What is the reason to start this check-off program?

Many members of the natural stone industry continue to see manufactured stone gaining positions in the marketplace. On their member’s behalf, to strengthen their position in the market and to have a sustainable marketing effort that is equitable among industry members, the Natural Stone Council (NSC) is on a quest to develop and finance the Natural Stone Research and Promotion Board, an effective coordinated program of research, promotion, industry information and consumer information regarding natural stone; strengthen the position of the natural stone industry in the U.S. markets; and maintain, develop and expand domestic markets for natural stone.

What will the funds be used for?

The Natural Stone Research and Promotion Board (NSRPB) will invest and manage industry funds to build a comprehensive marketing campaign designed at increasing the use of natural stone. Specifics of the strategy and tactics of the campaign will be decided on by the board of directors. Marketing tools such as a broad public relations and consumer education program designed to help consumers recognize the benefits of natural stone as well as retail point-of-sale and proper merchandising training for targeted retailers are examples of projects the NSRPB could consider. The NSRPB may also act as the industry’s single voice in time of crisis.

How much money will the check-off program generate annually?

The rate of assessment will be ½ of 1%, ($0.005 per dollar) of the first invoice of a finished product of domestic natural stone and declared invoice value of imported product. According to the 2006 statistics (source U.S. Geological Survey), the estimated value of domestic natural stone in 2006 was $275 million, and the estimated value of imported natural stone in the same period was $2.5 billion - for a total value of $2.775 billion. Therefore, the NSRPB’s assessment value would be $15.2 million.

Who contributes to the check-off program?

Any company that processes and sells $500,000 or more of domestically produced natural stone in a 12-month period. Also, any company that imports more than $500,000 of declared value of natural stone in a 12-month period will contribute to the NSRPB. This will include:

Natural Stone Producers - companies or individuals that are engaged in the production and sales of natural stone in the U.S. and own or share the ownership and risk of loss of the product; or a person who is engaged in the business of producing or causing natural stone to be produced and sold and having the value at first point of sale will contribute to the NSRPB.

Natural Stone Importers - importers that import natural stone into the U.S. as a principal or as an agent, broker or consignee of any person who produces or handles natural stone outside the U.S. and who is listed as the importer of record for such natural stone will contribute to the NSRPB.

Natural Stone Processors - any person or business that buys natural stone from domestic quarries and executes the first level of processing of the raw material, making it into a product that is saleable, will contribute to the NSRPB.

Will foreign companies be involved, or only domestic companies?

The NSRPB is designed to promote natural stone in the U.S. marketplace, and this includes domestic stone as well as foreign stone imported into the U.S. The U.S. companies that handle natural stone, regardless of where it originated, will be involved in the NSRPB, while any imported stone will be represented by the importer of record, which should be a U.S. company.

What is the rate of assessment that companies will pay, and how will each company know their competitors will pay a comparable rate?

The rate of assessment for the NSRPB is proposed to be ½ of 1%, ($0.005 per dollar) of the first invoice of a finished product of domestic natural stone and declared invoice value of imported product. The proposed legislation is designed to give the NSRPB the support of the federal government to ensure the assessment is remitted evenly, throughout the industry. Industries such as those for milk, beef and cotton rely on spot audits to ensure everyone is paying their fair share to their respective check-offs.

At what point in production will stone be assessed?

Under the proposed legislation, each natural stone producer will remit $0.005 per dollar of the market value of the natural stone to the NSRPB. The assessment will be submitted to the NSRPB along with a monthly report. The NSRPB assessment would also be collected monthly from importers of natural stone by U.S. Customs.

Who decides how the money is spent?

Natural stone producers, importers and processors will make up the directors of the NSRPB, who in turn will determine how the industry’s revenue will be spent. A list of natural stone producers, importers and processors will be submitted to the Secretary of the Interior by the NSC to be considered to serve on the NSRPB. The Secretary of the Interior will then select the directors of the NSRPB.

Who votes on the implementation of this program?

Natural stone producers (quarries), importers and processors will receive a ballot and determine if this program will be implemented.

How is the government involved in this process?

Government involvement in this program begins with Congress considering and passing legislation that creates a NSRPB. Once a government agency is assigned to this program, they will administer the referendum to determine if the natural stone producers, importers and processors want an industry-wide check-off. They will request a list of qualified producers, importers and processors from the NSC, then send each member a ballot. Once the ballots are completed and returned, the Department of the Interior will count the ballots and determine if 51% or more of the ballots returned are in favor of the program.

If the referendum passes, the Department of the Interior will, as stated above, work with the NSC to submit a slate of board members to serve the NSRPB. Once the board is appointed by the Secretary of the Interior, the board will convene and set policy, budget and hire staff. At this point, the Department of the Interior will step back and provide oversight to NSRPB. Oversight may include reviewing NSPRB programs to ensure activities are designed to maintain and expand the understanding of and preference for consumption of natural stone in the U.S.

What are some other points to consider?

Industry wide check-offs are common throughout the agriculture sector. Producers, handlers and imports of milk, beef, watermelons, potatoes, blueberries, soybeans, pork, peanuts, popcorn, cotton, eggs, lamb, cherries, almonds, mangos and mushrooms all have tools created by their own respective check-offs to help them reach out to the trade and consumers. The Propane Education and Research Council, for example, is a check-off program designed and managed by the propone industry members to enhance propane market share in the U.S.

Although these programs are far from perfect, they clearly give their respective industries a single voice with which to speak. They also provide a sustainable source of revenue to build a long-term marketing effort. Check-offs also create parity when it comes to funding industry promotions by eliminating the “free-rider” issue (an industry member benefitting from promotions funded by someone else). Industry wide check-offs are managed by industry members, using industry funds (no federal tax dollars) to help their own industry. At the end of the day, the industry can decide to shut the check-off down if they determine it is not doing the job.