Welcome to the 21st Century of Stone in North America

by | Oct 3, 2004 | Articles

It is important to define certain parts of this market study as marble-limestone for ease in studying the data available from world and domestic surveys. Further, marble, on a commercial basis, is defined, as any limestone that will take a polish, while geologically speaking, there is a difference between limestone and marble. Travertine is considered a limestone; however, most statistics, including those supplied by the Department of Commerce, only break out the consumption by travertine, granite, marble and other stones. Typically limestone is included in the other category. Other can be limestone, soapstone; green marbles are serpentines (which many consider to be a marble commercially speaking), quartzitic stones, semi-precious stone, basalt, etc. Black granites are not geologically granites but are Gabbro’s and thus could be classified as other. This makes understanding of the statistics confusing, to say the least, and thus consumptions will be an interpretation of these statistical numbers.

For example, the Department of Commerce figures as reported by Stone Magazine in the May 2000 issue, it is noted that for imports only in the year of 1999, about $50 million in travertine, $316 million in granite, $187 million marble, and $177 million other. About 80 per cent of the other figure is considered limestone. Sometimes by mistake the numbers showing marble include commercial limestone. The U.S. Customs now has a separate department for analyzing and geologically testing stone to identify these mistakes in order to take limestone out of the lower duty rate of marble and put it into the higher duty rate of other (limestone). For purposes of this market study we are defining the report to be a mixture of numbers meaning marble-limestones. Also the reader must accept that these import dollar figures represent wholesale costs or raw materials or blocks and not finished products in all cases or retail prices. Assumptions will have to be made reasonably to interpret these dollar figures on a conservative basis.

Compiled by M. Stratiyevsky; Supplied by the Department of Commerce
Travertine Granite Marble Other Stone Total
1998 $36,204,429.00 $263,815,119.00 $175,298,270.00 $165,611,802.00 $640,929,620.00
1999** Not shown $252,751,747.00 $467,215,561.00 $32,684,205.00 $869,819,625.00
1999 $50,027,868.00 $316,497,866.00 $187,219,109.00 $177,528,658.00 $731,273,501.00
2000* $41,987,277 $275,932,328 $139,922,814 $141,627,964 $599,470,383
Figures are in U.S. dollars as reported in the May issue 1999 and 2000 of Stone Magazine

* 2000 figures reflect only the January & August figures of the year. **1999 figures show Stone World statistics from U.S. Department of Commerce and in addition not shown is $117,168,112 for slate. In their marble category they have combined marble with travertine, alabaster and other calcareous stone. In the “other” category they combined dolomite, sandstone, quartzite, basalt, porphyry and other non-specific stones.

Discrepancies will occur in reporting methods and who is making the reporting. Note that the total 1999 figures as reported by Stone World show imports at $869 million while Stone Magazine shows imports at $731 million. If you add to the Stone Magazine figures that of slate for $117 million the new approximate total is now $848 million dollars. These are comparable.

 

World Information

World stone production has reached an all time high and is projected to go even higher. As per table below:World stone production has reached an all time high and is projected to go even higher. As per table below:

World Stone Production
Survey of Stone 2000
Metric Tonnes
1976 1986 1995 1999
18,000,000 25,000,000 59,280,000 110,000,000

It is projected that by the year 2005 that stone production shall exceed 160,000,000 tonnes annually. Some of the major producing countries of stone presently are:

China 11,000,000
Italy 8,500,000
Spain 4,500,000
India 4,500,000
Brazil 2,000,000
Korea 2,000,000
Major stone producing countries in 1999

A country to be on the look out for is Turkey, which has a tremendous amount of the world’s natural stone reserves. When the Turkish government can improve their economic conditions and entice investments from abroad, Turkey will expand their stone industry into one of the leaders of the world.

