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USG to layoff 25 in Cloquet

For the first time at its Cloquet facility, USG Interiors Inc. is laying off employees, according to Bill Schmitt, plant manager.

"Twenty-five of the company's 425 workers will face layoffs this week," he said. "We're seeing a downturn in business, specifically the commercial construction market. Because of that, we're reducing our workforce almost 6 percent."

Employees at the Cloquet plant are involved in all aspects of manufacturing acoustical ceiling tile that is shipped across the United States, Canada, Australia and New Zealand. Most of their ceiling tile is purchased for office buildings, hospitals and shopping malls - projects that seem to be slowing as the economy slows, Schmitt said.

USG reported second quarter net sales in late July of $1.3 billion, but also showed a net loss of $40 million. For the same period a year ago, the corporation recorded net sales of $1.4 billion and net earnings of $56 million.

Schmitt said despite the net loss, the cutbacks are not part of a company-wide restructuring plan.

"It's just that demand is down for the products we make in Cloquet," he said.

The 25 will be notified by the end of the week and given the option to work for two more weeks.

"We will help people file for unemployment, if necessary," Schmitt said.

He doesn't anticipate further layoffs as long as the economy does not slip further.

"Who can tell anything in this economy," he said. "But we will be manned for the volume [of work] we have now and as long as that holds, we will be in a good position."

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