Given the rocky financial landscape that
virtually all fabricators are facing these days, it makes sense that the
results of this year’s annual U.S. stone fabricator survey received a very
mixed reaction from respondents. On the positive side, the majority of
respondents actually said their business stayed the same or increased during
2008. On the negative side, more than two out of five fabricators did see their
business decline last year; moreover, the falloff was fairly significant
(generally 11% or greater).
In the future, however, the mood is much more upbeat - particularly over the
long term - as the vast majority of fabricators feel that the stone market will
grow over the next five to 10 years.
The survey was conducted by the Market Research Department at BNP Media (Stone
World’s parent company), and it polled a cross-section of fabricators across
the U.S., including large and small firms as well as relatively new and
Predictions for 2009
Looking at the coming year, the opinions of
fabricators truly ran the gamut. A total of 40.0% felt that business would
decline in 2009, while 37.4% said that sales would stay the same. On a more
positive note, more than one in five fabricators (22.6%) felt that business
would increase in 2009.
Fabricators who felt business would decline in 2009 widely varied as to how
much the losses would actually be. While 25.0% said that they expected business
to drop off by 20% or more, 36.7% felt that the decline would be less than 10%.
Another sizeable portion of those polled (38.3%) felt that losses would be
between 11 and 20%.
Overwhelmingly (and somewhat obviously), most fabricators predicting a decline
in 2009 cited the economy and accompanying housing market declines as reasons
for their bearish predictions. “We’re already down 20%, and the recession just
started,” stated one fabricator.
Those predicting growth expected fairly low to
moderate gains, with the majority (80.3%) looking for increases of 10% or less
in 2009. However, some optimists were calling for larger increases.
Fabricators expecting growth gave a range of reasons for their feelings -
including the inauguration of a new U.S. President, the cyclical nature of
economics and the increasing popularity of granite overall as a building
material. “Granite is still at the top of the list for home improvements,”
stated one fabricator, with another adding, “Stone is now the standard in new
homes, and a must-have for remodels.” Some companies also pointed to currently
contracted work - particularly in the commercial sector - as a reason for
The outlook of fabricators over the next five to
10 years was much more positive. According to the Stone World survey, more than
three out of four fabricators (75.8%) feel that the market for stone in the
U.S. will grow over the next five to 10 years, another 14.7% felt the market
would remain the same, and only 9.5% were predicting a
However, they were somewhat guarded in predicting a huge increase in sales.
Only 38.3% of fabricators overall felt that growth would be 11% or more over
the next five to 10 years. Representing the most optimistic sector, a little
more than one out of seven fabricators (14.5%) predicted growth of 20% over the
When asked about their long-term optimism, many
of the fabricators surveyed pointed to an eventual upturn of the economy and
the housing market. Specific to stone, they pointed once again to the
popularity and availability of granite as a building material. “Once the current
recession/depression is behind us, we will see the continued appeal of granite
countertops by consumers,” stated one fabricator, while another simply pointed
out, “The economic downswing won’t last forever, and people love
Of the fabricators predicting a long-term decline in the market (representing
less than one out of 10 respondents), most felt it would be due to a continued
economical decline and potential competition from manmade materials.
Investments in 2009
Despite uncertainties in the market over the
short term, fabricators are still planning to invest in their operations in
2009. The majority of those polled (57.0%) said they will increase their
investments in equipment this year, and one out of four (25.0%) will spend
money to upgrade the fabrication facility itself.
In an effort to generate business during challenging, competitive times, over
half of fabricators polled (52.5%) said they are increasing their investment in
marketing for 2008. Additionally, 34.2% of the survey participants said they
would be investing in showroom facilities this year.
For companies looking to add machinery, fabricators cited a range of
large-scale stoneworking machines on their wish list for 2009. Topping the list
in terms of cost, a total of 10.5% of fabricators said they would be investing
in CNC stoneworking centers in 2009. Although this figure represents just more
than one out of 10 fabricators, it is fairly significant when considering that
the mean dollar amount to be spent on CNC technology is more than $186,000
Also of note, fabricators are spending more
money on bridge saws than in past years. Just about one out of eight
fabricators (12.4%) are planning to invest in bridge saws in 2009, and they
plan to spend a mean price of nearly $74,000 on this technology, a major jump
over just a few years ago. This rise is clearly reflective of the fact that
some of the offerings in bridge sawing equipment have increased in terms of
automation and capabilities, and fabricators are willing to spend for this
Another major area of investment will be polishing machines. More than
one-quarter of survey participants (26.0%) said they would be investing in this
equipment, with a mean dollar amount of over $65,000 being
Fabricators are also investing in safety and efficiency, as 36.0% of survey
respondents said they would be spending on material handling and transportation
equipment during 2009. This investment comes with a fairly high price tag, as
fabricators said they would spend a mean of nearly $35,000 for this technology
Companies are also interested in investing in
air and water treatment, with 15.1% stating that they will invest in this
sector in 2009. And with a mean dollar amount of more than $30,000 to be spent,
fabricators are showing that they are serious about air and water
A number of companies are also planning to continue investments in
digital/electronic templating systems for 2009, with just about one out of 10
fabricators (9.7%) planning to invest a mean amount of over $27,000 in this
technology in 2009.
