stone processing machinery market and auxiliary …

STONE PROCESSING MACHINERY MARKET AND

AUXILIARY EQUIPMENT INDUSTRY IN THE U.S.

Report PresentationPrepared for: The Italian Trade Agency

by L2K Associates - Lisa KennedyFebruary 23, 2021

Market Outlook and Forecast Market Summary

• 2020, although a turbulent year, was positive for stone fabricators.

• 40% of fabricators found in 2020 an increase in annual revenues over 2019. The increase was estimated to be on average 32%. 35% had indicated a decline in sales and 25% indicated sales remained the same.*

• 63% of fabricators expect sales for stone and alternative surfaces to increase in 2021.*

• The increases in stone fabrication in 2020 have been as a result of homeowners remodeling indoor spaces as they were forced to stay indoors and remodeling kitchens and baths.

• The National Kitchen & Bath Association indicates the outlook for 2021 indicates an increase of 16.6% in 2021 in overall spending for kitchen in bath projects; after a decline of 5.9% in 2020.

2*Stone World Fabricator Survey, 12/20

Construction Forecast• Over the next five years, residential construction is expected to increase due to a pent-up demand following the

economic downturn. Single-family construction will benefit from the relatively low interest rates. Southeast US will grow the most. In 2024 and 2025, increases in interest rates will put a downward pressure on the demand for new homes.

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Source: IBIS World, L2K Associates

Market Summary

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• A comparison of the historical data trends in stone consumption trend areas indicates declines in stone consumption and value of construction are leading indicators to a decline in stone machinery imports.

Source: U.S. Census Bureau, USGS

Data Trend Comparisons – (Value of Construction, Dimension Stone Consumption, Stone Machinery Imports)2010-2019 USD

ImportsMarket Environment – Machinery and Stone Imports

• Stone machinery imports in the US from Italy for grinding machines only declined 10% in 2020 as compared to an overall 20% decline in grinding machines and an almost 40% decline in imports in grinding machines from China in 2020.

• The biggest discrepancy in imported machine tools consumption is in sawing machines. Overall imports in 2020 increased by 10% but declined 16.5% from Italy. Taiwan and China saw the biggest import increases in dollars into the US.

• Overall granite imports into the US has increased 30% in tons and 16% in value from year-to-date September 2019 to year-to-date September 2020.

5Source: US Department of Commerce

Stone Machinery – Imports from Italy/World (2018-2020)

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HS CodeDescription 2019 (Jan-Nov) 2020 (Jan - Nov) 2019/20

(Jan-Nov) 2018/19Stone Machinery 70,307,829 56,140,101 -20.15% -11.44%

8464100100

SAWING MACHINES FOR WORKING STONE, CERAMICS, CONCRETE, ASBESTOS OR LIKE MATERIALS OR FOR COLD WORKING GLASS

34,743,067 28,992,027 -16.55% -7.32%

8464200120

GRINDING OR POLISHING MACHINES FOR WORKING STONE, CERAMICS, CONCRETE, ASBESTOS-CEMENT OR LIKE MINERAL MATERIALS

18,387,575 16,329,323 -11.19% -21.34%

8464900120

MACHINE TOOLS (EXCEPT SAWING,GRINDING OR POLISHING) FOR WORKING STONE,CERAMICS,CONCRETE,COLD GLASS,ASBESTOS-CEMENT OR LIKE MINRL MATERIALS,NESOI

17,177,187 10,808,751 -37.07% -8.28%

◦ Recent data showing the imports from Italy vs World indicate Italy was less affected in 2020 in the area of grinding and polishing machines but more affected in sawing and other machine tools.

2019 (Jan-Nov)2020 (Jan -

Nov)2019/20

(Jan-Nov) 2018/19

232,711,276 217,532,371 -6.52% -8.31%

121,326,605 133,710,141 10.21% -14.61%

60,341,023 48,239,239 -20.06% 3.30%

51,043,648 35,582,991 -30.29% -3.30%

Imports from WorldImports from Italy

Other machine tools include hand tools, stone splitters, routers, etc. Data Source: US Census Bureau

Stone Machinery Imports – Italy (2010-2019)• Over half of stone machinery imports from Italy are sawing machines. From 2014 to 2019 sawing machine

imports have remained over $30 million. Most investment for sawing machines have been by large fabricators investing in 5-axis machines for increased productivity and reduced labor. The value of each machine is much higher and raising the import value.

