Quarrying: Ask the Rockman (or Woman)

To find out, Stone Business asked representatives of five quarriers on the continent – from several of the bigger firms to smaller regional operations – about the state of the trade.
Participating in this roundtable are Jon Gregory, quarry division president for Rock of Ages Corp. in Concord, N.H..; Patrick Perus, president of Polycor Inc.’s Georgia Marble Dimension Stone in Tate, Ga.; Linda Mathiasen, corporate communications specialist for Cold Spring Granite Co. in Cold Spring, Minn.; Tom Ellias of Anderson Bros. & Johnson, a quarrier of red granite for the last 109 years in Wausau, Wis.; and Sean Weaver, president of California Quarries in Maxwell, Calif.
Panelists provided their responses during late July and early August.

Is the volume of North American dimensional-stone quarrying going to increase or decrease in the next three years? Is the movement due to general market conditions, or extraordinary circumstances? And, if due to circumstances, what are they?

Gregory: We believe that the overall volume of dimension stone of all types quarried in North America will increase over the next three years. This is as a result of the increased use of dimension stone for residential applications and strong exports of dimension stone to China. We do not see any major increase or decrease in the output of granite in North America given competition from imports and the fact that the markets for buildings, monuments and curb are relatively flat and highly competitive. Certain granite quarries in North America producing granite sought by customers in China or residential customers in North America will see increases in output through at least 2008.

Mathiasen: We feel very good about the future for domestic stone. American pride has heightened and so has green awareness. Being environmentally friendly in product selection and taking in account proximity of product to project location is very beneficial to North American quarriers. Cold Spring Granite itself has quarries located throughout the United States and in Canada.

Perus: We see the stone market, mainly used for structural applications, favorable in the next two to three years, because of the recent increase in use of stone in the construction industry that benefits both export and domestic production. The sharp decline of the value of the U.S. dollar compared to the Euro is favorable to domestic companies – even if it was more favorable to Asian companies (in particular to China, where the currency is pegged to the dollar). The memorial market is probably different; sharp increases in the use of Chinese material will be detrimental to quarries supplying this market.

Ellias: I’m hoping it goes go up. I think people are becoming more aware of natural stone. The landscaping industry is definitely going to increase with the variety of different colors that are now available. People are used to the grays, browns, and the off-colored whites. Now you have color coming into play a bit more.
I think if people put a building up, they want to do it right the first time, and natural stone will last forever.

Weaver: I believe it will go up. The use of indigenous stone is popular with California architects. The building market here is strong and I feel the demand for California stone will increase.

Are we seeing any production expansion, as far as new quarries or reopening of old properties? If so, what types of stone are we seeing from these properties?

Perus: Polycor, in 2004, invested in two major new development projects.
In Colorado, we are expanding a pure-white-marble quarry which, with the proper quarrying technique and management, is probably one of the best deposits of this material in the world. We plan to be a major world player within two years for white marble in interior applications. Along with Georgia Marble, and its extraordinary structural properties that make it so popular for exterior applications, we forecast a major comeback of white American marble in North America.
NAMCA is a new division of Polycor, specializing in development of new deposits of dimension stone, mainly in the province of Quebec. Recent developments includes the re-opening of the Phillipsburg quarry (also known as Missisquoi) which was used on many Canadian federal buildings and the Empire State Building. The opening of a red marble quarry (Cascapedia) is also in process. NAMCA is dedicated to those new developments, just to highlight how important introducing new material is important to Polycor.

Ellias: With old quarries, you’re already starting to see more stone. Companies such as ours that own old quarries are looking at going back into them, maybe for landscaping, and also for countertop material and interior projects. Technology in the stone industry has changed with products that seal the stone. People like to have character in stone. “Mother Nature’s Birthmark” as I like to say.

Mathiasen: Cold Spring Granite is always looking for new granite colors to enhance its color palette. This includes inactive quarries becoming active as new deposits could offer opportunity.

Gregory: We are seeing the re-opening of some old marble and limestone quarries in North America primarily because of building projects where matching stone is required and the owners hope that additional demand can be generated. There have been very few old granite quarries re-opened and essentially no openings of truly “new” granite quarries in North America producing at commercially feasible output levels. We are actively expanding existing quarries where the granite is in demand for China or North American residential use.

Weaver: Our company is certainly expanding with the addition of more primary and secondary saws, as well as edge-profiling equipment.

What types of quarrying technologies are you now adopting, or expanding the use of, for gaining better efficiency and/or compliance with environmental concerns?

Ellias: We’re no longer working in the hole of our quarries with the use of derricks or small cranes. We have switched our quarries to fully drive in quarries. This has allowed us to move much more material faster and a lot safer. The machinery we use has helped us extract bigger blocks for the stone industry.
As far as explosives, the minimal amount that we can use the better. Less damage is good. You’re starting to see more quarry saws come into play. Years ago we used to burn channels or channel drill. Now we are looking at quarry saws in the quarry. This allows us for a much better yield for stone.
We’re also getting real close to using 100 percent of our material. If it doesn’t meet monumental, building, countertop grade, or erosion-control, we crush it so you now have road building and landscaping material. That has helped our overall business tremendously as far as fully utilizing our product.

