The United States: Finished-Goods Imports Are Still Growing
Report By : Marmo Maccchine on the net

The United States has been traditionally considered an outlet market, especially for exports of finished goods. While this is still true, the American market is now quite different from what it was. It has undergone a fundamental transformation, becoming the market par excellence for "small-scale" works after long being one for "large-scale".

It is a well-known fact that the United States stone market is of basic importance worldwide.
With an official population count of 215 million, the United States is the fourth largest country in the world in size, extending over an area of 9,363,276 square miles (about 28 times the size of Italy). Given the vastness of this territory and the solidity of the American economy, the building sector continues to be extremely important and has a fundamental influence on the development of the international ornamental stone trade.
In addition to its territorial and economic aspects, the U.S. market has other special features, such as greatly facilitated credit access and a "consumerist" mentality that often spurs purchases beyond real needs. In virtue of these factors the United States is traditionally considered an outlet market, especially for finished-goods exports.
In the 90’s the American market changed a great deal from the previous two decades, undergoing a "genetic" mutation to become primarily a market for small private works, after years of expansion thanks to large ones.

Where stone extraction is concerned, in 1999 the United States produced 1,500,000 tons of marble, granite and ornamental stones. Raw production reached its peak in 1990 with 1,700,000 tons, followed by a 1993-1994 drop to 1,350,000 and then fairly constant output until 1998 when it climbed back to 1,450,000 tons.
In light of its internal production, the United States is one of the eleven countries – with Italy, China, Spain, Greece, Brazil, India, France, Portugal, South Korea and Turkey – whose output is over the million-ton mark, and together they account for about 75% of total world production.

As for internal consumption, after a slump in 1991-1992 it has been gradually growing and in 1999 reached a record 1,808,000 tons, a 14.6% upswing from the year before. And in the 90’s there was also a slight uptake in finished-goods production, rising from 583,000 tons in 1995 to 691,00 in ’99 (with ups and downs in the meantime).
Nonetheless, per capita ornamental stone use in the United States is among the lowest in the world: a fact that demonstrates the great potential of the American market.

In ’99 its total raw exports slipped a bit, from 260,000 tons the previous year to 222,000; however, this was a considerable increase from the 70,000 tons in 1990.
Although rather limited, its 1990 to 1999 exports of raw calcareous rose a little bit. In 1994 the United States exported about 30,000 tons of marble and travertine blocks, followed by a drop to 11,000. In 1998 it recouped from the previous year, to 28,999 tons and then dipped to 26,000 in ’99.

There was a decline in its exports of raw siliceous, which in 1999 dropped 15.5% to 196,000 tons. This drop was the more noticeable due to the increases in previous years: in 1996 it exported 204,000 tons, rising to 226,000 the year after, and in 1998 peaked at a "record" 232,000 tons. The number-one buyer of these raw granites was Taiwan, although its purchases dropped 25.5% from ’98 to ’99, from 80,000 to 50,000 tons. Canada was in second place, with 40,000 tons in 1999, the same as the year before. Italy bought only 29,000 tons in ’99, after its 44,000 in ’98 that had given it a 14.5% share of the total. And also on the downswing were Japanese purchases, down from 26,000 tons in ’96 to a mere 3,000 in ’99.

In the finished goods compartment, another record was set in exports which rose from 14,000 tons in 1990 to 98,000 in ’99 with continuous growth after an already excellent ‘97-’98.

Mexico was the top purchaser of these products, buying 44,000 tons in a further boost of its ’97 imports of 35,000 tons. Canada came next, doubling its 1999 purchases to 11,000 tons, and Singapore was in third place, with 5,000 tons.
The United States market is going through an extraordinary period with regard to imports. The U.S. has never imported so many raw, semi-finished and finished goods as in the past few years, giving it fifth place among the major importers of natural stone. Overall, it imported 273,000 tons of raw in 1999, a 44.4% increase over 1998 (and a continual rise since ’96).

Especially positive were imports of raw siliceous, which from the 118,000 tons of ‘95-’96 rose to 131,000 in ’97 and then a record 228,000 in 1999.
First among granite block suppliers was Canada, with 79,000 tons (and a 58% rise in its sales to the U.S.). India came second, holding steady at 51,000 tons and South Africa was third with 27,000 tons. Brazil’s performance was also excellent, upping its exports by 80% to a total of 18,000 tons. From 1990 to 1998 Italy supplied an annual 2,000 to 3,000 tons, with a 1,000 tons more in ’99.

In 1999 America imported about 30,000 tons of raw marble and travertine, after a very good showing in 1998 when its purchases doubled to 20,000 tons.

After a slump from 1991 to 1992, finished-goods imports grew uninterruptedly, going from 467,000 tons in 1993 to 1,215,000 in 1999 (a 17.5% increment over 1998).
As America’s major supplier of finished stone, Italy’s performance was very good, rising non-stop from 133,000 tons in 1992 to 380,000 in 1999 (up 9.83% from 1998). Italy’s share of the total as prime supplier was 31.3%, a good slice although nothing like the 65% share of the American market it held in ’89. At that time (‘89-’90) however, Italian finished goods began to the feel competition from other producer countries with a better price/quality ratio. But on the other hand, while amounts may have dropped from the late 1980’s, Italy’s exports gained more in value.

