For well more than half a decade, the stone industry’s struggles have matched that of the overall economy — perhaps even worse. Just as the popularity of granite kitchen countertops bolstered our industry for many years, the decline of this sector has sent fabricators into a tailspin. Over the past couple of years, however, business seems to have stabilized, and fabricators are expecting growth in 2013 and beyond. This could mean good news for technology suppliers, as many shops plan to be investing in new equipment this year.

These are the findings of a survey conducted by the Market Research Department at BNP Media (Stone World’s parent company), which polled fabricators across the U.S., including large and small firms as well as relatively new and well-established companies.

Predictions for 2013

Speaking on the coming year, fabricators were more optimistic than they have been in years. More than two-thirds of respondents (68%) said the stone market will increase in 2013; 26% said it would hold steady, and only 6% expected it to decline.

Among fabricators predicting growth this year, the vast majority (73%) said that increases would be greater than 6%. Moreover, nearly a quarter of fabricators (23%) predicted growth of 11% or more.

When asked why they were optimistic for 2013, many fabricators pointed to overall economic growth, particularly in the housing sector. “We are already seeing increases in new construction with granite countertops being a standard offering,” stated one fabricator. “In addition to that, we have seen increases in the volume of our residential remodel market.”

Others echoed the sentiment that stone is becoming a staple in much of the residential market. “[We’re seeing] an increase in high-end homes being built in our area, all needing stone,” stated one respondent, with another adding, “My expectation of growth is specific to my market, [considering] the amount of work that we are bidding, and that the work is of a ‘high-end’ nature.”

People also pointed to their current workload as optimism for the coming year, with one fabricator citing “increased projects to bid and increased contracts received.” Others pointed to increased showroom traffic, job referrals and inquires.

Long-term optimism

Fabricators have an even better view of the stone market over the next five to 10 years. According to the Stone World survey, the majority of fabricators (78%) predicted that the market for stone will increase over the next five to 10 years. Another 18% felt the market would remain stable, and only 4% were predicting a decline.

But although most fabricators feel that the industry will see long-term growth, they believe it will be gradual. Only 19% of fabricators said that increases would be more than 11%. Just under half of the respondents (44%) felt the increases would be more in the 6 to 10% range.

Again, many fabricators pointed to a general rebound in the economy and continued new home construction as reasons for growth over the next decade, although they do not envision the “explosion” in the market that we saw in the past. “I think the next five years will see tempered growth in the construction industry; I don’t expect to see the boom years as we did in the mid-2000s,” stated one respondent, a sentiment that was repeated by many of those who participated in the survey.

Still, there is a general feeling that stone is becoming the standard for home construction, a trend that is due to greater consumer awareness. “The stone industry has gained popularity due to marketing and educating laypeople of its versatility,” stated one respondent, with many others repeating this notion. “Remodeling projects should replace new construction in most fabricators’ market niches, because of refinancing and folks who have been holding back for several years on the improvements they want,” said another.

Respondents also cited the natural pattern of the economy, particularly for those in construction. “Real estate is cyclical, and we are entering the upswing cycle,” said one fabricator.

Investments during 2013

Green Practices highlighted by fabricators 

North American stone fabricators remain somewhat behind the curve in terms of promoting green practices and the life-cycle of stone in their sales and marketing efforts. In this year’s Stone World fabricator survey, only 41% of respondents said that they are promoting these topics.

However, the ones who are promoting green practices offered a broad range of topics in their promotional efforts.

• Recycle water

• 100% closed loop water system scrap is recycled into road fill by our disposal company; resell remnants are used as often as possible

• Educating customers on the sustainability of natural stone, recycling scrap versus taking to a landfill and using water-based sealers versus solvent-based ones

• Explain pros and cons of natural stone and green materials

• Low- or no-VOC chemicals; recycling of replaced granite countertops

• Lower maintenance and longer-life products

• Offering products that are LEED qualified

• Offering quartz; all are GreenGuard certified

• Our system requires less volume to cover a specific area; greater sustainability

• Sales team promotes recycled glass and paper products

• IceStone, PaperStone with recycled material; saw natural stone scrap into pavers

• Strive to create and operate high-performance, environmentally-friendly, energy-efficient, healthful facilities

• Using marketing to promote using non-toxic sealers

• We advertise the recycled stone and the green methods used in our fabrication shop

• We are using green sealing products; recycling our leftover stone materials and water

• We have builders and developers that want green tied to their product, so we give them green options

• We promote green countertop material, and we use green products the best we can; the bottom line is money for consumers

• We recycle all of our stone; waste is busted up and used as road base; we also have begun to handle more eco-friendly products such as Richlite, cork, bio-glass and others

• We sell a variety of green quartz products, and our shop utilizes green practices such as waste recycling and water treatment

In the coming year, fabricators are planning a broad range of investments. More than half of those polled (51%) said they would be purchasing equipment in 2013. They are also planning investments in marketing (42), personnel (37%), showrooms (29%) and overall facility improvements (22%).

Some fabricators felt increased technology will help the market over the long term. “More CNC high-production shops [are resulting in] cheaper consumer costs,” stated one responded, with others saying, “I believe that technology is allowing things to be done in stone that were never done before,” and “Better technology is making stone more affordable.”

They also said that the fabricators who succeed in the future will be investing in technology to broaden their product spectrum. “Most small fabrication shops will need to continue adding services in order to generate additional profit,” stated one survey participant. “There is only so much profit that can be generated from cutting a countertop when the housing market rebounds. Equipment manufacturers will reap rewards.”

