Cut Stone and Stone Products

SIC 3281

Companies in this industry

Industry report:

This category covers establishments primarily engaged in cutting, shaping, and finishing granite, marble, limestone, slate, and other stone for building and miscellaneous uses. Establishments primarily engaged in buying or selling partly finished monuments and tombstones, but performing no work on the stones other than lettering, finishing, or shaping to custom order, are classified in either wholesale or retail trade divisions. The cutting of grindstones, pulpstones, and whetstones at the quarry is classified in the mining division.

Industry Snapshot

The three main products in the cut stone products industry are granite, marble, and limestone. According to Dun & Bradstreet, there were 2,748 establishments engaged in producing cut stone and stone products in 2010. The largest numbers of these firms were located in California (258), Texas (210), and Florida (207). Rounding out the top five states in terms of number of businesses in the industry were Georgia, with 140, and Pennsylvania, with 130. Together these establishments generated $2.5 billion in annual revenues in 2010. Texas was responsible for 10 percent of total industry sales, followed by California and Florida (7 percent each), and Pennsylvania (5 percent).

Organization and Structure

The three main materials utilized in this industry are granite, marble, and limestone. Granite products accounted for more than 50 percent of industry output in the early 2010s. Granite is a light-colored rock that is usually found in mountainous regions, comprised primarily of varying amounts of quartz and feldspar. About half of all cut granite is used in buildings, and the remainder is used to create monuments and miscellaneous products.

Marble, which represented approximately 20 percent of production during the early 2010s, also is used mostly in buildings. It is metamorphosed limestone and is usually quarried from the core of young mountains in the Rockies or from the exposed roots of ancient mountains in the Appalachians. The presence of impurities and other minerals during metamorphosis is responsible for the many colors and streaks found in different types of marble. Its strength and appearance make it a popular stone for statuary and decorative applications.

Limestone, a sedimentary rock, is comprised primarily of calcite that resulted from the sedimentation of coral and dead organisms. Limestone varies greatly in texture and color. Although most limestone is crushed for use as agricultural lime or cement, cut limestone is most frequently used as building stone. Limestone products accounted for about 10 percent of industry shipments during the early 2010s. Aside from the three major stone products groups, miscellaneous cut stone comprised the remaining sales of nearly 20 percent. Slate, for example, is commonly used in construction and to make such items as billiard tables and chalkboards.

Dimension stone is usually removed from open pits in rectangular blocks, although some rock is mined from tunnel quarries. A channeling machine is used to cut softer rocks, such as limestone, marble, and sandstone, into blocks that are removed by cranes and hauled away for use elsewhere. The rock also may be cut by wire sawing, which involves pulling a wire surrounded by an abrasive slurry back and forth along the stone.

The stone is hauled from the quarry to a processing plant where it is cut, shaped, polished, and coated. Most dimension stone is finished into masonry veneer for use as fascia on buildings. The stone veneer is anchored to a structural frame or backing, often giving the impression that the structure is built with stone blocks. A significant portion of cut stone is shaped and finished into surfaces for floors, walls, tables, and counters.

Background and Development

Dimension stone was quarried as early as Egyptian times. The Egyptian pyramids were built from quarried stone in about 2800 B.C., and the largest pyramid contains 2.3 million blocks with an average weight of 2.5 tons. The Babylonians used cut stone in 600 B.C. to build the renowned Hanging Gardens. The Greeks, who quarried marble as early as 447 B.C., and the Romans also used cut and finished stone widely as construction, decorative, and statuary material.

Stone was quarried in North America as a building and paving material before the Revolutionary War. Nevertheless, the U.S. cut stone industry lagged behind European production until the U.S. railroad system was developed during the mid-1800s. Mechanized cutting and finishing tools and methods during the late 1800s and early 1900s significantly boosted industry activity, as did the building boom of the 1920s. Early U.S. stone structures include St. Patrick's Cathedral (1879) and the Cathedral of St. John the Divine (started in 1892 and completed in 1996), both in New York City.

