In the decade before C.D. “Dick” Spangler Jr. bought National Gypsum in 1995 for today’s equivalent of $2.5 billion, the wallboard company was in the business news pages for most of a decade.
In the mid-1980s, the company was among the early, old-line industrial businesses to undertake a leveraged buyout, with management teaming with Lafarge, a French company. The 1986 deal occurred two years before the RJR Nabisco buyout that changed the future of Winston-Salem.
The National Gypsum LBO sounded wise for a short period, until wallboard sales fell off the cliff. U.S. housing starts plummeted 44% between 1986 and 1991. The debt-heavy business lurched into a bankruptcy reorganization in late 1990. It wasn’t fun for investors or employees, with cumulative losses topping $700 million during the three years under court direction. But the realignment period enabled new leadership to create a more focused business.
By 1993, Spangler and other shrewd investors realized a strong rebound was possible at National Gypsum as construction picked back up. After the company returned to the public stock market, a spirited takeover battle ensued, and Spangler won control in May 1995. That year also marked his 10th year as president of the UNC System.
Almost immediately, the headlines stopped. For three decades, folks outside the wallboard industry have heard very little from National Gypsum. The low profile reflects the style of Spangler and Tom Nelson, who succeeded his father-in-law as CEO in 1999. While many closely held companies prefer their privacy, National Gypsum excels at keeping on the down low.
Fortunately, this is National Gypsum’s 100th anniversary year, so Nelson agreed to a rare interview to share some insights on the company’s history and performance over the past 30 years.
While specific details are scant, it’s obvious that Nelson has been busy, and his long-term investment strategy has proven effective.
“[Dick Spangler] loved the company and believed it made an important, essential product that you use every day,” Nelson says. “So his investment firm bought the company with a clear mandate to invest for the long term. He wanted to make sure we are prioritizing innovation and talent. And we capitalized on what has been a great period since the early 2000s.”
Peter Browning, who was National Gypsum’s CEO for three years during its bankruptcy reorganization, praises Spangler’s vision at a time when others saw a stodgy commodity enterprise. “What he saw was an extraordinary business with great assets in place, and operating in a highly cyclical industry, but still able to compete through good times
and bad.”
He also saw the fundamental importance of wallboard.
It’s among the few products that is used in all types of construction, including both new construction and remodeling of residential and commercial properties and manufactured housing, Nelson notes.
Wallboard started becoming an essential product early in the 20th century when the mixture of a mineral called gypsum, newsprint and starch started replacing plaster as a superior way of making interior walls and ceilings. Among the early pioneers was Melvin Baker, who joined Joseph Haggerty and Clarence Williams in forming the company near Buffalo, New York, in 1925. Baker would go on to lead National Gypsum for 40 years, including taking it public in 1937 and overseeing a diversified building products business that once employed more than 13,000 people.
Its historic rival has been Chicago-based U.S. Gypsum, which was created through the merger of many smaller companies in 1902. For decades, it dominated the wallboard market, but it gradually lost market share to competitors, including the feisty Buffalo-based group.
Like National Gypsum, U.S. Gypsum had a run through bankruptcy court, having also taken on massive debt in the mid-1980s to avoid a hostile takeover. It got help from Warren Buffett’s Berkshire Hathaway conglomerate, which converted a loan into a 31% equity stake in 2001. The company emerged from court protection five years later. Buffett held on until 2019, when the world’s largest gypsum company, Germany’s Knauf Group, bought U.S. Gypsum for $7 billion. The world’s most famed investor later called the holding a “disappointment” and derided the company’s directors for “not doing their jobs.”
With USG now foreign-owned, National Gypsum is the largest U.S. wallboard manufacturer, Nelson says, declining to share other details. USG had revenue of $3.3 billion in 2018, its last year as a public company.
But it’s clear that National Gypsum has moved aggressively since 1995, defying the notion that newly private companies don’t reinvest much money.
“A lot of capital has gone back into the business,” he says. The company has made “big capital investments that will be around for generations if we do it right.”
C.D. Spangler Jr., who died in 2018 at age 86, was perhaps best known for leading the UNC System for 11 years, and for those interested in business, as the largest shareholder of the predecessors of Bank of America. He was a critical behind-the-scenes force during the years in which Hugh McColl Jr. built the Charlotte-based megabank.
