Head of Owens Corning hopeful cut in key rate will spur housing

12/26/2008

NEW YORK - The Federal Reserve's lowering of the main U.S. interest rate to as low as zero may spur a U.S. housing recovery by making home prices "very, very attractive," Michael Thaman, chief executive officer of Toledo's Owens Corning, said in a recent interview.

The Fed said Dec. 16 it will target a federal funds rate of between zero and 0.25 percent to unfreeze credit markets and end a recession kicked off by the worst housing slump in a half century.

Like other building-materials companies, OC, which is the largest U.S. producer of home insulation, faces plummeting demand.

The annualized rate of housing starts dropped 47 percent last month from a year previously to 625,000, the lowest in at least 50 years. New-home construction accounts for about 60 percent of OC's U.S. insulation sales. The insulation unit made up a quarter of the company's sales in the third quarter.

The company may cut production of insulation and glass-fiber composites fur-

ther if the markets continue to slow, Mr. Thaman said.

OC also makes glass-fiber products used in giant windmill blades. Mr. Thaman said the company expects wind energy to continue to grow globally next year, even as it falls in the United States because of credit restrictions and lower fuel prices.

He said President-elect Barack Obama's plan to stimulate the economy, which includes creation of "green" jobs, may give wind energy a lift.

He said OC also may benefit through higher insulation demand if a stimulus plan includes making homes and buildings more energy-efficient.

Commercial and residential buildings account for about 40 percent of U.S. energy consumption, and those buildings' energy efficiency can be improved by 30 percent to 50 percent with today's technology, he said.