Although stone remains an important building material, new construction materials and methods that were developed during the twentieth century limited its use almost entirely to a finishing element of mostly decorative value. Steel frames and concrete particularly infringed on conventional uses of stone. Furthermore, new synthetic materials replaced stone in many decorative and functional applications, such as countertops, wall coverings, and architectural ornamentation. Many synthetic substitutes with the look and feel of marble or granite are less expensive, more durable, and easier to manufacture, ship, and install than real stone. Nevertheless, stone continues to be a popular and cost-effective building material for many indoor and outdoor construction projects and consumer products in the early 2010s.

Many cut stone and stone product companies suffered during the construction slowdown of the 1980s and early 1990s. Synthetics and glass became popular building materials during the 1980s, and as demand for stone slowed, prices and profit margins dropped as a result of overcapacity and increased competition, although most industry segments remained stable. The demand for granite was greater than the demand for marble, however. Marble had been losing market share since the 1980s when it was determined that most varieties are affected by acid rain. Although granite producers faced stiff foreign competition, the use of granite for headstones and monuments remained strong, and a construction industry uptick in the mid-1990s bolstered the bottom line for many competitors.

An escalation in commercial construction in the late 1990s spurred cut stone industry expansion. Dimension stone sales expanded steadily as both residential and commercial construction markets boomed. Sales climbed from about $900 million in 1988 to almost $1.3 billion in 1996 and topped $1.3 billion in 1997. Furthermore, increased interest in stone building materials, as opposed to concrete and glass, continued to buoy sales late in the decade.

Some companies also benefited from changes to production that were implemented during the slowdown. The industry successfully increased its workforce 25 percent during the 1980s as its shipment value surged almost 80 percent. New automated cutting and finishing equipment, as well as advanced transportation and information systems, were credited with increasing efficiency. However, while some producers were able to boost profitability through automation, stone cutting remained a labor-intensive industry susceptible to competition from imports from emerging nations with lower costs. India, for example, made steady inroads into the U.S. granite industry throughout the 1990s.

The industry outlook was generally lackluster for the early years of the first decade of the 2000s. Limited opportunities for further productivity gains, coupled with increased foreign competition and lower prices for imported materials, were expected to hurt many industry sectors. Although traditional domestic markets, such as construction, experienced expansive growth in the booming economy of the late 1990s, superior synthetic substitutes continued to make gains.

Due to the strength of the construction industry, the cut stone industry experienced decent growth between 2002 and 2005, when the value of shipments increased from $2.1 billion to $3 billion. Shipments were valued at $2.1 billion in 2002 and increased to $3 billion in 2005, before falling to slightly more than $2.7 billion in 2008. The cost of materials grew from $727 million to $969.6 million between 2002 and 2005. Over the same time, employment in the industry increased from 20,510 to 26,401 workers, and by 2008 the industry employed over 39,000 people.

Foreign competition was expected to be a major factor during the last half of the first decade of the 2000s. In 2006 Stone Business indicated that stone imports: "continue on a contrarian track from the country's dull housing market and tepid economy&.hellip;Unlike automotive manufacturing or corn growing, the stone trade offers almost no way to measure its output; an estimate on the volume or value of countertops produced every year is, at best, an educated guess. Import figures are virtually the only statistics that track the use of stone. And, with 80 percent or better of U.S. dimensional-stone production involving imported material, it's a good indication of where the industry's headed."

Cut stone imports increased 18.7 percent from the middle of 2005 to the middle of 2006, driven by travertine and granite. For example, in 1996, the yearly value of all stone imports into the United States was $564.3 million, but 10 years later, in the first half of 2006, nearly 50 percent of the value of stone imported into the United States, or $734.2 million, was from granite. Because of stone's weight-to-value ratio, opportunities for U.S. export growth were slim, with the exception of the specialty stones niche. The expected continued surge in historical restoration projects requiring considerable amounts of stone to replace damaged pieces from the original construction was promising for the industry.

