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Slump in construction industry creates a Sheetrock ghost town

The Sheetrock producing Empire, Nev., will become a ghost town June 20. The isolated company town quit mining gypsum and dry wall production this year as a result of the construction industry slump.

By Jessica Bruder/ Correspondent / June 11, 2011

The United States Gypsum Company halted its gypsum mining and Sheetrock production in Empire, Nev. last January, after 87 years. Empire officially becomes a ghost town June 20 when the fence, erected here by workers, is completed.

Tony Avelar/The Christian Science Monitor

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Empire, Nev.

This mining town of 300 people clings like a burr to the back of the Black Rock Desert. For years, it was marked on state Highway 447 by a two-story sign reading, "Welcome to Nowhere."

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On June 20, that tongue-in-cheek greeting will become a fact. Empire, Nev., will transform into a ghost town. An eight-foot chain-link fence crowned with barbed wire will seal off the 136-acre plot. Even the local ZIP Code, 89405, will be discontinued.

Many towns have been scarred by the recession, but Empire will be the first to completely disappear. For only a few days more it will remain the last intact example of an American icon: the company town.

Since 1948, the United States Gypsum Corporation (USG), which is the nation's largest drywall manufacturer, has held title to all of Empire: four dusty streets lined with cottonwoods, elms, and silver poplars, dozens of low-slung houses, a community hall, a swimming pool, a cracked tennis court, and a nine-hole golf course called Burning Sands. The company also owns the town's drywall plant and the nearby gypsum quarry, a 264-acre gouge in the foot of the Selenite mountain range six miles to the south.

The end of Empire began just before Christmas, when dozens of workers in steel-toed shoes and hard hats filed into the community hall for a mandatory 7:30 a.m. meeting. Mike Spihlman, the gypsum plant's soft-spoken manager, delivered the news to a room of stunned faces: Empire was shutting down. "I had to stand in front of 92 people and say 'Not only do you not have a job anymore, you don't have a house anymore,' " Mr. Spihlman recalled.

USG, known for its Sheetrock-brand products, has posted losses of about $1.5 billion over the past three years. The red ink is a result of "weak market conditions and extraordinarily low shipping volumes," former chief executive William C. Foote told investors in October. Beneath the jargon is a simpler story: What Empire makes is not in high demand anymore. The housing construction slump has continued too long for the plant to hold on. By the end of 2010, wallboard sales had dropped more than 50 percent since 2006, when the industry peaked and USG had $297 million in profits. Manufacturers are getting desperate now. On Nov. 3, USG announced plans to hike drywall prices the following month by 25 percent, a Hail Mary pass to stimulate profits. The move rippled across the industry as other wallboard manufacturers followed suit. (USG's price increase was later revised and rolled out in two installments: 20 percent in March and an additional 15 percent in May.)

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