Stone Column

Putting their money where their mouth is

January 25, 2006
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For several years now, the American stone industry has been on an incredible upswing -- particularly stone fabricators. In general, business has increased, and most shops seem to be busier than ever. But just how much growth have we seen in the past year, and perhaps more importantly, how much growth is in the future? To examine these issues, Stone World has once again conducted a survey of fabricators across the U.S., and the results not only quantify past growth, but they chronicle expectations for the coming year and the next five to 10 years. Once again, the results were overwhelmingly positive:
  • 75% of the fabricators expect business to increase next year (20% expect it to hold steady).
  • 74% of the fabricators expect business to increase in the next five to 10 years (22% expect it to hold steady).
  • 69% of the fabricators said their business increased last year, and half said those increases were better than 20% (26% said business stayed the same, and 5% saw a decrease).

In addition to asking fabricators about their expectations for the future, we also asked them about their planned investments for 2006 and beyond, since the best way to truly gauge the fabricators' outlook is to see how much they are planning to invest in this industry in terms of actual dollars. Based on the responses we received, it appears that many American fabricators are in an expansion mode to meet market demand:
  • 69% of the fabricators surveyed will be investing in new equipment in 2006.
  • Looking at some of the more expensive equipment, 42% will be investing in polishing machines (including edgers), with a mean dollar cost calculated at over $75,000 on these units expected to be spent per fabricator
  • Looking at the equipment with the highest price tag, 24% said they will be buying shapecutting machines -- specifically CNC or waterjet technology. And while that is less than a quarter of the fabricators surveyed, it is a significant total when considering that the mean dollar amount they expect to spend is nearly $135,000 apiece.

On the other side of the equation, we asked fabricators about the challenges they face in their daily business, including devaluation of the U.S. dollar against the Euro, the prominence of solid surface materials and competition from new stone fabricators in the marketplace. Again, the responses to these issues painted a positive picture for the stone industry.
  • 89% of the fabricators said they were completely unaffected by competition from solid surface products like DuPont Corian or Avonite, and most of those who were affected estimated the effect to be less than 10%
  • 36% of the fabricators said the devaluation of the U.S. dollar against the Euro had an impact on their business, but only a few said they were using less European products as a result; most said they would “tighten up” their own operation to offset the increased costs from Europe
  • 33% of the fabricators said they are feeling the effect of new stone fabricators in their market, but felt they can distance themselves by maintaining quality and adhering to industry standards

These last two points are critical. As operating costs increase, there may be a temptation to raise prices and/or cut corners, but with new competitors entering the marketplace on a daily basis, it is crucial to maintain the high-quality standards generally associated with the stone industry. Very often, new competitors operating on the basis of price will create a “wow” factor in the sector. (“Did you see that So-and-So Granite is installing kitchens for $30/foot?”) But in the long run, quality and craftsmanship will always win out over a discount price.

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