Demand for all imported stone slowed during 2007, and by the end of the year, the industry experienced the worst decline of the century. The economic downturn caused tightened financial lending standards that resulted in fewer construction projects, particularly for residential construction, which left the industry with an overabundant supply of stone. "Granite forms the backbone of today's U.S. dimensional-stone market," according to Emerson Schwartzkopf in the November 11, 2007, issue of Stone Business. Schwartzkopf added that "the posture remains sure, but the wonder years of dynamic growth are on hold."

Cut and shaped marble used for construction represented 18.6 percent of market share manufactured by 583 quarries shipping $481.7 million in 2008. Demand for cut and shaped granite accounted for 18.1 percent, generating $582.4 million. Stone, quarrying and processing of own stone products, garnered 7.8 percent of the market, with a value of $232.6 million.

Market conditions remained bleak in the first quarter of 2009 with imported granite falling 50 percent from the previous year. Residential construction fell 33 percent during the first five months of 2009. Overall, the cut stone and stone products industry was negatively affected by the economic recession that continued into the 2010s. Experts predicted that even when residential construction did rebound, the industry would need to use built-up inventory before cut stone products firms could return to profitability.

Current Conditions

Although participants in the cut stone and stone products industry, like most other U.S. manufacturers, suffered during the economic recession at the end of the first decade of the 2000s, many believed that recovery was on the horizon as the nation entered the 2010s. The U.S. Census Bureau's July 2011 figures were encouraging for the industry, with private housing starts up 9.8 percent from the previous year. Building permits were also up 3.8 percent for the same period.

Consulting firm Ceramic Tile and Stone Consultants predicted in 2010 that recovery in the cut stone and stone products industry would be aided by an upturn in residential remodeling spending, as well as by the increase in new construction. According to the organization's 2010 Stone Product Industry Report, "U.S. stone product sales gains are expected to strengthen over the next five years as the builder and non-residential construction markets rebound from depressed levels." In addition, according to the report, "countertops increased their importance to stone product fabricators and processors as well as to importers and installers as stone increased its position in the U.S. countertop market."

Industry Leaders

The cut stone industry is highly fragmented with relatively small, local manufacturers because of its logistical characteristics, including transportation costs. At the beginning of the twenty-first century, slightly more than 1,000 establishments competed in the industry. The largest producer was United States Lime & Minerals Inc., based in Dallas, Texas, which reported $132.6 million in 2010 revenues. Other industry leaders were Royal Baths Manufacturing Co. of Houston, Texas; Buechel Stone Corp. of Fond du Lac, Wisconsin; Carolina North Granite Corp. of Mount Airy, North Carolina; and Environmental Materials Inc., of Denver, Colorado.

Workforce

According to the U.S. Census Bureau, total 2009 industry employment was 22,707, down from 26,401 in 2005, of whom 72 percent were production workers earning an average hourly wage of $17.17. The majority of workers employed within the cut stone and stone products industry worked in Texas, Pennsylvania, California, and Florida.

Research and Technology

New cutting, finishing, and construction technologies in the late twentieth century helped the cut stone and stone products industry remain competitive with new synthetics and low-cost imports. For example, advanced construction techniques were used in Washington, D.C., in 1992 to create and erect massive 50-foot-tall limestone columns for the Market Square Arena, with 800,000 cubic feet of limestone quarried to produce the 80,000 cubic feet of material contained in the columns. An advanced horizontal lathe rounded and fluted the huge pieces, which were put in place as the concrete frame of the building was poured. The project was indicative of a trend toward increased use of natural stone in restorative building projects.

Cut stone producers also benefited from improved quarrying techniques, such as laser rock-face profiling and robotic drilling and cutting machines. While much of this technology was being developed for the extraction of crushed stone and other minerals, cut stone producers were finding applications for these and related innovations.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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