With all the daily talk of economic crisis all over the world, the high level of indebtedness, unemployment, slow economic growth, it is easy to forget there are markets which are actually doing quite well in the natural stone industry. We do not refer to a relatively small emerging market which has been growing impressively for about 5 years and which is catching the eye of the world. We refer here to no less than Germany, a country of 80 million people and with as solid an economy as is possible in these current times. To get a feel for the market we spoke to several people, mostly big stone importers, to get their views and impressions.
One aspect stood out immediately in all the meetings. Even in an ecologically sensitive country like Germany which reveres all things natural, artificial stone has recently been making inroads in a significant way- so much so that natural stone companies, be they mining or processing companies in different countries, had better wake up to this new threat. The advances in digital printing and other technological innovations means the porcelain tiles that are now being produced are almost perfect copies of natural stone, and it is sometimes hard for even the stone professionals to differentiate between the two. Many companies reported that, in the improving German economy where construction activity is, without any doubt, on the upward trend, while demand for natural stone has increased only slightly, the demand for artificial stone has increased substantially. The arguments given by artificial stone suppliers- big size slabs which are valued by the stonemasons, easy maintenance, which is often valued by the end consumer, availability in unlimited quantities without any hassles which is valued by the stone wholesalers, they all add up to growing acceptance of the copycat industry. And yes, artificial stone is being sold in the market at relatively high prices, which means it is good business for everyone in the entire logistical chain. Cheap natural stone and any cheap product ultimately becomes unattractive for all or almost all parts of the distribution chain- it means much lower profits for everyone even though the effort, the financial commitment, and the risks remain the same.
As Jos Simmons of Michel Oprey & Beisterveld, located in the Netherlands but doing substantial sales in Germany, puts it, architects prefer big size formats in their projects and, very often, they no longer insist on natural stone. Moreover, artificial stone now comes in 6 mm thickness without nets. The trends too have changed, the architects very often mix natural and artificial stone. For example, in a hotel lobby, in the main traffic area, the architect may use artificial stone, but in that part of the lobby where there is a sofa and chairs where the guests sit down natural stone is still preferred to give that luxurious look which only real stone can give. The artificial stone companies also do far superior marketing. They provide attractively designed displays for the showrooms. They provide the test results of their materials right from the start, they have understood better than natural stone people that architects will never use any material without knowing the test results beforehand.
ROSSITTIS is one of the best known importers in Germany, the biggest company in the country in natural stone. It has 3 huge warehouses in different towns - in Holzwickede, Brinkum and Waldorf. The company also has a quarry in Brazil. Gerhard Rossittis, President of the Company, is officially retired, but is as active and passionate about the business as any young teenager. According to him market demand for natural stone has remained stable. Marketing in today´s world is important and artificial stone have done well in focusing on retail outlets. But he basically sees artificial stone as being part of a fashion trend with a life cycle of perhaps 10-12 years. As he puts it, the leather finish, waterjet, flamed, etc. - these are just not possible with artificial stone and are unique to natural stone. He points out that porcelain tiles cannot be cut with normal diamond tools- and this is currently a problem for stonemasons. But he acknowledges that in indoor applications artificial stone is being used more often. However, natural stone, he insists, will keep its place.
The German market for construction has revived during the last two years. Both commercial buildings and the residential sector are enjoying growth.
One curious aspect in the residential segment, the opposite of most other countries, is that growth is being driven by people over 60 years age. The older people, often retired, want to make improvements in their homes and generally prefer natural stone. The younger people, in Germany, but also in the Netherlands and possibly other countries, prefer to spend their discretional income on experiences, a weekend in Ibiza, for example, rather than in purchasing goods. This new sociological trend has also been observed by the automobile companies, who have noted relatively less sales to this demographic segment of the population.
Albert Platte, Marketing Manager in the company NATURSTEIN RISSE, located in Anrochte, also sees the German market as increasing in size, low interest rates being a driver of growth. He also feels that ceramic slabs and tiles will increase their market presence in the market. He says that ceramics can now be used in all kinds of applications. For his company the biggest problem today, and this is something all businessmen in the industry seem to agree upon, is the shortage of qualified people in the stone industry. Germans prefer other professions, and more foreigners are now being employed in stone installation due to shortage of locals.
Albert Killing of the company ALBERT KILLING NATURSTEINBETRIEB GmbH, also located in Anrochte, feels natural stone will continue to have its niche in the market, but its market share will decrease. He, too, sees the ceramics as increasing sales at the cost of natural stone. The argument of less maintenance being given by the artificial stone people has special resonance in that segment of housing which is given off for renting. In outdoors applications too ceramics is increasing market share because it is easier to handle. He also emphasises the marketing orientation of the ceramics industry as being a major factor. And he also points out that technological innovation is now reaching a stage where each ceramic tiles now looks different.
Reiner Krugg, General Manager of the German Stone Association confirms the positive trend in the German construction industry. The low interest rates environment has encouraged many people to invest in new housing buildings so as to rent them and obtain better financial returns. There are also a large number of government buildings in construction all over the country. Home renovation is also increasing and in private gardens individuals like to put natural stone there. In kitchen countertops about 50% of the market share remains for natural stone. Limestone is currently in fashion, from Germany, Italy and Spain. The use of travertine from Turkey and Italy has also increased. Architects prefer mono-colour stones, and therefore sand blasted, flamed and bush hammered finishes are more popular.
Overall, therefore, one gets a very positive feeling about the state of the construction industry in Germany. But, it also becomes clear, the natural stone industry is facing a new, unprecedented challenge, that of copycat stone- and how it responds to this challenge will ultimately determine whether the industry prospers or not.