Mathiasen: We’re focusing on more-efficient slot-drilling and wire-sawing methods, which require only the bottom of a loaf to be freed by explosives. The company as a whole is putting tremendous focus on being lean and implementing Total Productive Maintenance (TPM) for each piece of equipment to increase efficiency, reduce down-time and save on repair expenses. TPM provides machine operators with autonomous maintenance schedules to ensure equipment is kept in tip-top condition and abnormalities are reported immediately.

Weaver: Our company uses and distributes an English blasting technology called Nonex that is phenomenal. It is a gas expansion capsule that splits stone out of our quarry fast and effectively without micro-fracturing. When you combine this with the product having little noise and vibration, Nonex is a great tool.

Perus: In term of quarrying technique, the focus this year has been in changing method of extraction in our marble quarries in Georgia and Colorado, moving from gatters and belt saws to wire sawing. This has improved both the yield of our property and the quality of our blocks.

Gregory: New quarry technologies have not made great strides since the introduction some years ago of hydraulic drilling equipment, quarry diamond wire saws and large front end loaders for extraction. Waterjets have improved and had some success, but still have a high amount of downtime limiting their cost-effectiveness. As diamond-wire prices have declined, diamond-wire sawing has proven to be the superior quarrying method at this point due to the higher cutting speed, lower waste and fewer cracks generated in extraction.

How has less-expensive (i.e., cheaper) stone and the large increases in imported-stone volume in the last five years changed your planned operations and business plans for the next five years?

Weaver: Well, we try to give our customers the best product at the best price. If that means going to China for granite, so be it. Most of our sandstone, limestone and tuffa is domestically quarried and fabricated.

Mathiasen: The increase in competition has definitely changed the granite landscape. Granite is available everywhere and duplicate colors are easy to find. Cold Spring Granite has several strategic partnerships with granite sources all over the world, combining imported stone with our own domestic colors to offer the largest array of colors, expand our capability, and provide timely and accurate delivery and reliable service

Gregory: As an integrated quarrier and manufacturer focused primarily on the market for granite memorials, we initiated plans to vertically integrate into retail distribution of memorials about 10 years ago and went public to buy memorial retailers seven years ago. This step was taken primarily because of what we saw in Japan where China grew to a point of supplying 80 percent or more of all the finished memorials sold in Japan and substantially decreasing our block sales to Japan. We believe that a strong and growing retail distribution system offering customers a choice of both imported and domestically produced memorials will not only grow revenues, but sustain and increase demand for the granite from our North American quarries and manufacturing plants. It also permits us to better balance quarry output with quarry demand as market factors dictate. In 1998, we began increasing our international block sales team to expand offshore block sales outside of North America.

Perus: Import of stone is not a new thing in North America. The market share of imports has been, for several years, more than 90 percent. The recent increase of Chinese imports is probably affecting other exporters to North America (in particular, Europe) than domestic producers, which serve a different part of the market. We keep adapting our strategy and services to market conditions, and the decision of Polycor to leave the memorial market in 2004 is linked to those changes.

Ellias: We’re more aware of the quality of stone we send out (quality control). With our stone, it’s some of the most-expensive in the world – it’s in the top ten on the monument side.
With the cheaper stones – yes, you can buy them for less, but when you have problems, who are you going to talk to? It’s always nice to be able to pick up the phone and address the situation, and how can we adjust to fix those problems. Others can come in and sell a container of stone from somewhere, but when you receive that container it’s like a box of Cracker Jack; there’s a surprise in each one. By volume, you have to sell that much more of the cheaper stone to maintain the price you have now. We tell our customers – sell ten of our stone, or 20 of their stone, and the price is going to be the same and in most cases it is hard to find 10 more customers.
As we see more of the cheaper stone out there, I think we’re going to start seeing problems with it eventually. The less-expensive stone has brought the overall business down a bit.

Do you see the renewed interest in local niche (or boutique) quarries lead to larger numbers of independent producers of dimensional stone, or will there be a consolidation of these under larger ownership groups?

Mathiasen.: Dimensional stone quarrying requires many resources, not just monetary but also skilled quarriers, heavy machinery and equipment, and environment awareness. We depend on our supervisors and managers to know and understand the quarry to develop plans to work the stone. They need to know what kind of stone we are moving into from color and markings to the structural integrity. In addition, importing and exporting could become more difficult for smaller operators

Gregory: We think it is very unlikely that local niche (or boutique) quarries will lead to larger numbers of granite quarriers or other dimension stone quarriers. In view of permitting requirements, environmental requirements, high capital investment requirements, safety regulations, foreign competition and employee compensation issues, we see no reason to believe the 50 years of ongoing consolidation in the quarry industry will suddenly stop.

Polycor: It is no secret that Polycor believes it is time for the dimension-stone industry to consolidate, and be organized like most major industries. The market today, more than ever, is global; small operations cannot take advantage of this globalization. Market access is the most-important aspect of the success of our industry, and this can be achieved only through global organization. Polycor is dedicated to playing its role in this reorganization, and this is just the beginning.

Weaver: On the West Coast, we have seen a number of independent quarries with smaller fabrication facilities. The eastern market is established by larger companies.

Ellias: You’re always going to have your few local mom-and-pop type operations. As you consolidate, what you become is a big corporation, and sometimes corporations overlook smaller businesses.
You do not want to put all your eggs in one basket. I would rather have ten $10,000 dollar customers than one $100,000 dollar customer. If you lose one customer, you’re able to maintain your company, but as soon as you lose that major customer, you’re hurting.

This article first appeared in the September 2004 print edition of Stone Business. ©2004 Western Business Media Inc.