Will Warren Buffett's Big Bet on Housing Pay Off?

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May 8 (Bloomberg) -- James Metcalf, chairman and CEO of USG Corp., discusses the U.S. housing market with Trish Regan on Bloomberg Television's "Street Smart." USG is a wallboard maker whose largest shareholder is Warren Buffett’s Berkshire Hathaway. (Source: Bloomberg)

Country's biggest makers of construction materials.

Warren buffett is one of his biggest investors.

Great to have you here.

Let's talk about what you are seeing.

What is happening?

Would you echo what janet yellen is saying , that housing is a tough sector right now and has flattened out?

You know, the market has been choppy.

It's coming off historical lows, like she said, but we believe in demographics.

Household formation is going to be anywhere between 1.3-1 .4, and people still need shelter.

The population is growing.

We had a harsh winter.

Everybody knows what happened with the weather, but topline was up, bottom line was up, and in fact, the first quarter was the best quarter we have had since 2007 when the overall housing crisis started.

When perhaps we were all a little too optimistic.

Let's talk about what a recovery in housing might look like.

Janet yellen is saying things of flattened out.

If we do get a little bit of growth, are we going back to housing as it used to be when it kept pace with inflation.

Housing for usc is about 25% of the business.

The market we look at is repairing the model.

The average age of the home is 40 years old.

If people cannot buy a new house, they fix up their home.

With housing prices coming up, people have more equity in their home.

Half of our business is repair and remodel.

Along with that is commercial repair and remodel.

You see around new york city that they are fixing up all the commercial buildings.

That is where we play as well.

Do you think things will change now that hopefully the weather is getting better?

Do you think that will help you guys and as people look to remodel do you see forces combined to make you more rock -- more optimistic?

Yes.

We are seeing it with a big home retailers like home depot, lowe's. we are starting to see a pickup with those customers.

Also, we are positioning in other markets.

We made a very big joint venture in asia.

We wanted to really diversify our earnings.

We got to that part of the world.

We created our own recovery.

We are not waiting for housing to return.

We wanted to create our own recovery.

We diversified our earnings in asia.

And we did this all around innovation.

Do you see this as something you would want to continue.

80% of your business is still domestic.

Yes, it is a big opportunity in 12 countries.

Our partner and we now have a 40% growth share.

Also, the adoption rate of our products is still very low, so we are getting kind of a twofer with our growth rate and the adoption rate.

We started off the segment saying that warren buffett is a shareholder.

What is it like to work for war and?

We work for all of our shareholders.

Warren is our largest shareholder.

Can he call you up and say -- he is there for advice if i want to get some advice, but he is a wonderful shareholder like all of our shareholders.

We appreciate his investments.

We appreciate any advice he gives.

He really lets the management team run the business and hopefully we have the right returns for our shareholders.

You are just at the berkshire hathaway meeting.

Yes.

How is that?

It's a wonderful weekend.

They work very hard for all of the shareholders.

And they show berkshire hathaway their appreciation through numerous events throughout the weekend.

Thank you very much for joining me today.

Jim metcalf, chairman and ceo of

This text has been automatically generated. It may not be 100% accurate.

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