India is still growing in production and sales. Exports in 1999 exceeded 350,000 tons of finished or semi-finished, a new high; while block sales were over 500,000 tons to Europe, 380,000 tons to Asia and only 50,000 tons to U.S.A. In 1999 India saw a 20% rise in its internal consumption of granite. Germany is the main buyer for Europe and the U.S.A. is still the number one buyer for India, especially of tombstones, and for which Germany imported 25,000 tons from India.

Spain is number two in natural stone in Europe and is moving fast on Italy. Italy is down on its sales in the world market. Spain sold over 2.5 billion dollars in stone in 1999 for which 600 million dollars or more was exported. Spain has about 700 quarries and over 1400 processors of stone. Italy by far spends the most amount of money in Europe on stone production and operations management with Spain second and Germany and Greece behind them.

Every country is feeling the touch of the Chinese power of granite in their market place. There is apprehension that China will be a major player in sales to all importing countries over the next decade. The issue is not there natural availability of stone that is over 300 different stones, but their quality control issues. Presently China is trading on price alone, in hopes of capturing major markets. Exports from China rose from 10 million tons in 1998 to 15 million in 1999.

World stone consumption per capita finally rose to 10 square meters per 100 people an all time high.The highest consumption is still Greece with 151 square meters per 100 people.

Consumption per 100 people
“Measured in square meters”
Greece 151
Saudi Arabia 139
Switzerland 132
Belgium 117
Italy 101
Germany 55

The U.S.A. is still one of the lowest consumers per capita which shows the potential for growth in the marketplace. For most countries that export stone, the U.S.A. is still considered the number one country for sales of stone.

Consumption of stone shows the U.S.A. is still high on the list and is growing.

Stone Consumption
Top ten countries with over 110 million square feet per year
Million square feet
China 650
Italy 620
Germany 470
USA 445
Spain 420
Japan 350
India 290
France 270
Taiwan 235
South Korea 220

As reported by the U.S. Census Bureau in their Commerce News, dated June 18, 1999, “In 1997 the U.S.A. showed a marked increase in the number employees in the stone and masonry contractors industry of 164,000 persons. This does not include importers, distributors, sales, fabricators, wholesalers, retailers, or associated product industries. Masonry and stone contractors released a report in 1997 showing contractor construction work over 12.2 billion dollars.”

The future of stone is predicted to increase at an average consumption increase in the world of 7.72% per year with the forecasts shown in the following table:

Expected World Trend & Use
Year Production of Gross tonnes Square Feet Increase per
Millions Millions Year %
1996 46,500 507,455
1997 49,500 540,200 6.45
1998 51,000 556,665 3.05
1999 54,500 594,870 6.86
2000 58,180 635,100 6.76
2005 80,650 880,230 7.72
2010 111,800 1,220,260 7.73
2015 154,980 1,691,640 7.73
2020 214,850 2,344,875 7.72
2025 297,830 3,250,820 7.73
Source: Stone 2000 Annual % increase

Finished products of stone are also forecasted to grow at an annual rate of 9.7% per year in the world with present figures showing in the year 2000 finished products of 2.3 billion square feet and the year 2005 projected at 5.3 billion, and 2010 at 8 billion square feet. If these projections are accurate than in the year 2025 we shall see sales of finished products exceeding 26 billion square feet. This should make the tile, slabs and cut to size factories very happy.

Note the Department of Commerce tracks totals in stone in four categories: travertine, granite, marble and other. Most people consider travertine a limestone.

The U.S. market is a very fractured market with various levels of distribution. Producers typically are quarries with small fabrication plants capable normally of producing only cubical work. This work is sold to contractors for cladding of commercial buildings, or large residential jobs for walls and retainer walls or other uses in residential construction. Very few producers are capable of producing tiles and slabs for the residential market. The marketing of stone is antiquated and not international in scope. Most producers are regional and do not promote nor sell nationally. Most sales are in house sales and are not through the current channels of architectural representatives or Independent Sales Organizations (ISO’s).