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Source: U.S. Census Bureau

Stone Machinery Imports into US from Italy ($)

Segmentation by Product/End-Users• The primary investments in stone machinery are for sawing machines used by dimensional quarries and

fabricators. Fabricators are the largest end-user segment. Fabricators have been investing in new automated technologies for sawing applications, thus increasing the revenue in this end-use category.

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Source: U.S. Census Bureau, Interviews

Other includes routers, stone splitters, etc.

Stone Machinery Segmentation by End-UserStone Machinery Segmentation by Product

Segmentation by Material - Flooring • Stone flooring demand has been flat. Stone demand has remained about the same with 5.7% of the

market in 2013 and in 2017 in terms of value, and 1.5% of the market in square feet. Equipment manufacturers for stone tiles should diversify into other increase to grow revenue.

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Segmentation by Material - Countertops• Laminates and natural stone comprise of 61% of the market. Engineered stone and natural stone are

fastest growing market segments. The growing segments will drive the increased consumption of stone machinery used by fabricators.

• Fabricators cut and finish stone, engineered stone including quartz, and newer materials including ceramic countertops. It is estimated machinery cuts natural stone approximately 65% of the time. There are regional differences as West coast markets prefer the more modern look of ceramic. Newer bridge saws can handle the more fragile ceramic material.

Source: Freedonia

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U.S. Countertop Demand 2019780 million ft2

Stone Machinery – Marketing Marketing/Positioning

• Italian companies have enjoyed over $60 million in export value to the U.S. of stone machinery since 2015. This is up from a low in 2010 of $22 million. Investments in machinery are cyclical.

• There is approximately a lag of 2 years of for a decline in construction spend and stone consumption to a decline in machinery spend. Italian companies need to track data to be prepared for decreased machinery consumption.

• Italian companies need to emphasize their knowledge, quality and advanced technology as a competitive advantage.

• Machinery companies note the direct sales channel works best. Select companies will offer a commission to regional distributors for bringing the company a lead.

• Trade shows most common for machinery companies to exhibit at include: Fabtech, The International Surface Event and Coverings. Stone America is a new event starting in Florida.

• Fabricator workshops are an important promotional tool. Equipment manufacturers need to partner with fabricators to help them increase productivity and reduce material and labor costs.

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Stone Machinery – TechnologyTechnology

• Commercial and large fabricators are moving more towards CNC machines to replace manual bridge saws and other less efficient equipment. The reduction in labor and increased throughput increases margins at the fabricator level. There are regional machinery preferences based on labor cost, with Florida preferring manual bridge saws (low-cost labor availability) and Ohio preferring CNC.

• Robojets (cutting/waterjets) have gained in popularity especially in states where environmental and employee safety are strongly enforced.

• Many fabricators are primarily involved in stone countertops. Competing materials in stone counters are taking market share from granite. Materials include engineered stone and ceramics. Machinery provided needs to cut multiple types of materials.

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Stone Machinery Technology13

Equipment Primary End-Users Trends

Material Handling Quarries and Fabricators Conveyors, overhead cranes, Jib cranes; no real trends

Crushers (hammer mills) Quarries Machines can last up to 70 years; no real trends

Diamond Wire Sawing Dimension Stone Quarries • Replacing manual block saws• Diamonds saws on hydraulic tracks to enable movement from block to block to

increase efficiency • Automatic cutting programmer displayed on a touchscreen controlled by PLC

Grinding and Polishing Machines

Quarries and Fabricators • 5-axis machines for finishing and shaping• Use of stone routers versus by hand for a more professional look• Slab polishers used by dimensional stone quarries

Rotary Presses Fabricators Used to manufacture tiles; no real trends

Cutting Dimensional Stone Quarries and Fabricators

• Automation (large fabricators only)• Use of Robojets for combination of cutting and waterjet to reduce dust• Preference for a blade and spindle on one bridge so don’t need to manually change

tool out• Conveyors for loading and unloading

Auxiliary Equipment Quarries and Fabricators Waterjets to reduce dust as required by local regulatory agencies

• Machinery technology trends are driven by the end-users need for accuracy, employee safety, automation and increased throughput. The trend is for automation of processes to reduce labor and reduction of dust for employee safety reasons.

