On To The Teens

Last year marked a sour end to a decade that recorded phenomenal growth in the stone industry. Doing an overview of the past 12 months would be, in any number of ways, painful.

It’s impossible, though, to just close our eyes and pretend it didn’t happen. Nor can we put a Pollyanna spin on it; like the false optimism of the early 1930s (and the famous billboards of the happy, smiling family saying, “Wasn’t the Depression awful?”)

There’s still much we’ve learned from the past few years, though, including trudging through that dry lake-bottom of 2009. It’s time to use that and look forward as we move into the teenage years of the 21st century.

The first thing is to get a handle on where we’re really at as an industry. We’re nowhere near the heights of, say, three years ago, but the crashed-and-burned feeling is way off the mark, especially with everyone’s favorite pet rock: granite.

Let’s go back 10 years, at the height of the dot.com boom, when money sprayed out of Wall Street like an exploding fire hydrant and people spent the dough freely. By the end of the third quarter of 1999, the slabs and tiles of granite rolling into ports-of-entry amounted to 385,695 metric tons (according to U.S. International Trade Commission data).

Fast-forward a decade to last September 30, when everyone cursed the previous nine months of bad business. At the end of 2009’s third quarter, the U.S. imports of granite slabs and tiles only came to … 965,089 metric tons.

I’ll save you the math. In 10 years, the demand for granite grew 150 percent in the U.S. market. Sure, current figures are way down from the go-go years of the mid-2000s, but we’re nowhere near a complete disaster.

As last year came to a close, most people still in the trade thought that we’d hit bottom and begun slowly moving up. That “bottom,” though, marked a point where we’re selling and using two-and-a-half-times more granite than 10 years ago. No adjusted-for-inflation values here; that’s literally a rock-solid growth rate that most other trades would envy.

Those figures, admittedly, are cold comfort to those who thought the heady times of a few years ago would last forever. We need to realize, though, there’s plenty of life after the party; we still have a strong and vital trade.

We also need to remember that stone, in the last decade, gained acceptance by a general audience. There’s plenty of cursing about customers poking around a granite display at Home Depot or Lowe’s, but buying stone at a Big Box store 10 years ago was an extreme rarity. The big guys don’t sell the stuff to run you out of business; it’s driven by popular demand.

What we can take from the recent dark times is that customers aren’t going to line up like people at the ticket window for a rock concert. (And that business isn’t so hot anymore, either.) Finding prospects and making sales is going to require more work as we move into a new decade.

There’s always plenty of room for improvement. Showrooms need to be more than just racks of display samples; they need to be places to offers ideas and solutions with the beauty of your materials. The longer people stay, the more success you have in making the sale.

Being customer-centric doesn’t stop with getting the work order, either. We’ve had too many Flakey Jakes appear in the past few years; fabrication and installation schedules need to be set and followed to the day and hour. That means continuing contact by any number of means, including phone calls, emails, Web and text messages. We have a quality product that they’re buying; clients are entitled to quality service.

That also means charging quality prices. In his monthly Stone Business column, Tom McNall offers regular sermons in providing a premium experience and being paid well for it; those lessons are key in dealing with the next few years.

The second half of the last decade became an era of square-foot pricing and betting on massive volumes of work. The rush to feed a market eating up stone as a commodity went beyond value pricing, with slapdash work at bargain rates discounting our profession.

And, we’re selling custom products and services, not slabs and tiles. The proliferation of materials in the past few years raised the ire of stone purists, but all those choices also caught the eyes of customers expecting a wide selection.

Stone shops are ideal for handling a large variety of materials, including natural stone, quartz surfaces and cementious products. Now isn’t the time to take the hard line; succeeding in the new decade requires versatility.

Some of the goods just aren’t the real thing for many in the trade, but even the most old-school fabricators can work wonders with the stuff. Offering it can be tough to swallow, especially as some manufacturers take some petty and snarky shots at granite and marble, but a growing number of other suppliers are glad to get your business.

Finally, 2010 should be a year where everyone starts looking at capital expenditures and making strategic production moves. Or, in other words, it’s time to invest in new or near-new machinery.

The last two years saw the deaths of plenty of new stone shops – or ones that over-expanded – resulting in a surplus of state-of-the-art fabrication equipment in the United States. It’s anybody’s guess on how much machinery remains idle, but $100 million isn’t a far-fetched valuation.

Manufacturers need to sell new machines to finance research and development, as well as maintain quality service for the installed base of equipment. The industry needs to clear the logjam of used machinery to keep manufacturers viable.

There’s probably not going to be a better time than this year to upgrade anything in the shop with either top-line used equipment or new machines still sitting in a manufacturer’s inventory. It’s a terrific investment for the long-term ….

… but we’ll also need to write off old machinery, most of which is long past any amortized value. Write off doesn’t mean trade-in, either; machines need to be scrapped and crushed, like so many mid-‘90s minivans in last year’s Cash for Clunkers. It’s the only way to cut the surplus and bring some life back to the machinery market.

We’ve seen highs and lows in the 2000s, and we’re in relatively good shape to start the next decade. Sure, the teen years can be difficult – but there’s plenty of promise ahead.

Emerson Schwartzkopf can be reached at emerson@stonebusiness.net. You can also read his blog at Stone Business Online (www.stonebusiness.net) and stonebusinesseditor.wordpress.com. And don’t forget to keep up with Stone Business on Twitter (StoneBizMag) and Facebook (search: Stone Business Magazine).

©2010 Western Business Media Inc.