Machinery in most plants is limited to simple cutting with multiple lines for various finishes. Since textured finishes are in demand the market most factories are offering bush-hammered, chiseled finishes, or split finishes. The most popular today are the dolomitic limestones, which can be flamed and are suitable for exterior uses.  Indiana limestones are in decline. For years the Indiana limestone has been the staple of most large commercial projects on the East Coast of U.S. especially in the New York and Washington, D.C. area where governmental projects are on the increase. However, since the Indiana producers are limited only to producing Buff beige and Grey limestone, they are losing their favor with the architect-designers and will be losing a large market share to other limestone producers domestic and foreign. There will be many changes therefore over the next decade of producers in Indiana changing ownerships.

Marble-Limestones represents about 39% of the total stone production in the United States (as reported by Minerals Yearbook and U.S.G.S. 1998 article called “Stone, Dimension-1998”) that is estimated now around 71 million dollars in block format of which 61 million is limestone and 10 million is marble. In retail sales at the common factor of 5 this represents total sales of domestic produced stone around 350 million dollars or 300 million for limestone and 50 million for marble. The United States market production is unable to currently fulfill the demand for stone made by buyers thus forcing more and more the import of stone. Since there are a limited number of producers of tiles and slabs this area of the market is almost 97% import. The only two producers at this time are Georgia Marble producing only their white marbles but now with French ownership will expand over the next five years with imported stone, and New Mexico Travertine who is producing some limited stones from their quarry but has expanded with over 12 limestones from other domestic quarries. Tennessee Marble Company is producing some tiles and slabs but primarily markets the stone for cut to size projects and has limited resources of stones other than their Tennessee pink which is difficult to produce and limited in size of slabs that can be produced.

According to the United States Geological Society, as prepared by Robert L. Virta in the Mineral Commodity Summaries dated February 2000, dimension stone produced in the United States in dollar value has remained constant for the last 5 years.

Dimension Stone United States
Excerpted from U.S.G.S. Study by Robert Virta
Feb-00; Published in Mineral Commodity Summaries
1995 1996 1997 1998 1999
Production $233.00 $234.00 $225.00 $224.00 $230.00
Imports $478.00 $462.00 $548.00 $698.00 $805.00
Consumption $659.00 $646.00 $718.00 $862.00 $990.00
Dollar values in millions; Difference between domestic production plus imports which do not add up to consumption is 20% of domestic production was exported.

It is interesting to note that the U.S.G.S. study of imports shows $805 million while the Department of Commerce shows $731 million for 1999. Using the U.S.G.S. study of consumption of domestic and imported stone and again using the multiple factor of 5 for retail values, the total consumption is estimated at almost $5 billion. It is also noted that imports have taken a steady rise since 1996 over 15% per year.  This is a sizeable increase that is not foreseen to decline. Also based upon this report it is obvious that imports versus domestic are on the rise and now the United States imports 80% of its consumption.

The U.S. Census Bureau has now reported the following for imported stone by code or category:

  Code Description ANNUAL 1998 ANNUAL 1999 ANNUAL 2000 MAY 2000 YTD MAY 2001 YTD %1998- 99 %1999- 00 %2000- 01
  2514
TOTAL 1,487,696.00 2,140,243.00 3,086,086.00 1,105,952.00 1,855,637.00 43.86 44.19 67.79
  2515
TOTAL 4,934,275.00 7,621,613.00 8,057,360.00 2,944,283.00 3,110,948.00 54.46 5.72 5.66
  2516
TOTAL 18,878,287.00 21,409,140.00 24,604,795.00 9,213,487.00 9,012,231.00 13.41 14.93 -2.18
  6801
TOTAL 1,754,847.00 2,842,227.00 3,550,657.00 754,553.00 1,436,927.00 61.96 24.93 90.43
  6802
TOTAL 825,231,807.00 958,405,335.00 1,208,967,905.00 469,097,023.00 534,786,700.00 16.14 26.14 14
  6803
TOTAL 44,681,024.00 57,284,987.00 67,815,309.00 24,673,168.00 27,690,149.00 28.21 18.38 12.23
Grand Total 896,967,936.00 1,049,703,545.00 1,316,082,112.00 507,788,466.00 577,892,592.00 17.03 25.37 13.8
2514 Slate crude or roughly trimmed
2515 Marble, Travertine, Alabaster crude etc. Onyx, Limestone
2516 Granite, Porphyry, Basalt crude or cut etc. Blocks, Slabs, Sandstone, Cobblestones
6801 Setts, Curbstones and Flagstone of Natural Stone Stone
6802 Worked Monument etc. Stone Art Nesoi Marble, Alabaster, Slabs, Tiles Granite Monument
6803 Slate Worked and Articles Building Stone Slate