But the Spangler family’s roots were in contracting, with Spangler’s father starting his business in the 1930s. For many years, Spangler Construction had an office in south Charlotte that was next door to National Gypsum’s local sales office.
Indeed, the family and National Gypsum had a relationship long before the 1995 acquisition. In 1955, Spangler’s father appeared in a Saturday Evening Post ad, testifying that National Gypsum’s wallboard was a superior building material.
In 1978, the company moved the main office of its key brand, Gold Bond, from Buffalo to Charlotte, marking an early, important corporate relocation for the Queen City. The main headquarters later also moved from Buffalo to Dallas, but company leadership shifted to Charlotte when Browning was named CEO.
Private ownership has been an advantage, says Nelson. “We’ve been able to invest for the long term and been free from thinking about quarterly performance.” Nelson has plenty of boardroom experience, serving as a director of publicly traded Yum! Brands, the Louisville, Kentucky-based company that owns Taco Bell, KFC and Pizza Hut, and Bechtel, the San Francisco construction business that is one of the world’s largest private companies.
Since the family bought National Gypsum, it has added new wallboard plants in Mount Holly in Gaston County; Tampa, Florida; Shippingport, Pennsylvania; and Eloy, Arizona. The latter site opened earlier this year and is the company’s largest facility, enabling expansion in the western U.S. Again, National Gypsum doesn’t disclose its investment in plants. But for perspective, Georgia-Pacific said it spent $325 million for a wallboard plant that opened in Sweetwater, Texas, in 2023.
National Gypsum has also established several plants that produce so-called “joint compound” and “cement board” under the ProForm and PermaBase brands, Nelson says. Joint compound is used for finishing drywall, while cement board is often used in wet areas such as bathrooms or kitchens.
Overall, the company operates more than 40 plants in the U.S. and Canada and employs more than 3,000 people. Revenue is in the billions; anything closer than that is a guess. Asked about overseas expansion, Nelson says he has plenty of remaining opportunities in North America.
Innovation is a vital issue for any business, including century-old wallboard firms. It operates a research center in Charlotte that includes several Ph.D. scientists and technicians who work on issues including fire, sound and air quality. For creativity, National Gypsum may be best known for its Purple line of mold- and moisture-resistant wallboard products used for interior areas. In 2012, the company scored the rare feat of gaining a building product trademark for a color. Purple has been “very effective” for National Gypsum, Nelson says, without elaborating.
A stable senior leadership team also suggests the company’s success. Its top managers have a cumulative 250 years of experience at National Gypsum, with many having worked there for 20-plus years. Earlier this year, John Mixson was promoted to executive vice president and chief operating officer. He started as a strategic planning director in 1999. Other key executives include CFO Lori Hudson, Chief Information Officer Chuck McMinn and Corporate Counsel Laura Budzichowski.
Looking ahead, National Gypsum expects to benefit from more housing starting in the coming years. “We underbuilt new residential [property] as a country for a decade,” Nelson says. “I think there will be a big unlock on that because there are a lot of people in their early 30s who are hitting their principal first-time buyer age. They are forming households and tending to get married later … but they have the same aspiration to live in their own home.”
While the lack of affordable housing is a major national issue, “We made it through a lot of other cycles and I’m confident things will play out well here,” Nelson says. “I think we have some great tailwinds here.”
Since leaving National Gypsum, former CEO Browning has had lots of contact with the company as a director of home improvement retailer Lowe’s and Atlanta-based Gypsum Management & Supply, a distributor of building materials that is being acquired by Home Depot for $4.3 billion.
“Tom has done a helluva job leading that business. Morale is high and they’ve invested in the business even when things were softer in the economy,” Browning says. “After sitting on the board of their biggest customer (GMS), I can assure you they are highly regarded.”
Beyond capital investments and product innovations, National Gypsum has also instilled a winning spirit, he adds. “They haven’t had significant executive turnover, which they would have had if they had problems with their culture. They have done great things for that business.”
Asked what the fun of the work is for him, Nelson’s answer is simple. “It’s our people and their deep sense of pride. I’m reminded it’s our people behind the product and they keep us moving forward and keep me coming back every day.” ■
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.