Latest trends in the U.S. Stone Industry
The American market has seen a lot of growth in the last decade, the principal increase has been in the residential market, specially for granite counter tops. Over 3000 new small companies have entered the market to fabricate granite kitchen countertops and bathroom multicoloured or granites with movement. They appear to be the only two markets with the right colours appealing to home owners. Prices have dropped drastically by 40% for granite, making it the leading hard cover surface material in demand. Home Depot by introducing Silestone from Spain has also made this once unknown product and leader in the market place against other synthetic stone tops. Brazilian granite slabs have dropped in price almost 40% in the last three years, in part due to the devaluation of its currency.
Major changes have occurred in the restructuring of companies. Georgia Marble, the dimension stone division was sold by the French company Imetal and bought by a Canadian company called Polycor. Dal-Tile, which owns American Olean, a major ceramic company, was bought by a major carpet company in Georgia, which has entered the hard covering market, making them one of the biggest flooring distributors in the United States. Canadian companies have expanded and consolidated their marketing efforts by buying companies or distributors in the United States. Many foreign companies have entered the market either with warehouses or sales offices, from Egypt, Turkey, China, Indonesia, Brazil, Mexico just to name a few.
China is increasing its sales to United States yearly at double digit figures and taking over the monument business (as are major producers of Indian granites), and branching into the commercial market such as hotels and restaurants, and now some into office buildings. They are specially strong in granite flooring and the Chinese market is looking to compete on all levels of production with any foreign producers to increase their percentage of this large market. It appears that in granite mostly China and India are competing heavily against each other to take orders at the lowest prices ever seen in this market, and prices have dropped by as much as 50% on Indian granites in the last decade. To give an example, 10 years ago Absolute Black granite tiles cost $5.00 per square foot and today the price is $2.50/SF for the same quality.
There is still a good market for marble, but the growth in the market has not been as relevant as in the granite market. Granite has declined in the segment of major commercial buildings whereas limestone has increased steadily by 7% a year and new countries of supply have entered the market in both limestone and travertine, such as Bulgaria, Turkey, Armenia, Iran, and others taking away the large market share once held by the Mexican and Italian producers. The main purchases from Spain remain still year after year to be Crema Marfil but this too will change drastically over the next decade as the high priced products from Spain will lose their market share to new quarries in beige marbles from countries like Turkey and Indonesia and others.
The demand for stone has been increased regularly every year in North America by close to 15% or even more. Granite Countertops have been increasing by over 40% per year and have increased over 400% since year 1997. Marble and granite tiles have been increasing yearly by about 6% to 15% and have increased overall by about 70% since 1997.
The strengthening Euro is affecting imports from Europe a lot as the exchange rate is now more than 1.20 U.S. dollar. This means over 35% increase in prices from Europe due to the dollar devaluation in the last two years. Buyers are looking for alternative suppliers at the time of now writing this article, not tied in to the Euro to buy their stone as prices still dictates the market, thus allowing many new entries from new countries, specially with most favoured nation status or duty free entry.
2003 saw a modest overall increase in demand for stone from 2002 while some specific markets within the country have seen a larger increase. Decrease in granite monuments and decreases in demand for Indian limestone have been noticed. This year has seen a 25% increase in granite countertops. It is expected 2004 will see a very good increase in residential dimension stone. In general, construction is up in the market and exceeds over $500 billion, according to McGraw-Hill Construction Dodge. Total construction has seen about a 1% increase in this year from January-September 2003 index over last year. The low cost of financing a home in the United States due to the low interest rates has kept the residential market very strong, offsetting any commercial differences, and has seen a17% overall increase over the previous year.
The commercial market has seen a slight decrease in dimension stone as many major companies are restructuring, and getting ready for more heavy competition from both domestic and foreign entities. Domestically all the other hard surface producers are fighting with the stone industry to increase their own demand for their products. Stone has out paced increases in even the traditional large market of ceramics. Foreign producers are introducing new products in the way of new finished, new colours or types of stones, and new countries are also entering the market.
Many architectural firms have seen a decline in many projects either not financed or delayed awaiting redesign, and in many cases deleting stone from the projects. When cuts are made in the budget the first to be decreased is the stone portion of the project. There are still many more projects on the drawing boards that will use dimension stone over the next few years, as stone is still the choice of architects, if affordable. Where architects could not afford stone from Europe they are looking at India and China to give them the right price to make it affordable so they can use stone in their projects. However, most architects still have the dream of using French or Italian stone, as this has been a mind set that goes years back in their education of architectural development with leading historical projects being from these two countries.
Just to show you the demand for stone has increased, the Marble Institute of America or MIA as it is known, under new management and expanding their services widely, has seen a large increase in membership and now has over 1000 members and is still growing strongly. It is projected to have over 2000 members by mid year 2006. The increase in membership and the trade show Stonexpo, organised by it, that met in December 4-6 last year in Atlanta had close to 200 exhibitors. Other new shows for stone have appeared in Las Vegas and New York to give an East and West coast coverage and attendees and exhibitors are flocking to these shows in addition to the well known Coverings show in Orlando. There is sure to be a shake up with Coverings now with these added two shows.
In general, as far as colours go whites are now coming back in demand for buyers both in marble and granite. Beige and yellow granites, marbles and limestones are still leading the market demand. Green, black, greys, and browns are the next colours in demand as far as percentage demand for stone. Many new colours are being introduced yearly and there seems to be no end as to what colours and or designs will sell in the market in some quantity. Imported slate tiles are still increasing in demand. Patterned flooring such as tumbled, antiqued, rusticated, and many other designs are increasing, especially with the ceramic tile distributors. Borders, mouldings, and even water jet cutting patterns have all seen an increased demand in the market.
Demand for machinery has increased, especially in small affordable CNC type machines or those for making kitchen tops as well as edging machines. As so many small shops have entered into the market, they are all consuming transportable yet versatile machines affordable to the new entrepreneur. The demand for diamond blades and bits has increased by 15% a year. Many major producers domestic and abroad especially in granite have invested in resinating machines to apply epoxy type coverings to the face of granite to hide the blemishes of the natural fractures and markings in granite. Water jet machines are still on the increase in demand and it is expected that over a 100 will be sold in 2004.
Many distributors have expected in to the fabrication business while many fabricators have now expanded into the installation business. Distributors have expanded out of their home office and into other cities and other states. Next year is a waiting phase in the economy to see that will happen in the Presidential elections. This will affect the market outcome in one way or another. The dollar against the Euro may remain the same over the next 6 months at least and perhaps till end of 2004 but who really knows. At least these views are what most common economists foresee at this time.