Stone Fabrication Machinery Trends

Source: Independent interviews by L2K Associates

Stone Machinery Forecast (2020-2024) • Interviews with stone fabricators forecast a very difficult market the next couple years. Many fabricators will

be very conservative in capital equipment investments until the commercial and residential construction markets return to stable conditions. Italian companies should focus on increasing relationships and expect revenue to start to increase slowly from 2021 to 2024.

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Source: U.S. Census Bureau, Interviews

Other includes routers, stone splitters, etc.

U.S. Stone Machinery Consumption (U.S.D)(2020-2024)

Stone Machinery Distribution• Distribution can be accomplished one of 3 primary ways depending on product and size of presence in

the U.S. Select Italian equipment companies have tried to work with distributors but find a direct model to establish relationships with customers is best. Options used include:

• Direct sales• Regional lead sources that the stone machinery company pays a commission. Regional

companies are involved in the stone industry (companies that provide tooling or sinks).• Distributors

• Many machinery companies work with regional agents such as distributors that are involved in the stone industry and will pay them a commission if they bring them a lead. The machinery company takes over the lead as there are detailed requirements that only the equipment company can handle.

• Hand tools and wear items such as pads, etc., are primarily sold through regional and national distributors that represent multiple companies.

• Companies that offer only material handling equipment often sell through distributors.

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Fabricator Profile• The largest market for stone machinery in the U.S. will be with

fabricators.

• Fabricators tend to focus on the same equipment company for saws, grinding, etc. It is important to get that first CNC machine order if a fabricator will be replacing several manual machines. Chinese owned fabricators tend to purchase the Chinese equipment and the fabricators are located mainly on the east and west coasts.

• Fabricators are regional. Fabricators are segmented into larger companies that serve commercial accounts and small regional players.

• “You need to do 20 kitchens/day to want to invest in a $300,000 5-axis machine” – manufacturer

• Target market is companies with $5 million or more per year or 13% of the market

• The remainder of the market prefers manual bridge saws• Establishing a return on investment is important

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Source: Stone World Market Survey (As of 2018, there were an estimated 8,694 establishments and 96,366 employees in the stone fabrication industry in the United States)


Segmentation of Stone Fabricators by Company Size

Fabricator Survey – End of 2020

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Source: Stone World; Jan. 2021

• 56% of fabricators surveyed anticipate spending more the $1 million for capital in 2021. Their biggest concerns related to equipment is adopting new technologies in fabrication. Best practices from Italian stone machinery companies will strengthen the fabricator/machinery company relationship. Maintaining a safe environment for employees was the biggest concern at 46% of respondents.

Stone Machinery Fabricator Purchases• The fabricators that have recently purchased equipment have done so to increase productivity

and quality of final product. If a fabricator has a good experience with an equipment manufacturer they will tend to continue with that same manufacturer.

• Johanningmeier Stone bought a CNC saw from Park Industries and a backsplash polisher because the manual machinery they were using could not keep up with the demand. The company was using an older Park bridge saw. The company went with Park because of the previous good customer service.

• Seamless, easily programmable interfaces are extremely important to fabricators.

• Material yield is another important issue. The ability to punch holes with a coring tool then disconnect parts is an advantage if all in one machine.

• Cutting speed is important but machine reliability and uptime is more important.

• Fabricators appreciate machinery that is flexible and can be easily shifted to a manual mode if rerquired for an operation.

• Most fabricators run very lean operations with a small manufacturing crew so any equipment enhancements that can save labor is an advantage.

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Stone Machinery Fabricator – Case Study• Stone Resources is a premier fabricator for the residential and commercial industry. In a fast-growing

suburb of Austin, Stone Resources opened a brand-new facility.