Canada ranked behind Italy in finished-goods supply, exporting 140,000 tons in 1999, a 55.5% increase over the previous year. In third place was India, whose 80,000 tons were a 27% drop from ’98. Mexico came next, rising 32% to 78,000 tons, followed by Spain, up 11.1% from an already good year to 60,000 tons.

A considerable amount of America’s finished-goods imports came from China (51,000 tons) and from Turkey, whose 45,000 tons were even better than its ’98 results, when it tripled the previous year’s sales. Portugal shipped 16,000 tons to the United States and 13,000 tons came from Greece.

Italy’s exports of stone-working machinery and equipment to America are growing fast and the U.S. recently became its number-two buyer of stone technology. In 1997, in fact, Italian sales rose to 40 billion lire from the 26 billion of the year before, and after a dip in 1998 they rose even higher, to over 68 billion lire in 1999, accounting for 11.8% of total exports. Partial data for the first nine months of 2000 shows excellent performance, up 18.64% from the same period earlier.

We have described how for nine consecutive years the United States stone industry was boosted by a record number of building projects. Today, in fact, the country is the world’s number-one builder of housing units and therefore a very big buyer of marble and granite, especially of finished pieces. Pulled by a good economic picture in general, the huge domestic demand for marble, granite, travertine and stone had less impact on the amount extracted than it did on the quantities imported.

While growing, internal output showed less extraordinary results because American capital preferred other types of investments, ones able to ensure immediate profits. However, its great wealth of stone resources found in its many extraction basins has not yet been fully tapped.

The big demand for natural stone in the U.S. has triggered fierce competition between the top European producers like Italy, Spain, Greece and Portugal, especially where finished goods are concerned. And those elsewhere, such as India, China and Turkey, upped their sales of finished products, gaining important market shares.

The business volume tied to ornamental stone sales in the United States also helped neighboring countries like Mexico and Canada. The latter has shown itself to be a fierce competitor in raw siliceous, able to beat out the European producers thanks to very low transport costs and exceptionally fast delivery times.

Developing producers like India, Brazil and Mexico were able to up their sales by offering low prices and extremely advantageous sales conditions. And especially where granite block exports were concerned the United States was decisive in relaunching many companies in difficulty, especially Brazilian and Canadian.

As we mentioned, the evolution of the U.S. market has led to a process of "miniaturized consumption". While in the 70s and 80’s stone use was mainly in large-scale building projects such as skyscrapers, shopping-centers and banks, at the end of the 80’s this type of consumption dropped in percentage in favor of medium to small works, especially in home interiors. Today the United States is in first place in its use of special finished goods because its "epochal" change has made using ornamental stone more popular. Especially in the southern states – with Florida, Texas and California in the lead – ornamental stone has captured the taste of Americans who in many cases do work with marble and granite by themselves.

So the change in America’s stone-use distribution from previous decades is basically tied to the middle class’ discovery of ornamental stone.

At the start of the 90s the American market was mainly interested in flooring and facing, while today the interest is in interiors. What has boosted America’s demand for marble and granite was a growth in the population’s overall cultural level on the one hand, and on the other a greater tendency to invest, which has led to better quality-of-life and the concept of the home as a durable good.

Given the type of use that is prevalent, exporting full machinery lines to the States is not easy. Right now stone use in America is primarily tied to finely finished pieces, due to the many technical-functional demands that are being made by a continually progressing building industry that is based on a highly mobile and many-faceted socio-cultural scenario. This variation in demand also testifies to how well stone adapts to the needs of a post-modern and multi-ethnic society like America’s. In fact, the beauty of ornamental stones has blended in well with the artistic and architectural language of the new epoch.

So there has been exponential growth in the number of "mini-works" done on interiors, with a big increase especially in kitchen and bathroom counters and tops. It should be mentioned that in the bath and kitchen furnishings sectors Italian products are experiencing an excellent moment on the American market thanks to the winning combination of Made-in-Italy high quality and affordable prices.

On the other hand, it should be remembered that there is also great competition from best-selling materials like glass, ceramic tile, wood and carpeting, which compete with ornamental stone to cover skyscrapers, airports, malls and medium to high range hotels.

In the past few years the United States stone industry has been buying quarry equipment, machines for cutting and surface finishing like milling machines, block-cutters, smoothers and polishers as well as numerical control machines to work kitchen counters and bathroom tops and diamond tools, abrasives, polishing materials, mastics, waxes, etc. For the do-it-yourself category it is also buying small manual tools and portable machinery.

The processing industry has made great progress, primarily because the U.S. has absorbed European – especially Italian – know-how. In fact, the most hi-tech installations are imported from Italy, even though block-cutting and milling machines have been manufactured in America for some time. Where purchase value is concerned, as we said, the USA has become Italy’s second largest buyer of machinery and complementary stone-working equipment.

On the payment front, there are some sore spots here, mainly due to the drawn-out terms that company owners can grant themselves in virtue of their contractual strength, particularly at a time of such booming economy.
To conclude, while this analysis cannot give Italian stone businesses a guarantee for the future, it may serve to make them more aware of how to deal with the complex and dynamic U.S. market.