Also of note, nearly one-fifth of the fabricators polled (17.4%) said that they
would be investing in management software in 2009, spending a mean dollar
amount of almost $12,000.
As in previous years, hand tools were the most prevalent common area of
investment, with 85.3% of respondents indicating that they will invest in this
area in 2009. However, with the mean investment among respondents totaling
under $11,000 for hand tools, this will not have a huge impact within the
Capital Outlay for 2009
Already moderate to begin with - considering the
small size of the average fabrication shop - capital outlay among fabricators
will likely be on the decline during 2009.
Well more than half of respondents (72.1%) are planning to outlay less than
$250,000 in 2009. (Last year, that total was 63.4%). Another 14.6% said they
are planning to invest $250,000 to $499,999 this year, and only 13.3% were
planning to invest more than $500,000.
Fabricators also pointed to specific spending cuts that they made during 2008,
with 61.7% saying that they reduced spending on personnel during the year - by
means of attrition when possible, and by layoffs when unavoidable. Fabricators
also said they cut investments in stock (with 45.8% saying their reduced
spending in this area), equipment (39.1%), marketing (29.6%) and facilities (20.6%)
Results for 2008
In addition to asking about the future, the
Stone World survey asked fabricators to compare the business levels for 2008 as
compared to 2007. Responses to this question were perhaps more positive than
expected. While 43.1% of those surveyed said their business declined in 2008,
another 18.4% said that sales held steady, and a surprising 38.5% actually said
business grew in 2008. Of course, the real banking/credit industry collapses
occurred during the second half of 2008, so many fabricators enjoyed their
greatest success during the first six months of the year.
Of companies that saw an increase in business, the gains varied quite a bit. A
total of 17.3% said that the increase was only 1 to 5%,while 38.2% saw growth
between 6 and 10%. However, there were some companies that saw solid growth in
2009. A total of 25.5% reported growth between 11 and 20%; and 19.1% reported
growth of more than 20%.
Among fabricators that saw a decline in business, the losses were fairly
significant. A total of 12.4% said that the decrease was between 1 and 5%,and
an additional 25.6% lost between 6 and 10%. More noteworthy, another 25.6%
percent of those noting a decline said the losses were between 11 and 20%, and
an additional 36.4% reported declines of more than 20%.
Overall, fabricators were relatively split between companies doing more than $1
million in annual sales (51.8% and less than $1 million (48.2%). Broken down
further, 27.9% said that sales were less than $500,000; 20.3% reported sales of
$500,000 to $1 million; 32.8% reported sales of $1 million to $2.9 million;
9.3% reported sales of $3 million to $4.9 million; and 9.7% reported sales of
over $5 million.
â€œThe Great Radon Scareâ€
On a positive note, consumer fears regarding
unsafe radon content in granite did not appear to have a major impact on the
natural stone industry in 2008. Nearly three-quarters of fabricators (74.6%)
said that fears regarding granite and radon had absolutely no effect on their
business in 2008, and of the 25.4% who did see an effect, the vast majority
said that declines were only between 1 and 5% overall.
Moreover, even less fabricators felt that concerns over radon in granite would
not be an issue in years to come, as an overwhelming majority of 88% of
fabricators said there would be no long-term effect
Also of interest, a total of exactly two-thirds of fabricators (66.6%) said
that they fabricate both natural stone and some form of quartz surfacing, while
only one-third (33.4%) said they fabricate natural stone only.
Other Challenges in 2008
When asked about the greatest challenges facing
fabricators in today’s marketplace, 43.7% said it was the decline in the
housing market; 28.8% felt it was competition from low-end fabricators; and
24.6% said it was the banking/credit industry crisis. Just about no one felt it
had to do with the devaluation of U.S. currency (2.6%) or the granite/radon scare
Consistent with previous Stone World fabricator surveys, participants in this
most recent study were relatively small in size. A total of 29.6% of
respondents had one to five employees; 25.9% had six to 10 employees; 26.3% had
11 to 25 employees; and 18.2% had more than 25 employees.
Looking at the experience of the fabricators polled, this survey was answered
by a mix of industry veterans and companies that are relatively new to the
trade. A total of 32.6% said they were in business for more than 20 years;
24.6% have 10 to 19 years experience; 25.6% have five to nine years of
experience; and 17.3% have been in business less than five years.