2019 FORECAST

While the majority of participants have high hopes for the coming year, another 12% said the market would remain status quo and 6% are bracing for a drop in sales revenue. The mean average of 26% growth is a 7% increase from last year’s results.

Many of the fabricators polled cited an increase in market demand for the basis of their opinion that sales will increase in 2019. “Our business has been on a steady upward trajectory,” said one participant. “There has been an increase in demand for natural stone products,” said another. Others had more personal reasons, such as shop improvements and new employees.

Among those participating in the Stone Worldsurvey, 82% expect business to continue to grow over the next five to 10 years by an average of 24%. This is up from the 78% last year who foresaw the market to continue to grow by 16%. A total of 9% said the stone market will remain stable during the next five to 10 years, and another 9% say there will be a decline over the next five to 10 years.

Many respondents believe that the stone market sales revenue will continue to increase in the future due to the increase in demand for the product. They also say growth in construction will help sales revenue increase. “People are building more custom homes and using real stone instead of laminate or other products,” said one fabricator. “There has been a demand in natural products – especially for aesthetic finishes,” said another person.

EQUIPMENT INVESTMENTS

While more than half of the fabricators participating in the survey (53%) will invest in equipment in 2019, this is the second year there is a decrease in this area. Last year, 57% said they had plans to invest in equipment and 73% said they would the year before.

Investment in facilities, marketing, showroom and stock all come in at 47% — each a significant jump over the previous year, although stock by far shows the biggest increase with a rise of 29%.

Surprisingly, there was a decrease in the percentage of fabricators looking to invest in personnel in 2019. While last year 56% were planning to turn attention to their employees, only 41% have plans to in the coming year. A total of 26% are looking to invest in warehousing this year and 6% have no plans to invest in 2019.

It looks like fabricators are planning to have more spending cuts in 2019 compared to years past. Among areas some fabricators will pull back on are: marketing (32%), stock (32%), equipment (32%), personnel (26%), facilities (24%), warehousing (21%) and showroom (18%).

Hand tools (47%), followed by digital/electronic templating (38%) and material handling & transportation equipment are the top three types of equipment to be purchased next year. Digital/electronic templating more than doubled, with only 17% who said they planned to invest in 2018.

Additional plans for equipment spending include: polishing machines (26%), CNC stoneworking centers (24%), bridge saws (24%), management software (24%), robotic equipment (21%), air/water treatment (18%) and saw/waterjet (12%). Of the group surveyed, 24% do not plan to purchase any equipment in 2019, which is a significant difference from the 9% in 2018.

Statistics show the average spending on hand tools in 2019 is expected to be $15,927, which is nearly double from the $8,047 fabricators expected to spend in 2018.

Stone Worldadded a new question to this most recent survey: What are important factors in selecting stone-related equipment? Product quality/reliability topped the list, with nearly two-thirds of respondents (65%) indicating this is extremely important. Other top contenders were as follows: price (53%), brand/company reputation (53%), relationship with manufacturer (53%), technical support (53%), customer service/sales rep (44%), sustainability/environmentally friendly (41%) and availability (38%).

BUSINESS CONCERNS

This time, we also asked fabricator what their biggest concerns are for the coming year. A total of 50% cited adopting new technology in fabrication, while 47% said competition from other fabricators, 35% employee retention, 29% sales and 21% adhering to OSHA standards. To be in compliance with OSHA standards, a total of 53% hold regular safety meetings with their staff, 53% invested in water and air filtration systems, 35% performed an initial baseline lung capacity test on employees – followed by regular check-ups afterwards and 26% scheduled an appointment with an OSHA consultant to evaluate their shop.

With the new tariff on imports from China making headlines these days, we also asked participants if they expect this to affect them in 2019. A total of 50% said it would have a positive effect, while 32% said it would negatively impact them and 18% said it will have no effect on them.

Competition among other stone fabricators continues to rank high, with 68% citing low-end fabricators as their biggest challenge the past year. The same percentage was reported in the 2017 survey and 48% in 2016. Additional business concerns include: competition from alternative countertop materials such as Corian, concrete, wood, etc. (26%), smaller margins on current products and services (12%) and changes in the residential housing industry (9%).

REFLECTING ON 2018

Of those surveyed, three-fifths (59%) indicated that their companies’ gross annual sales have increased over the past year by an average of 32%. A total of 56% of respondents’ companies gross annual sales are expected to be anywhere from $1 million to less than $5 million in 2019, while 26% of respondents anticipate their sales to be $5 million or higher.

A total of 29% indicated that their companies’ net profit in 2018 was more than 10%. The rest of the numbers were as follows: 24% said their net profit was 7 to 10%, 29% said it was between 4 to 6%, 15% said it worked out to 1 to 3% and 3% stated their companies’ net profit was 0%. When asked what they anticipated their companies’ net profit to be in 2019, 44% believe it will be more than the net profit of 2018, 53% said it will stay the same and 3% stated it will be less than the net profit last year.

When it comes to material, on average, two-fifths of respondents cut natural stone (44%), followed by just over one-third who cut quartz surfacing (36%). A total of 22% reported cutting compact sintered stone.

Of those responding to the Stone World fabricator survey, 6% have five employees or less, 29% have a staff of six to 20 employees, 9% have 21 to 50 employees and 56% have more than 50. The majority of those polled (26%) have been in business between 11 and 20 years. The percentage of fabricators polled in the west and south were evenly split at 32% each, while 21% were from the Northeast and 15% from the Midwest.