How Big is the U.S. Stone Trade?

   If you search the Internet or a large city library long enough, you’ll eventually end up finding a number from a reputable government source. It’s a nice, big, juicy number that puts you in a billion-dollar industry.
   There’s only one problem. The number’s wrong … because it’s too small.
   Not that we should take the Bureau of the Census – the agency with the much-too-conservative total – to task. Figuring the size of the stone industry is a tough task, because it’s not regulated and also fails to gain much attention from Wall Street. It’s easy to track car sales, but just how many square feet of granite countertops are installed in a year.
   A reader question on the size of the stone industry started the search a few weeks ago, and an extended hunt brought up the 1997 Economic Census. There’s a separate business code for “Cut stone and stone product manufacturing” (NAICS 372991) and a report on 1997 shipments, number of businesses and other statistics.
   The federal Department of Commerce, meanwhile, uses that survey to develop some trends. The result is that, for 2000 (the last year they tackled), the value of shipments – in other words, all goods –  for the U.S. dimensional-stone trade is $1.69 billion. Figure in 6.7-percent annual growth  (the rate used for post-1997 data by the agency), and the estimated size of 2002 shipments is $1.87 billion.
   That’s a nice number. But, it’s not even close to the retail sales total of installed stone in the United States.
   Again, it’s not the fault of the Census Bureau. The agency tries very hard to find businesses for their every-five-year census, but their base may be a bit small. For example, in 1997, it identified 1,021 cut-stone establishments, and that includes quarries, purchasers, and fabricators of any cut-stone product, including monuments. It found eight stone firms in Virginia, 16 in Michigan, 31 in Indiana ….
   Get the feeling that the count was a bit short? (And, if you’re running a shop and didn’t get a questionnaire late last year, you won’t be part of the count for the 2002 Economic Census, either.) Again, there’s no reason to point fingers at the Census Bureau; I know hard it was for Stone Business to find you to send this magazine. So let’s try and work the numbers a different way.
   In a previous career, I worked – albeit for a very short time – as an industry analyst, covering an economic area that isn’t related to stone in the least. However, the job included sizing up different industries; when precise statistics weren’t available, I learned to develop estimates.
   Sometimes you did the best you could with a small amount of broad professional analysis, which came under the in-house definition of a WAG number. Excuse the use of a mild oath here when I tell you that WAG stands for “wild-assed guess,” which is acceptable in macroeconomics and fatal for sink undermounts.
   So, here’s my try at a WAG number for the U.S. dimensional-stone industry in 2002: $5.37 billion.
   Now, how did I do that? Fortunately, there is one thing you can track in the stone trade through statistics – its value. For that, thank some different parts of the federal government.
   Every year, Thomas P. Dolley of the U.S. Geological Survey offers a paper on the nation’s dimensional-stone production. For 2002, he set the value of stone produced in the United States at $240 million.
   The other source is the U.S. International Trade Commission, which collects data on imports and exports. By adding up the dimensional-stone imports in a wide variety of categories, the 2002 value totals $1.55 billion.
   Put those two numbers together, and you have $1.79 billion. (For those of you who detest a lot of numbers in a column, we’re almost done.) Because this adds the amount of quarried dimensional material produced in the U.S. and the stone coming across the border, it’s a good assumption that $1.79 billion is the wholesale value of stone last year in the nation.
   Of course, we’re also talking about just slabs, blocks and blanks for the most part. To get the retail value, we need to factor in the value added by fabricators, contractors, installers and anyone else who takes the stone from a shipping dock to a final, installed product.
   There’s no set formula for how stone itself is figured into the retail price of any job. Some fabricators mark up stone from 100 percent to 400 percent and include their overhead within that figure. Others charge only the wholesale price, plus a handling fee, and then assess overhead charges to get a final retail number. And still others dream up their own WAG and seem to come out ahead.
   And, there are transportation fees, broker/distributor margins, waste and a host of other charges to be considered. Since I’m WAGging the numbers here, I decided to take the estimated U.S. wholesale value of stone – $1.79 billion – and mark it up by a factor of three to cover all of these to get a final retail installed number. $1.79 billion X 3 = $5.37 billion.
   Seems too high to you? Too low? Great. Tell me how you’d figure it, using that $1.79 billion as a base number. I invite any and all comers to develop their theories and send them to me at the e-mail listed at the end of this column, and we’ll tackle the issue early next year.
   Until then, you can bask in the glory of a multi-billion-dollar industry. Throw that kind of WAG around, and even your banker might buy you lunch.

 This article first appeared in the October 2003 print edition of Stone Business. ©2003 Western Business Media Inc.