Building products group, James Hardie Industries, has become a high profile Australian corporate casualty of the US housing recession.
The company yesterday said that the slump has forced it to suspend production at a manufacturing plant in Pennsylvania at a cost that could reach $38 million.
The final cost will be detailed in the company's third quarter figures, due on November 19.
The shares slumped 27c to a new 52 week low of $6.47.
It's another in a growing list of local companies feeling the brunt of the slowing US economy, falling US currency and stronger Australian dollar.
Hardie has joined major industrials such as Amcor, Paperlinx, AGL Energy, Aristocrat, Caltex, Fosters, CSL, Cochlear, Resmed and Boral to report significant actual or potential damage to earnings this half or quarter from the higher dollar and the slowing US economy, especially the stricken housing sector.
The outlook for housing is worsening: more than 2 million houses are for sale and over 17.5 million houses are vacant and all but unwanted in the US.
New home sales are still easing, housing starts and permits are falling and home prices are declining.
The Hardie plant is in Blandon, Pennsylvania and has been running at reduced levels because of the growing slowdown in US new home sales and sales of existing houses.
James Hardie said production at the plant was suspended because it was the least cost-efficient of its 10 manufacturing plants in the United States, which have a total annual production capacity of 3.4 billion square feet. Blandon had a capacity of 200 square feet of fibre cement products.
"Although we have continued to partly offset the impact of the US housing downturn by concentrating on market penetration against alternative materials, the further deterioration in market conditions led to today's decision," James Hardie chief executive, Louis Gries, said.
James Hardie bought the plant from a former competitor, Cemplank Inc, in 2001 to meet the growing demand for fibre cement but because it services the North east US states, it's not as economic as the market is smaller for the product and there are tight restrictions on the site use and environmental controls.
Mr Gries said Wednesday's decision would affect about 80 employees. The North East new home market isn't as badly hurt as the markets in Florida, Nevada, Texas, Utah and California, where Hardie is a major player.
The company says it expects to book impairment and related charges of approximately $US30 million ($A32.72 million) to $US35 million ($A38.17 million).
Boral on Monday warned the US slowdown and stronger dollar could cost it more than $40 million in a full year. Fosters yesterday warned that the higher dollar could cost at least $40 million, perhaps more, off its US wine earnings and sales into the lucrative British market.
Figures released earlier this week show that US house prices fell nationwide in August for the eighth month in a row.
The respected Standard &Poor's/Case-Shiller index which looks at house prices in 10 US cities fell 5% in August from a year ago. That was the biggest drop since June 1991.
Yale economist, Robert Shiller, who helped create the index again warned that things could get worse (he said the same to a congressional hearing in the US two months ago, but things have worsened since then).
According to the index, US house prices have fallen more every month since the beginning of the year and August was the 21st month of slowing returns.
A broader index of 20 cities fell 4.4% in August over last year, with 15 of 20 cities reporting lower prices.
Economists say house prices and consumer spending are closely associated. Now consumer sentiment has dropped sharply. That will cut into the renovation market, which is also a source of strong demand for Hardie's products.
Professor Shiller said in a statement: "The fall in home prices is showing no real signs of a slowdown or turnaround".
