How a Canadian building materials company overcame tariffs | News

As Canadian businesses and workers brace for the threat of U.S. tariffs, there are signs that globalization may be moving in the opposite direction. Some companies are examining ways to boost manufacturing capacity to service Canadian markets, reducing the need for imports.

CGC Inc, known originally as Canadian Gypsum Company, is an integrated manufacturer of wallboard products used in homes and light commercial industries. The company also mines the raw material gypsum used to make its Sheetrock-branded products.

Sid Tetz, CGC’s vice-president of sales and marketing, said the company knows how tariffs can drive up costs and hamper supply chains.

CGC is part of a larger corporation called USG (United States Gypsum Corporation) with manufacturing facilities spread across North America.

CGC doesn’t sell directly to builders or contractors but uses a network of distributors to serve the Canadian homebuilding market.

Domestic distribution

Today, as Tetz noted, all of CGC’s manufactured material is distributed within the Canadian marketplace, insulating the company from tariff threats.

Prior to 2016, CGC imported some wallboard products from Washington State until a temporary tariff was imposed on U.S. drywall imports into Western Canada. When anti-dumping tariffs ranging from 105 to 276 per cent were imposed by the Canadian Border Services Agency, imports of U.S. wallboard became a non-starter.

“We want it to be as predictable as possible and tariffs don’t benefit that predictability,” said Tetz. “They make the market a lot less certain and take away some of the predictability and consistency of what we want in a market to actually meet the demands of your customers as well as the demands of their customers because we’re selling through an integrated supply chain.”

Improved market reach

Since then, CGC has focused on improving its Canadian market reach by building new domestic manufacturing plants, including a facility in Wheatland County, Alta. to serve western Canada. The new plant is slated for completion in 2026.

“The Wheatland facility allows us to be close to the customer which ultimately gives us the ability to service those customers better, thereby reducing supply chain stress,” said Tetz.

Tetz noted GCG has spent several years improving its reach by expanding its domestic manufacturing capacity in each region of Canada, to remain close to areas where new homes are being built.

“It’s coming together at the right time given the current climate, for sure,” said Tetz.

In 2023, CGC announced the relaunch of its gypsum quarry in Little Narrows, N.S., to reinforce CGC’s supply of raw gypsum material.

CGC estimates one year’s worth of gypsum mined at its Nova Scotia facility provides enough raw materials for 300,000 homes.

In Ontario, CGC’s Hagersville plant south of Hamilton is supporting markets in Ontario and western Canada. That plant is also built on top of a gypsum mine.

Tetz added wallboard products are difficult to ship, so adding manufacturing capacity in key regions also makes sense logistically.

Countdown to tariffs

At a Jan. 28 White House press briefing, Press Secretary Karoline Leavitt said the Feb. 1 date for the announcement of 25 per cent tariffs against Canada and Mexico “still holds.”

Tariffs on Canadian goods would be paid by U.S. importers and passed onto U.S. consumers.

In response, Prime Minister Justin Trudeau and candidates hoping to replace him as the next Liberal leader have proposed retaliatory tariffs against U.S. goods that would increase costs for those goods in Canada.