For many American stone fabricators, 2009 was the most difficult year ever to run a business. Since many fabrication shops in the U.S. are relatively young in age (typically less than 20 years old), business owners have never felt a recession that came close to what we’ve seen over the past few years. But for the most part, fabricators feel that the worst is behind us, and they are relatively optimistic for 2010 and beyond. These are the results of a survey 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 well-established companies.

Predictions for 2010

Looking at the coming year, the vast majority of fabricators polled truly felt that declines will not continue. A total of 45% said the stone market will increase in 2010, and 40% said it would stay the same. Only 15% said there would be a decrease in business this year.

The fabricators expecting growth for the year varied in how much they believed business would increase, although most (69%) said that business would grow by more than 6%, and nearly one in eight fabricators (12%) predicted growth of more than 20%.

A number of reasons were offered for the optimism in 2010, and many pointed to an improving economy. “An upsurge in recent business gives me hope that the businesses that did survive the recession will continue to see this upsurge - not that it’s over yet, but so far we have survived,” stated one fabricator. “The ones that didn’t make it will lead to more business for those of us who 

“People are starting to spend money again,” reported another respondent. “I believe as the economy continues to stabilize, we will continue to see this spending trend. Also, as the housing market begins to expand again, this will drive further consumer spending.”

Fabricators also said that remodeling work seems to be on the rise. As one respondent pointed out, “Homeowners have put off installing granite or doing renovations, but now with an upswing on incomes in the near future, we will see an increase in these projects.” But even while some fabricators were optimistic, others feared that increased traffic and activity may not result in actual business for a few months. “We expect a very slow start to the year,” stated one fabricator. “There are some projects going to architects now, but they will be six months on the drawing board. Residential customers are still slow to commit to contracts.”

Long-term optimism

The outlook of fabricators over the next five to 10 years was even more positive. According to the Stone World survey, more than four out of five fabricators (83%) feel that the market for stone in the U.S. will grow over the next five to 10 years. Another 11% felt the market would remain the same, and only 6% were predicting a decline.

Following the trend expressed in last year’s survey, however, they were guarded in predicting a large increase in sales. Only 32% of fabricators overall felt that growth would be 11% or more over the next five to 10 years.

When asked about their long-term optimism, fabricators again pointed to the eventual recovery of the market, along with increased popularity and awareness of stone among home-owners. “Eventually we will all decide that the world was not actually ending, and business as usual will resume,” stated one survey respondent, while another commented, “It is going to take a couple of years for the market to correct itself, but when the industries realize it is up to them to help bring the economy back, it will begin to take hold.”

Some fabricators pointed to general improvements in the industry itself as reasons for long-term optimism. “Technology is still increasing daily,” stated one survey participant. “Stone applications in the building sector are becoming more and more creative.”

Investments in 2010

After a year of cutting costs - 88% of fabricators polled said they decreased spending in 2009, primarily in the area of personnel - it appears that fabricators are planning to invest back into their operations this year. “Banks will return to allow some credit for machinery and expansion,” explained one fabricator.

According to the Stone World survey, 57% of fabricators said they will be investing in marketing, and 50% reported that they will invest in equipment in the coming year.

In terms of equipment choices, hand tools were once again mentioned by the majority (60%) of fabricators, and they expect to spend an average of nearly $7,000 in this area.

In terms of larger investments, the percentage of fabricators planning to purchase big ticket items is predictably small, but still significant when considering the amount of money they expect to spend. More than one out of 10 fabricators (11%) said they will buy a CNC stoneworking center machine this coming year, expecting to spend close to $190,000 in the process. A similar total (9%) said they would be investing in waterjet technology, and they expect to spend close to $185,000.

Nearly one out of five fabricators (17%) said they will buy a bridge saw this coming year, and reflecting the growing level of automation for this equipment, they are expecting to spend an average of nearly $80,000. The same percentage of fabricators (17%) said they would be purchasing a polisher this coming year, expecting to spend close to $50,000.

Reflecting the continuing need for air and water treatment in fabrication shops, approximately one out of six shops said they will invest in this technology in 2010, expecting to spend more than $20,000. Also in the area of improving the overall shop environment, one out of three fabricators will invest in handling equipment, expecting to spend close to $35,000.

New technology is also being purchased for operations beyond the shop floor. A total of 11% of survey respondents said they would be investing in digital templating technology in 2010, spending an average of more than $16,000 each; and 12% said they would be purchasing management software this year, spending an average of nearly $8,000.

Although still relatively moderate - considering the small size of the average fabrication shop - capital outlay among fabricators looks to be improving in 2009. A total of 34% of respondents said they are planning to outlay more than $250,000 in 2010. (Last year, that total was 27.9%).

A difficult 2009

In addition to asking about the future, the Stone World survey asked fabricators to compare the business levels for 2009 as compared to 2008. Responses to this question showed just how difficult the last 12 months have been, as 68% said their business declined in 2009, another 13% said that business stayed the same, and a surprising 19% actually said business grew in 2009 (although typically less than 10%).

For companies that saw a decrease in business, the losses were significant. A total of 23% of respondents reported declines of 11 to 20%, and an additional 54% of fabricators said that business was down by over 20% in 2009.

Overall, fabricators were relatively split between companies reporting more than $1 million in annual sales (47%) and those reporting less than $1 million (53%). Broken down further, 30% said that sales were less than $500,000; 23% reported sales of $500,000 to $1 million; 29% reported sales of $1 million to $2.9 million; 93% reported sales of $3 million to $4.9 million; and 8% reported sales of over $5 million.

Speaking on challenges facing fabricators in today’s marketplace, more than half of the fabricators polled (53%) said that increased competition from new stone fabricators had a direct, negative impact on their business during 2009. Moreover, those reporting an impact reported high losses that they felt were due to new competition: 35% said they lost between 6 and 10 % of business; 24% said they lost 11 to 20% of business; and 16% said they lost more than 20% of their business.

Survey demographics

Consistent with Stone World fabricator surveys conducted in the past, participants in this most recent study were relatively small in size. A total of 38% of respondents had one to five employees; 21% had six to 10 employees; 24% had 11 to 25 employees; and 17% had more than 25 employees.

Looking at the experience of the fabricators polled, the market survey drew responses from industry veterans as well as companies that are relatively new to the trade. A total of 29% said they were in business for more than 20 years; 27% have 10 to 19 years experience; 24% have five to nine years of experience; and 20% have been in business less than five years.

Also of note, most fabricators (73%) reported that they are fabricating both natural stone and quartz surfacing products.        

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