Of those who responded to the Stone World survey, which was sent primarily to stone fabricators, nearly two-thirds (66.0%) expected the stone market to increase in 2003. Almost all of the remaining respondents (30.7%) predicted that business would hold steady this year, with a small fraction (3.3%) predicting a decline.
And not only are fabricators predicting growth in 2003, but they also feel that the increase in business will be fairly significant. The vast majority of those predicting an increase in business this year (88.6%) state the growth will be greater than 10%, and almost half of the respondents (45.5%) feel that the rise will be greater than 15%.
They are a variety of reasons being cited for the increased business in 2003, with the growing affordability of stone for residential countertops at the forefront. More and more fabricators are stating that natural stone has become a cost-effective option when compared to man-made counter surfaces. "The cost [of stone] is much more in line with solid surface," reported one respondent, while another stated, "Many people are discovering that stone is not especially for the rich and famous."
Increased consumer awareness of natural stone is also being cited as a boon for the industry, and this appreciation is being enhanced by the presence of stone at home centers such as Lowe's and Home Depot.
Long-term growth
Perhaps even more important than the short-term success, fabricators are also predicting solid growth for the industry over the next five to 10 years. Over three-quarters of respondents (76.2%) feel that the stone market will increase over the course of the next decade, with 18.9% predicting that the market will remain unchanged and 4.9% calling for a decline.Of those predicting long-term growth of the stone industry, nearly half (48.8%) feel that the increase will be more than 20%, and a portion of respondents (22.1%) expect even greater growth, as they are forecasting a market increase of 30% or more.
When asked about the long-term optimism, respondents astutely pointed out that while stone use in the U.S. is certainly on the rise, the overall market share of the stone industry is relatively small when compared to other materials used in homebuilding. This fact leaves room for untold growth for stone fabricators. "Only a small percent of houses are using stone now," stated one fabricator. "The declining price of stone will increase market share," predicted another.
Results for 2002
Moving beyond speculation and market trends, the optimism for the future of the stone industry can also be explained by its recent history. When polled about their own firm's performance over the past year, companies reported that growth was excellent in 2002, with 73.4% of fabricators reporting increased sales in 2002. Of the remaining respondents, 18.9% saw business hold steady, and 7.7% noted a decrease in 2002.Moreover, the growth in business for stone fabricators last year was significant. The vast majority of companies with increased business (91.4%) saw a rise of more than 5%, and 59.2% saw their business increase by a factor of over 15%.
It is interesting to note that over two-thirds of fabricators (68.5%) reported that the September 11 terrorist attacks and the ensuing world events have not had a direct negative impact on their business in 2002. And even with the ongoing threat of terrorism and impending war overseas, most fabricators (71.8%) do not feel that these events will have a negative impact on business in 2003.
Future investments
With solid prospects for 2003 and into the next decade, fabricators are planning to invest more into their businesses over the course of the coming year. A total of 77.9% of fabricators polled said they will increase their investments in equipment in 2003, and a significant number will also be upgrading their overall fabricating facilities (44.2%). Also a sign of increasing business, many respondents (37.7%) also said they would invest more in personnel this year.Reaching out directly to consumers, other major investments by fabricators will be made in marketing efforts (33.1%) and in showroom facilities (31.8%). And with increased sales in mind, 29.2% of respondents said they would be investing to increase their stock in 2003.
Overwhelmingly, equipment purchases by U.S. fabricators are being made to fabricate stone for the residential market, particularly granite countertops. More than four out of five respondents (81.6%) were planning to invest in hand tools during the year. Other popular equipment investments included polishers (44.9%), bridge saws (31.6%), shapecutting machines (24.3%) and cranes (18.4%). And following the usual trend, the work in American fabricating shops is geared almost entirely towards slab fabrication, with only a small percentage of respondents planning investment in blockcutters (3.7%) or gangsaws (2.2%). Interestingly, the amount of respondents who planned to invest in tile lines jumped to 5.1% this year (up from 2.3% a year ago), but this is still obviously a very small segment of the industry.
Following the pattern of a year ago, the increased spending will be relatively moderate in 2003, but slightly more than last year's figures. About two-fifths of the respondents to the survey (39.2%) are planning investments of greater than $250,000 in 2003. And there are a significant number of firms planning relatively major investments this year, with 15.7% planning to invest $500,000 to $1 million. Additionally, 7.2% of respondents are planning to invest more than $1 million in 2003.
The capital outlay for 2003 takes on even greater significance when considering the size of the companies polled for the survey. The majority of firms polled for the survey (60.3%) had 10 employees or less, and only 16.6% had more than 25 employees.
Companies that participated in the survey had relatively large turnover for their size, with nearly three-quarters (74.1%) reporting sales of over $500,000 in 2002, including 38.8% recording sales of between $1 million and $5 million and 6.0% with sales of more than $5 million.
Once again, the survey demo-graphics show the participants to be well-established firms - matching the standard of the industry. A total of 71.1% of companies polled have been in business for more than five years, with 41.6% having been established for more than 10 years. But the good fortune of the stone industry and the opportunities for fabricators have also attracted some new firms, as 28.9% of respondents have been in business for one to four years.
