Foreign Stone: A Grave Concern
By K. Schipper
Less-expensive natural stone from overseas helped fuel the boom in residential countertops and vanities in the United States – and it’s also having their impact in what might be called the last retail market as well.
In the monument industry, consumers enjoy lower prices and a wider range of granite colors in both custom and standard blanks. Wholesalers, however, are being forced to cut profit margins and delivery times, while retailers face the prospect that that overseas suppliers will begin to offer finished products.
FADE TO BLACK
Just how much of an impact foreign imports are having on the U.S. monument industry is definitely in the eye of the beholder.
For Kurt Swenson, president of Barre, Vt.-based Rock of Ages, the current scenario is something of a good news/bad news proposition. He sees the largest impact coming with imports of black granite, initially from India and more recently from China.
“More people are choosing black granite,” he says. “It’s not clear that it’s a price issue, although it’s clearly made black granite more competitive. But, a lot of people are interested in etchings, which are best on black granite. So, there’s some consumer preference playing into it.”
Chuck Monson, president of Milbank, S.D.-based Dakota Granite, agrees with Swenson that black granite – specifically, its use in the Vietnam Veterans Memorial in Washington – opened the gates to imported stone for monuments.
“The Vietnam Memorial is done in an Indian granite, and that started the trend toward black granite,” he says. “Now the Chinese have entered the market with even lower prices because of their cheap labor rates and a deflated currency.”
Unlike Swenson, however, Monson says the imports have had a significant impact on his business, a view that’s shared by Tom Robinson, executive vice president of the Elberton, Ga.-based Elberton Granite Association.
“They’re making it very difficult for us to compete,” says Robinson. “They’re very aggressive in establishing channels of distribution, and they seem to be willing to sell to just about anybody who will make them an offer.”
Robinson’s membership includes about 150 manufacturing plants in the Elberton area, most of them involved in producing memorials. Much of the stone for those memorials has traditionally come from some 45 producing quarries in the region.
While Elberton gray granite is its best-known export, profit margins are small. Many plants found better income manufacturing other colors of granite into blank monuments.
“The blacks, the reds, the mahoganies that are not as available in the marketplace always commanded a little higher price due to supply and demand,” Robinson says. “Now, our local producers have lost most of those sales to the foreign imports.”
Mike Zniewski, general manager of Rex Granite Co., a family-owned wholesaler in St. Cloud, Minn., says his company has been impacted for several years by foreign imports; as time has gone on, those impacts have gotten greater.
“It’s really changed our business,” he says. “We’ve had to start importing some of that stone and reselling it at a lesser profit margin.”
PRICE POINTS
Joining in the parade to use imported stone may set the teeth of some in the monument industry on edge, but it’s not likely they’re going to beat them sticking to domestic products. The main reason: Price.
While the Vietnam Veterans Memorial may have influenced the initial move toward black monuments, black granite from India – and now China – is also lower-priced than anything produced domestically or imported from Africa.
Bruce Fuerstenberg, president of the Monument Builders of North America (MBNA) trade organization, says a similar situation occurred with red granite.
“The domestic red from Wausau (Wisconsin) is beautiful granite, but very expensive,” says Fuerstenberg, who’s also president of the Vancouver, Wash.-based retailer Vancouver Granite Works. “When the Indian red came in, price was a big thing, because it was considerably cheaper than the Wausau. Cost was an issue there, and since then the spectrum of colors has only expanded.”
As with the Elberton granites, Ned Steinmetz, a partner in the family owned Willow Monument Works in Bridgeport, Conn., says price is definitely undercutting consumer demand for the Barre-area granite that used to be a mainstay for his business.
“What we’re seeing now is a lot more people purchasing Chinese gray granite through some of the smaller dealers,” Steinmetz says. “They’re using it as a less-expensive alternative.”
Steinmetz attributes the difference to the lower cost of labor overseas; while it’s not really affecting his business he knows it’s hurting suppliers his family has dealt with for generations.
Michael Feinberg, a designer and operations manager for Chicago-based Peter Troost Monument Co., says from the retail side that lower price can actually be a real benefit for people seeking more intricate monuments.
“Foreign stone affords me the opportunity to be really creative,” he says. “I can make some really different-looking monuments and the cost is still affordable at the retail level. I can take a monument that might cost us $3,000 domestically and get the same thing overseas for $1,800, and it still has perceived value.”
The idea that retailers are turning to foreign stone for custom jobs is part of the continuing evolution of the market. Initially, the product reached this country in a few standard sizes and designs, and Elberton’s Robinson says that thanks to the Chinese government, suppliers were able to hold deep inventories of those products.
“They did their homework, they knew which sizes are commonly used in which markets, and with their inventory, if somebody wanted something they could pretty much deliver it tomorrow,” says Robinson. “If nothing else, it’s becoming important for the domestic manufacturers to maintain an inventory of standard sizes so they can match the service response time on orders.”