The above chart shows exactly which categories are to be included in the general numbers of stone for dimension stone or building stone as reported by the Census Bureau and should consist of 6 harmonized tariff codes as shown. Thus if anyone wants to pull out certain numbers they may to suit their needs. This does not include other miscellaneous stone. The year 2000 shows a total stone imports of 1.3 billion dollars, which does not include domestic production.

The market for stone is large with over 20,000 buyers or more and expansion of stone sales is inevitable. The market per capita use of stone in the United States is less then half of that of most European countries. This means future growth for stone in the market. The introduction of Home Depot and Home Depot Expo into the stone business of selling primarily tiles and kitchen countertops has increased the demand for stone and the awareness of the consumer for stone. Presently Home Depot has around 900 stores and plans over the next decade to increase that to 1600 and the Expo will be increased to 250 outlets. They are the stone markets best marketing effort direct to the consumer. Their innovative approach to buying in volume and by-passing the distribution stream to sell direct to the consumer on average mark-ups of 35% is taking a lion share of the consumer market and causing many local distributors and producers to think about their approach to the market. Presently Home Depot is selling around 100 million dollars yearly.

The biggest increase in use of dimension stone for the 1990’s was for residential construction in stone fireplaces, renovations, tile for bathrooms and entryway, and especially granite kitchen countertops. The countertop business today is the largest use of granite which is now competing with Corian and laminate tops. As the price of Corian increases and granite decreases, the prestigious use of granite for kitchens will dramatically increase yearly in the United States. Further, when you consider the average price of granite kitchen countertops ranges from $40 to $70 with Home Depot Expo selling around $60 per square foot, the value of consumption is increased due to the installation costs.

The “Stone 2000” report by the Italians has some interesting data. Among them is the world stone usage survey as shown in the chart below

World Net Production of Finished Products And Natural Stone Main Uses in 1999
Uses   1000 Square Feet 1000 Net tons %
Flooring 2,450,000 11895 37
Exterior Cladding 630,000 3215 10
Stairs 230,000 1125 3.5
Interior Cladding 630,000 3215 10
Special Works 740,000 3860 12
Structural Works 630,000 3215 10
Funerary Art 950,000 4825 15
Other Uses 172,000 800 2.5
Total   6,432,000   32,150   100

The direction is therefore clear to reach the largest market in the United States, the consumer, producers will have to restructure their sales and marketing method to combine with local distributor-fabricator-installers in order to compete and make the stone more affordable by the end-user. This will increase the sales of stone for any producer and will assist it to compete against other hard cover flooring materials such as ceramic tile, parquet, wood flooring etc. The D.I.Y. (Do-It-Yourself) market satisfies a segment in the market. The other major segment will be qualified installers to satisfy the other part of the market that is presently lacking in the United States. There appears to be a shortage of qualified labor market that is temporarily being filled by foreign workers such as Mexican workers. Fabricators or factories will be required to retrain the work force in the market if they want to service the buyers.

Installation costs vary according to the type of stone, size, and whether it is in tile format or slabs, residential or commercial. Also according to the area and labor rate installation costs will change. The average for installation of tiles ranges from $4 to $8 per square foot. Cut to size slabs vary in installation costs from $12 to $25 per square foot and higher if it is cubical work. Other factors that can raise installation costs are cladding of exteriors of building by handset or other methods. If installation is included in consumption of stone, the added factor of $10 per square foot can conservatively be added which means that the installation of stone in the market is another $3 billion dollars (300 million square feet times $10 per square foot) in total consumption. Thus the total consumption of stone in the United States including installation is about $8 billion.