Speaking on specific equipment choices, hand tools were once again mentioned by most fabricators (61%) and they expect to spend a mean total of $7,796 in this area.

But there are also some larger technology investments being planned, as 18% of those polled said they would be purchasing a new bridge saw in 2013, and they expected to spend a mean total of $80,000. Additionally, around one in eight fabricators (12%) said they would be purchasing CNC stoneworking centers.

As shop safety is becoming an increasing focus for fabricators, more poll respondents said they would be investing in material handling and transportation equipment than ever before (42%). Moreover, they plan to invest heavily in this area, with a mean dollar amount of $40,433 cited.

Plans to invest in management software (16%) and digital/electronic templating technology (13%) are also on the rise as fabricators become more tech savvy.

Reflecting on 2012

One factor that contributed to optimism among fabricators is their relatively positive returns in 2012. The Stone World survey asked fabricators to compare their business levels over the past three years. According to the survey, 53% of fabricators saw their business increase during 2012, with 29% reporting that business held steady and only 18% showing a decline.

Many of those reporting an increase in business said that the growth was significant. More than one-third of fabricators (35%) saw growth of more than 11%, and nearly one out of six (16%) saw their business rise 20% or more in 2012.

Given this situation, it is not surprising that the fabricators polled made less spending cuts last year. Whereas nearly half of the fabricators (48%) cut their spending on equipment in 2011, only 35% reduced spending in this area in 2012.

While most of the fabricators taking part in the survey reported annual sales of under $1 million (58%), there were some shops with higher turnover. Nearly one in five fabricators (17%) had business of $3 million or more in 2012, and 12% had sales more than $5 million.

When asked to compare today’s business climate to that of 12 months ago, 54% said that conditions were better, 20% said they were worse and 27% said they were about the same.

Speaking on their biggest challenges in today’s marketplace, competition from low-end fabricators was cited by exactly half of the respondents, a greater percentage than ever before. This was followed by smaller margins (23%) and continued declines in the housing market (20%).

Survey demographics

Remaining consistent with our industry makeup, respondents to the Stone World fabricator survey were relatively small in size — although they averaged somewhat higher than in recent years. A total of 38% of respondents had five employees or less; 29% had six to 10 employees; and 20% had 11 to 25 employees. Only 1% of respondents had 26 to 40 employees, although 12% of survey participants had more than 40 employees.

Looking at the amount of time that the survey respondents were in business, fabricators cited a broad range of experience levels, with less new companies participating than in past surveys. A total of 24% said they were in business for 21 to 45 years; 9% have 16 to 20 years of experience; 17% have 11 to 15 years of experience; and 11% have five years of experience or less. This year’s Stone World survey also saw greater participation of long-term industry veterans, with 14% saying that their company has been in business for more than 45 years.

Also of note, most fabricators (76%) reported that they are fabricating both natural stone and quartz surfacing products. Only a few respondents expressed concern about quartz surfacing taking market share away from their business, and many of them actually felt it would benefit the industry in the years to come — perhaps drawing consumers that might have selected solid surface or another alternative material. “As new quartz colors continue to come out, consumers will begin to spend more for quality products,” stated one fabricator.



Low-ball competitors still seen
as a threat to the U.S. fabrication industry


Speaking on the short term as well as the long term, stone fabricators see low-ball competitors as the greatest threat to the industry. When given four choices as to the biggest challenges in today’s marketplace, competition from low-end fabricators was cited by exactly half of the respondents, easily outdistancing smaller margins (23%) and continued declines in the housing market (20%).

Moreover, 45% of fabricators reported that increased competition from low-cost fabricators had a direct, negative impact on their business in 2012. These impacts were significant, with 44% saying that they lost 11% or more of their business volume.

When offering their candid open-ended responses to the Stone World survey, low-ball competitors clearly drew the most frequent and extensive commentaries, including the following:

• Have the distributors stop selling to low-end illegally operating fabricators and stop selling to fabricators who do not know how to manage their cost accounting.

• Hopefully the general public will be more educated and won’t accept poor workmanship from some of the low-end fabricators.

• In order for quality shops to survive, we need to figure out how to deal with the low-ball fabricators. We have been fortunate and have a good reputation, so we are busy, but little by little, these low-ballers keep opening up and taking part of the market share of the work.

The work is terrible, but they get away with it somehow. I always said they will not survive; the problem is that sometimes they do survive even by filing for bankruptcy, closing and re-opening under another name with another family member as the owner. I think these types of people are bottom feeders and shouldn’t be allowed to own businesses, but this is how it is and we have to deal with it.

What makes it harder is that, more and more, it’s about price and not quality. When you have a passion for this business, it’s hard to figure out where to go next when the public doesn’t want quality anymore.

• I’ve been fabricating and installing granite and marble for 12 years, and it’s been harder and harder to stay in business due to many so-called fabricators that lower down the prices, but don’t do the job well.

• Low-ball shops run by people who knew little or nothing about stone before they started a shop, have been a great detriment to the stone slab fabrication industry. Most of these shops do not comply to OSHA standards, do not pay workman’s compensation and show poor workmanship. Part of the reason they get by is that the general public has not been informed of the craftsmanship that is available. Having pre-fabricated counter pieces shipped into the U.S. from other countries, that are sold for less than the American fabricators can purchase the raw slab material, has proven to lure unsuspecting customers into getting a product that does not ordinarily meet the industry quality standards.

• The problem with the stone market is that race-to-the-bottom smaller shops lower their prices to get jobs, cutting margins. Most of these places pay no benefits and don’t understand their costs.