USA imports of hard surfaces are at the highest level in years. (The figures for first 6 months show a figure of US$ 2.6 billion). Business in stone is very good depending on what area and what part of the North American market one is working. Many companies growing and expanding with multiple outlets. Foreign investment in the distribution or fabrication/showroom business is at a high. Foreign buyers are also looking to reopen old quarries in USA as part of their strategic plans and investment opportunities.
Mergers are occurring everywhere. Polycor is expanding and now may be the largest stone company in the world. They took over companies in Indiana, North Carolina granite, Oklahoma quarry, New England factories and quarries like Rock of Ages, and even plants or quarries in France.
Unemployment is very low. Remodeling of homes is very high on the list. The problem is shortage of labor and, therefore, what was previously taking days or weeks to do is now taking months. A typical remodel bathroom renovation used to take three weeks and now will take three months. The cost of materials and of installers has increased tremendously. There is a shift in the labour market of people who want to work more from home than the office and are demanding higher wages and benefits. Minimum wages have increased.
Many distributors are doing fine and moving goods. They are over inventoried due to the diversity of products and selections they have been carrying. Remember, the strength happens to be still in the engineered quartz, but now has entered porcelain slabs, sintered glass, and other new products. Natural stone is still competing and has, in fact, become a little stronger. However, there are so many countries selling so many selections for the market that it is hard to keep up with it all. I tried the other day to find 2000 feet of Indian Absolute in stock and everyone I called, like ten distributors, said we are down and may have 800 SF divided up among three of their warehouses, which means mixed lots. Unacceptable.
Or they said “we can order for you, like I can’t directly order myself?”. If I had the time to import, I would not have tried to buy it domestically.
I think distributors are unclear sometimes as to how much to stock and what is moving. The taste in the USA is varied and diverse and changes everywhere In some areas people buy kitchen tops of mainly 2 cm thickness and in other areas it is primarily 3 cm thickness. Try guessing your stock when you have over 80 stone selections in stock from granite to quartzite to marble then limestone, slate, soapstone. Quartzite is so popular, I mean the real stone, and so are white marbles which are in high demand. Any distributor may well have over 8 selections of white marbles in their inventory.
The housing sales market is down a little due to the higher mortgage rates, but people are still buying, and the market is still considered strong. An average home in Atlanta sells in three weeks after listing, for example. There is still a shortage of homes for sale. Prices of homes are on the increase and, in fact, people are getting their asking price and sometimes more. The renovation market is still strong, and the demand is high which is causing that labour shortage I mentioned. In some parts of USA there are more downturns in sales than in others. But this is always true in this business.
It is the same with commercial buildings which is overall up in demand. You should see all the tower cranes in just the Atlanta area. Government buildings and renovations have increased a lot this year. The government is releasing more funds for buildings, highways, education, road infrastructure, ports, and much more.
Banks are getting a little tighter on funding things and/or financing housing purchases with clients who do not have the income to justify the size of the purchase. Many people have been buying homes on speculation and in price ranges far exceeding their worth. To them it is an investment. Since prices are and have increased 10 to 15% percent in the last year or so in some places, imagine the increased profit on a higher priced home worth an average $300,000 versus buyers who are demanding homes of $800,000. The average turnover of a home is they are selling it every 4 years.
Apartment and condo building has increased so much that it is changing the looks of cities. As the prices are increasing so are the salaries of people. Where salaries had been stagnant before now people are getting 5 to 15% increases across the board. The pandemic had a big effect on personal spending. People who over the last two years of having to stay at home opened their savings and spent a lot of money, buying online, by mail, by car delivery systems for food, clothing and all things required, including entertainment. They also spent more on making their homes more comfortable. Six months ago, or so, the pandemic was basically in decline and people left the home and wanted to travel and get out, go to restaurants, and then the price of gas went from $2.85 a gallon to almost $5.50/gallon. Today it is down around $3.40 a gallon. The higher prices of gas has not stopped people from traveling or flying and new historical records were are set at all airports.
Imports increased even though freight rates were high. At the peak we were asked to pay $17000 for a container from China, can you imagine. Now I have just got a rate of $4000. A most significant decline in costs. But again, the issue is all the ports are jammed, full of cargo, and there are not ports large enough, or workers available, or space, to unload all the ships in the harbor quickly and in a timely manner.
Could the stone market decline? Yes, for sure it can happen, and, probably, it is already happening.This is what sellers of stone in Europe, China, India, and Brazil are now observing. Cautionary buying and reduction of slow moving inventory, the tightening of the belt, is always necessary, but today is demanded.
Regarding the future,the biggest area of growth in stone will be in landscape stone products and outside structures and kitchens and walls.
For now the US market is strong.