Traditionally the market has sold stone through importers or wholesale distributors. In turn the stone filters to retail showrooms, contractors, ceramic showrooms, slab distributor/fabricators, and other stone type yards. This traditional method increases the final price to the consumer. This is eroding now to the point where you will find many fabricators are installers and importers of stone thus making the final price of stone more affordable to the end user whether it is residential or commercial. On the commercial level many contractors, or owners, or developers are importing stone directly.

Fifteen countries account for over one per cent of the world production. When combined these fifteen countries account for over 77 per cent of the total production according to the World Stone Industry Report from Italy. This report goes on to say that the world consumption of stone is about 6 billion square feet. The United States represents about 5 per cent of the world consumption or 300 million square feet of stone usage or 4 per cent of the world usage.

Further, based upon the world standard of 33 per cent of the world production of stone is limestone-marble or 2 billion square feet. Thus the market in the United States at 5 per cent of this represents about 100 million square feet. Approximate 80% of the stone in the United States is imported due to the lack of available domestic stone producers and selection of stone. The world of stone produces over 5000 varieties and colors of stones while in the United States there are only a couple of hundred available and not enough to satisfy all the designers and architects needs or requirements. This allows tremendous growth in potential investments in new quarries and factories in the United States as most buyers are inclined to want “made in U.S.A.” products if available and competitive.

If we apply dollars to the volumes of square feet in the statistics we can state that the average retail price currently in the market ranges from $5.00 per square foot for the most inexpensive stone tile to $20 per square and for slabs from $8.00 to $30.00. Cut to size slabs of 2 or 3 cm thick range in retail price from $15 per square foot to over $40 per square foot. Therefore assuming a minimum standard price of $10.00 per square foot is feasible and conservative. This means that the 100 million square feet of stone consumed yearly in the United States represents about 1 billion dollars of marble-limestone. If installation is added and the assumption of 33% of usage of stone is limestone-marble than 33% of the $3 billion for total consumption would mean that another 1 billion dollars is added to this market or that the total installed consumption of marble-limestone is 2 billion dollars.

Further statistics show that on average about 55% of stone is slab type material ranging in thickness from 2 cm or ¾” thick and thicker and 45% is tile typically 1cm or 3/8” in thickness. Thus about 550 million dollars a year in the marble-limestone business is slab type material and about 450 million is tile.

As reported in 1999 by the IMM, Internazionale Marmi e Macchine Carrara S.p.A. for the first 9 months of 1999 exports that “the whole North American area shows an increase in Italian stone exports equal to +12.7% in quantity and +12% in net values as compared to the first three quarters of 1998.”[1]

The domestic and import data for consumption of stone in the United States shows wholesale costs of stone sold is about $862 million in 1998 of which about $200 million was domestic production. This value when applied to a factor of 5 times raw costs would show or support the market consumption of retail value of stone at 4.3 billion dollars. Applying a 34 per cent factor of consumption that represents marble-limestone, we support the fact that this market represents about 1.2 billion dollars plus a year.

“Demand for Dimension Stone is expected to grow during the next five years and beyond. Growth rates can be attributed to the increased use in both the residential and commercial building markets, resulting from prestige markets and renovations which have become critical to real estate operators in attracting and maintaining growth of both sales and leasing activities. Other factors contributing to this outlook are improved technologies and additional varieties of stone in an environment where alternative construction material costs have increased, thus improving the overall value proposition of natural Dimension Stone.”[2]

 

[1]IMM: Marble and Granite Import/Export During The First Nine Months of 1999.” Available on line: http://www.immcarrara.com/immnews/news/com00_003-en.htm.

 

 

[2]Loyd E. Antonides and Robert L. Virta, “Stone, Dimension”, Minerals Yearbook 1998