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Absolute zero?

March 1, 2009
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OK, so “absolute zero” is actually a scientific term unrelated to the business world. These past few months, I often feel like it is the level of business in today’s stone industry - or perhaps the latest closing figure for the stock market (as in “The Dow closed today at absolute zero.”)

Seriously, when I ask people what kind of business people are doing, many of them say, “Absolutely nothing. No one is coming to the phone, and no one is buying anything.” So does that mean that people walk into their office, sit down and fruitlessly attempt to sell stone until 5 o’clock every day? I know business is bad these days - extremely bad - but has it reached the point of “absolute zero?”

Each month, Stone World publishes the monthly stone import statistics recorded by U.S. Customs. For the second half of 2008, they were typically down by 20% to 30% each month compared to a year earlier. For example, in November of 2008 (the most recent month recorded), the U.S. imported $94.04 million worth of granite - down from $123.48 million in November of 2007. This marks a decline of 23.8%.

In the category for marble in the same month, the decline was even greater. The U.S. imported $96.65 million worth of marble in November in 2007, but only $69.2 million this past November - a dip of 28.3%.

These are disturbing figures, especially when you consider that annual growth for the stone industry routinely topped 30% per year until only a couple of years ago. Moreover, based on conversations I have had with major distributors, the decline in stone imports to the U.S. is expected to worsen for the first part of 2009.

We all know that business is terrible, and that this recession is unlike any that most of us have seen in our lifetimes. If you pick up a newspaper or turn on your television, this will be made abundantly clear. You don’t need me to tell you this.

What I want to know is this: Who bought the $163.24 million worth of granite and marble in November? Better still: Who is buying the granite countertops I see being driven up and down the highways every day? And on the international front: Who bought the containers of granite I saw being loaded in the stoneworking plants in Brazil last month? I assume they’re on the way to someplace, right?

I know I am simplifying things, but the fact of the matter is that while granite and marble imports have significantly declined, they currently stand at levels that are very similar to 2004. And as I recall, no one was jumping out of windows back then.

I realize that our collective business has taken a huge step backwards, and no one wants to regress five years in a relatively short amount of time. Moreover, the playing field is more crowded at all levels - quarries, slab producers, fabricators, distributors, etc. - so there are more people looking for a slice of a much smaller pie. All of this can be devastating for individual firms.

As I said, I know things are bad out there, but my point here is that the industry hasn’t hit “absolute zero” - nor will it. Distributors (and some fabricators) are importing stone, and homeowners are buying granite countertops.

On the machinery end, fabricators are buying new equipment. In this issue of Stone World, we are rolling out a new section entitled “Technology Investments” (pages 108-109), where we feature stoneworking companies around North America that have added new technology to their operations. In contacting different vendors to participate in this feature, it was refreshing to see that the response we got wasn’t: “Sorry, we didn’t sell anything to anyone.”

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