The Evolution of the Stone Industry
And even though per-capita stone consumption in the U.S. is relatively small, it has shown tremendous growth in recent years. And as with most industries seeing growth, these developments have attracted new suppliers. While some of these suppliers are reputable, others possess little or no experience in the industry, and frequently base their knowledge on relations and friends in the country of origin.
With regard to block sales, it appears that the majority of quarry owners around the world, are primarily interested in selling blocks, resulting in the growth of processing plants the world over. For every type of stone that is quarried, there are three qualities: select or first choice (10-25%); standard quality (30-50%); and commercial quality (30-50%).
As a result of these developments, the challenge that is presented to the stone industry is to have suppliers become experts and diligent in their dealings within the market. This requires knowledge about the materials and a respect and dedication to providing good quality. All too frequently, decisions are based -- and influenced by -- the concept of offering low price as a formula for obtaining a competitive edge in the marketplace.
There should be a professional response to this competing information. Before the industry is headed for disaster, a standard for quality should be established. A â€œRating Systemâ€ for suppliers would protect the average consumer, and guarantee a product that is truly reflective of both cost and quality.
Let us preserve the historic value of stone as a product of beauty and endurance; let us preserve the industry by joining together and ensuring that we provide the communities of people with material that is worthy of its historical attributes and applications.
Low barrier for entryGoing back a few years, all marble and granite came from Italy -- or at least that is what was common belief. The Italians dominated the marble and granite industry worldwide. Then in the 1980s, we saw the development of marble and granite quarries, and the discovery of large mineral deposits in India, Brazil, South Africa and China. This continued into the 90s, and with it, processing capacities as well grew astronomically all around the world.
During this time of fast-growing quarries and processing capacities, the families and close friends of these people became important links for developing markets for export. All one needed was a sample and ability to hustle. Today, a lot of these players are still around. Someone in the industry once remarked to me, â€œI get a lot of Indian and Chinese suppliers in my office every week.â€ He was advised that half the world population, put together, is Indian and Chinese, so he better count his blessings, as every second person he meets should be an Indian or Chinese.
By and large, the stone industry is made up of â€œMom and Popâ€ operations, and as such, it is easy for suppliers and distributors to establish themselves with little to no experience in the stone industry. With the right contacts willing to send a few containers on consignment, they get into business, and the rest is history.
Fragmented at all levelsStarting with quarries almost all over the world, there are numerous sources for the same material. Mostly located in remote locations with little to no infrastructure, these local people are often interested only in selling the blocks. In many of the lesser-developed countries, like India or Brazil, the quarry owners would rather export the blocks than to sell it to the local industry. Some of this also has to do with the tax benefits that their national governments offer for export operations, as well as local laws on mining rights.
Industrialists looking for new opportunities found the granite and marble industry in the 1980s and 1990s. As a result, there are now huge processing centers in Korea, India, China, Brazil, Indonesia, Taiwan, Spain and Turkey. There is a local industry for stone almost in every country in the world.
Distribution of stone has not been an exception. There are about 200 new distributors or suppliers that open every year in the U.S. However, I have found that the vast majority of them close down in two or three years. Additionally, as the use of natural stone continues to increase, there are more installers who become â€œdistributorsâ€ and â€œimporters.â€ There has also been some lateral integration from the ceramic industry as well.
Quality concernsLooking at any material from any part of the world, it is a known fact that there is a wide selection of color and characteristics. Typically, one can categorize the production of every quarry into three categories: Select (or First Choice), which is normally from 10-25%; Standard, which is 30-60%; and Commercial, which is 30-50%.
This would mean that most suppliers are supplying the standard or commercial materials. First Choice material is always at a premium. Besides the challenge of finding the First Choice materials, there is the constant pressure of filling demand and meeting the competition.
The biggest challenge facing suppliers is to understand quality, and to promote material through quality. This obviously is against the cost-sensitive pressures of the market. It is also difficult to achieve considering the growing number of companies who enter the business with a lack of understanding and knowledge of the process and nuances of quarrying, production and distribution.
Large corporations and integrationDue to the growing number of businesses (seen as an opportunity) in the stone industry and the lack of any single dominant player, the industry has become a target for some large ceramic producers to acquire smaller local companies and become distributors of natural stone. In many cases, these acquisitions end up being operated by people who have limited knowledge about stone, and who are required to fulfill annual sales targets and goals.
At the same time, more and more installers and fabricators are starting to import tiles and slabs directly from overseas. To give some idea of the level of sophistication, at a recent trade show in Brazil, a fabricator approached me and asked, â€œHow much weight is allowed in a container in Los Angeles? What is the duty rate? Can you give me the names of a few truckers that can carry the containers from the port?â€ He had ordered about six containers of slabs.
When it comes to large commercial projects, the scenario is quite similar. With better information and access to the Internet, installers are able to locate materials and suppliers anywhere in the world. There are fewer people who have knowledge and experience about natural stones, and it is ultimately being handled like a commodity in many cases.
Low price as competitive edgeWith more people getting into the business and less experience and expertise in the stone industry, the winning formula is often based solely on price. Customers are getting the same signal from many suppliers and distributors: â€œWe are selling at the best price.â€ There is a lack of marketing sophistication and concern for quality, customer service, design or aesthetics.
So, where is this all headed? It could be a disaster, with fierce competition for more â€œcheapâ€ quality materials. We could see more suppliers (and salespeople) with little or no knowledge of stone. Some have never seen the quarries or understand the material. And as a result, we will see more unhappy clients and substandard quality work.
There is a real need to establish a standard of quality in the industry; a need for a â€œRating Systemâ€ for distributors and installers -- with classifications that the consumer can recognize. This can be done through an independent body like the Zagat or JD Power & Associates, or through the industry itself.
There is a dire need for a standard that will protect the consumer, and provide him with the information to make an informed decision -- a process that will make the experience of using stone in their homes a pleasant one and not a nightmare. There is a need to protect the industry from disaster; a need to protect the value of natural stone, as a product of beauty and endurance.