering, unfair competition and the creation of artificial shortages by the nation's leading manufacturers of gypsum.
The shortage of wallboard, which is made of gypsum, and the accompanying rise in the cost of the material, is threatening to cut short a boom in home construction in the Washington area that was aided by the lifting earlier this year of a sewer moratorium in suburban Maryland.
"Now that we're finally able to build, we can't get the material," complained Warren W. Pearce Jr., executive vice president of MCD Enterprises, Inc., of Seabrook.
Andrew O. Mothershead, owner of Sonny's Inc., a building supply firm in College Park and a Prince George's County state delegate, charged that while he is having difficulty buying wallboard for his contractor customers, "preferential dealers who are subsidiaries of manufacturers are having no problem" getting the gypsum material.
Mothershead predicted "there will be layoffs (by home builders) in the next 30 days" if the shortage isn't eased. He said that prices have risen more than 40 per cent this year.
William Fay, of the National Association of Home Builders, told Spellman that "the problem exists in varying degrees around the country. He said the shortage is the result of "the industry not being capable of meeting demand."
Jack Alfandre, whose Aldre Properties builds homes in Montgomery and Fairfax counties, said, "We built more homes in the 1960s and we always got drywall wallboard."
Eugene Miller, vice president of corporate relations for the Chicago based U.S. Gypsum Corp., the biggest of the nation's manufacturers of gypsum wallboard, said the shortage is the result of "a very big year in home building, particularly in the Northeast." Not only are there more housing starts, but individual units are larger, requiring more material, Miller said.
The higher prices, Miller said, follow a long period of "very low profitability" in the industry.
Rep. Spellman, who is a member of the House Subcommittee on Housing and Community Development, said U.S. Gypsum reported third-quarter earnings this year that were the highest in the firm's 52-year history.
Calling current prices "exorbitant," she said, "I'm not confident the industry is working in the public interest."
Miller, contacted by telephone in Chicago, said, "We had good profits" in the third quarter, but noted that the second half of the year traditionally is the busiest for the industry.
The upsurge in demand has resulted in U.S. Gypsum plants "working three shifts at least six days a week," Miller said.
Thomas Mitchell of Georgia-Pacific, another major gypsum manufacturer, said some of his firm's 150 distribution centers sell directly to home builders, but that its centers in Landover and Manassas sell only to wholesale suppliers. As for giving preferential treatment to its subsidiaries, Mitchell said, "It seems to be that's why you're in business."
U.S. Gypsum's Miller said the decision on which of its customers receive shipments of wallboard during times of shortage depends on "what kind of customers they have been in the past," acknowledging that its own supply outlets "are good customers."
Afandre said that builders formerly could call wallboard suppliers one day and get delivery the next, but that they now face delays of three-to-four weeks.
Two builders who attended the informal 90-minute meeting in the hearing room of the House Banking Finance and Urban Affairs Committee said they have houses under construction that cannot be completed because of the lack of wallboard.
Spellman promised an investigation by the housing subcommittee, saying housing problems are "especially important to Prince George's County, not only because of the need for more units, but because a great majority of the industry's employees live there."