Eastern Influence

May 5, 2006

One of these came last month after a long day at Coverings 2006, when Salem Stone made its annual report on company progress and new products. A question came up about those “Chinese knockoff” production machines, and Mike Willard, Salem’s sales/marketing vice president, noted that the current quality of products isn’t always up to par.
And then came one of those nice, simple, clear moments.
“Eventually,” he continued, “they’ll get it right.”
Willard knows his territory on this one. Salem serviced the glass industry for years, and experienced the shift of production of finished goods – and the machinery to make them – to China. The key word on this development isn’t if. It’s when.
Right now, Chinese machinery is barely causing a ripple in the U.S. stone market. It isn’t likely to change overnight, or next month, or next year. You may never see a Chinese saw or edger or CNC move within a day’s drive of your business.
Will you be competing with those machines and what they produce? Oh, yeah. You can count on it, whether you’re a fabricator or a distributor or just about anyone else in the stone channel.
To put it in one word, China makes the U.S. stone industry uneasy. On one hand, there’s plenty of stone coming into U.S. ports that costs less than material from countries such as Italy and Spain (but not Brazil or India), along with other supplies. On the other side of the counter are the massive pre-fab jobs cutting into large volume business, and stone that isn’t always delivered through this country’s established distribution routes.
There’s also a feeling of unpredictability about China’s actions in the stone market, although a worldwide look at the industry should settle anyone’s doubts. For the past few years, China has become the number-one country in stone volume, whether it’s in quarrying, exporting or importing.
Importing? For the few tardies left in the class, it should be repeated that China is the world’s largest customer for dimensional stone, according to Stone 2005 (the standard market reference published by Gruppo Editoriale Faenza Editrice s.p.a. in Faenza, Italy).
China’s also its own best customer; of the dimensional stone processed in the country, notes Stone 2005. It’s pretty much an even split; for every ton of stone exported, a ton is used inside China.
It’s not hard to see that, to process all that stone, China needs to have plenty of equipment. There’s a bigger, and easier, market internally for machines, so building anything for export isn’t always going to the top of the list.
Of course, plenty of machines are selling on the world market, although not necessarily in the United States yet. Much of the grumbling among European manufacturers at the Stone+tec exhibition in Nuremberg, Germany, last year came with the proliferation of Chinese machines – not just standard shop equipment, but also with factory-sized gang saws and slab polishers.
In one of the show exhibits at Nuremberg, I struck up a conversation with a hard-working young man who wasn’t just a salesman: He headed up one of China’s largest stone-machine factories. And when I asked when his machines would be making an appearance in the United States, he picked up a catalog and started pointing at several models.
That’s when I started recognizing the pictures, because I’d already seen them in shop profiles and advertisements in my own magazine. And as I expressed surprise in my own moment of clarity, the young man’s face broke into a big grin.
Stone equipment from China, for the most part, isn’t going to be sold as something like the Happy Dragon Fine Luck Stone Bridge Saw. These are being sold through U.S. companies with sharp, futuristic English names. Those U.S. companies will provide the sales and support, and experience the growing pains and profits that come as the Chinese machines develop.
In an astonishing bit of data from Stone 2005, it looks like the Chinese are getting part of the equipment market right. China is already the largest exporter (by dollar value) of stone cutting and sawing machines to the United States, and has been since 2003. For polishers, edgers and more-sophisticated equipment, though, the Chinese lag far, far behind.
As the Chinese solve the second part of the equipment puzzle with better finishing equipment, however, the impact may not be from actual pieces of machinery passing through U.S. ports. As China ramps up the efficiency in creating finished product internally, the pre-fab market may drift down from volume to custom work … as in more individual kitchens, bathrooms and residences in the United States.
It’s not hard to fathom. Instead of blueprints for hotels, Chinese manufacturers take in digitized templates from a home-improvement retailer in say, Houston, finish all the parts, and ship them to the United States for installation; consumers who opt for a longer lag time in delivery get something for a substantial discount. (And if you don’t believe that approach would ever work with stone, talk to a monument dealer sometime.)
This isn’t a gloom-and-doom piece about the end of the world, as far as the U.S. stone industry is concerned. However, we’re part of the global economy of stone, and more than just the benefactors of larger quantities of slabs at great prices.
The important thing is to recognize that China’s development of machinery (along with a host of other factors) is changing the worldwide stone industry, and that you’ll continue to evolve your own business in the short term and the long run. It’s not easy and full of trial-and-error … but, eventually, you’ll get it right.