However, due to the difference in prices between foreign and domestic stone, retailers are finding that buyers are willing to wait the weeks, even months it takes to cut a custom order overseas.
Vancouver Granite’s Fuerstenberg relates a story from his own business where a customer needed to duplicate a 3’ X 7’ red granite slab covering a grave. Fuerstenberg began the process by calling a well-known granite supplier that deals in both domestic and foreign stone.
“They could have made it for me right away because they had the slabs,” he says. “But, they said if we waited for a piece from India it would be about $1,000 less. I called the family and explained that if they’d wait four or five months it would be a whole lot cheaper. They weren’t in a hurry, so they waited and the stone came from India.”
GUARANTEED CHANGE
While Fuerstenberg’s clients knew they were buying an import, those in the monument industry say many don’t know they’re not getting a domestic stone, and the idea of getting an American-made product doesn’t register with others.
Dakota Granite’s Monson says he suspects a lot of people would rather rest under a domestically quarried stone, especially those who’ve served in the military. However, “I don’t think the retailer wants the customer to know,” he says.
Robinson says response to a joint program by his association, the Barre Granite Association and the Northwest Granite Manufacturers Association urging people to “Buy American,” only went so far. Rock of Ages’ Swenson says a lot of that has to do with human nature.
“One of the first issues the consumer is interested in is color,” he says. “If they say that they want black, you can’t say to them, ‘No, you don’t want black.’ We can tell them it’s imported and we offer black granites quarried in the United States, but if they want that color and we say, ‘It’s going to cost $1,000 more to make in the United States,’ it isn’t going to work. It’s just not a sales proposition people are going to accept on a commodity type memorial.
Swenson says the exception to that is with large or highly personalized memorials where workmanship and a warranty are critical. The idea of a warranty on domestically made memorials is one the Elberton Granite Association adopted as its own.
“We offer a written guarantee on products that are manufactured by our members, and we won’t put our seal on any imported material,” says Robinson. “We stress to our members’ customers that if they want a certificate of guarantee it has to be on a black granite manufactured by one of our member companies.”
Of course, the issue of a certificate of guarantee raises a question about the quality of the products being exported. Opinions tend to vary, but Robinson, for one, says he feels the memorials are inferior.
“We’ve heard reports of many instances where this material is failing,” he says. “It’s been about 10 years since they started putting stone in the United States and now we’re starting to get reports that it’s begun to crack or discolor.”
However, Rex Granite’s Zniewski says he thinks claiming the stone is inferior is just a sales tool, and that it’s not appreciably different from what comes out of the ground here or in other foreign countries. Troost’s Feinberg agrees.
“As for the stone and the quality of the work, you have to be careful with who you deal with,” Feinberg says. “But, that’s the way with anything, even domestically. If you have the right source overseas, the quality of the product can be exceptional.”
Guarantees aside, how do the wholesalers intend to compete with imported monuments? For companies such as Rex and Dakota Granite, the keys are quicker turnaround times on jobs, and diversification of products.
Zniewski says Rex now offers a delivery time of 20 working days on monuments it produces. And, along with offering some of the imported monuments, the 82-year-old company is diversifying in other directions.
“We’re getting into other stones,” he says. “For instance, we now handle white marble, and we never used to do that. We also handle some landscaping rock, which we never used to do.”
Dakota Granite’s Monson takes much the same approach. Not only is the company inventorying more standard designs to give its customers a five-day delivery on them, but he says he’s kept investing in technology and machinery in able to better compete.
“One of the things we’ve tried to promote is customization,” Monson says. “Doing different shapes and different textures is one of the things we’ve tried to promote. We’re doing more one-of-a-kind monuments than we’ve ever done, and we’ve also diversified into countertops, cut-to-size jobs, and we’re expanding into mausoleums and columbaria.”
So far the push has been successful, and Monson estimates as much as 40 percent of the monument work his company now does is custom.
While it’s the wholesalers that have felt the biggest impact from these imports until now, just about everyone agrees that may change. Rumors abound that finished memorials – complete with names and dates – will be the next product offered by the Chinese, and even the most optimistic believe those finished memorials will be further changing the market within the next five to ten years.
Until then, Rock of Ages’ Swenson may have the broadest view of the subject. He notes that his company actually exports granite blocks to China, buys finished granite memorials from China, and is focusing on expanding its memorial distribution system – not just in the United States and Canada, but also in Japan, where the company has a retail distribution network for its branded memorials.
He says the concern about Chinese stone has followed on the heels of concern about imports from India and, before that, Italy.
“If this goes the way the rest of the world has gone, over time wages will start to go up in China and costs will start to go up, too,” he says. “China’s so huge it could take years, but clearly, it’s going to be a major factor in this country in a lot of markets, including memorials, for many years to come. We have no choice but to adjust our business strategy to meet all the evolving realities of the memorial marketplace.”
Original publication ©2005 Western Business Media Inc. Use licensed to the author.
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