• SR invested in the most technically advanced equipment and wanted to be fully automated to be more productive and easier using digital templates and CAD straight into the system. Equipment included:

• 2 - Robo SawJets and an Edge XL stone CNC router, edger and stone polishing machine – from BACA Systems

• A water recycling system from Water Treatment Solutions • LTX COMBI line polisher from Marmo Meccanica • Tooling is supplied by Colossal Diamond Tools, LLC and uses Terminator products• For templating, uses two 2D3Ds, and four LT-55 Laser Templators - from Laser Products Industries.

• “We had the machine (BACA Robo SawJet) side-by-side with a similar competitor’s waterjet and the production level was higher with less down time and lower preventative maintenance.”

• Stone Resources is a certified Silestone and Dekton manufacturer. There is a trend moving more towards quartz rather than granite. In addition to Cosentino, the company’s suppliers include Arizona Tile, MSI and Vicostone.

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CNC Machinery• High volume fabricators indicated they are replacing their old planar machines for new CNC 5-axis

machines for the following reasons:

◦ Labor saving

◦ Automatic tool changes

◦ Higher accuracy

◦ Automation

◦ Conveyor loading for CNC machines

◦ Lower preventative maintenance

◦ Improved material yield

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Stone Machinery ServiceService should be a number one focus for Italian machinery companies especially those that service commercial accounts.

• American competitors place a high value on service and will send out technicians immediately in the event of an issue --“We sent an email on Friday that we were having a problem and the Northwood technician was at our office on Monday morning and we did not know he was coming”-Fabricator

• 5-axis Italian machines are compared to a Ferrari, “when they are operational they are going 100 miles per hour and are extremely efficient; but there are reliability and service issues”-Fabricator

• Fabricators that serve commercial accounts indicate uptime of equipment is very important as there are fines associated with late material, “if our material is not on a job-site we are subject to fines so we need out machines to be working”-Fabricator.

• Spare part availability is very important. Companies will want to know there are parts stocked in the U.S. for servicing machines. The ability to get a hold of a company during the day is also very important.

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Stone Machinery Comparisons by Product• The largest investment quarries and fabricators make in stone machinery is the CNC machines.

There is a wide range of pricing depending on what type of CNC is purchased and if it includes robotics and waterjets.

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Product Price RangeCNC Saws/Grinders $300,000-500,000

CNC Saws with Robotics $400,000-600,000Robo SawJets $500,000-600,000Large CNC Saws/Grinders for Quarries

$300,000-$600,000

Manual bridge saws $40,000-70,000 (Italians +$10,000)

Stone Splitters $100,000-200,000

Source: Independent interview by L2K Associates

Stone Machinery Comparisons by Source Country• Market perception based on interviews with fabricators based on country of origin. Italian companies

indicate they have a competitive advantage in the U.S. because of their knowledge of use of the machine tools. Companies indicate that the addition of Robotics to the CNC saw adds approximately $100,000 to the cost.

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Machinery Source

Service Technology Price Reliability Ex 5-axis machine pricing

Manual Bridge saw

Purchase preferences

Italian Average High High Average $350,000-$500,000 with concrete base

$45,000-$85,000

Preferences for Italian for technology, throughput, and knowledge

American High Average Average High $325,000 $35,000-$70,000

Quarries/fabs with strong “buy American” or poor experience with Italian cos

Chinese Low Low Low Low $300,000 $30,000-$50,000

Chinese owned fabricators prefer to use Chinese equipment


Stone Machinery Marketing

• The best way to for Italian companies to market stone machinery products is to emphasize quality, knowledge, and experience.

• The continued development of new technologies for machinery to improve reliability, productivity and reduce labor provides a competitive advantage for Italian companies.

• Companies must emphasize the availability of technicians, service and spare part availability. There is a mindset in the U.S. that Italian companies have poor service and part availability. Equipment downtime costs fabricators and quarries money.

• Fabricators indicate quality and reliability are their number one important in equipment purchases.

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Knowledge

Quality

Service


Methodology25

L2K Associates completed the Stone Processing Machinery Market and Auxiliary Equipment Industry in the U.S. report by primary and secondary research.

Secondary research sources include:• U.S. Census Bureau• Dodge Reports• USGS• Stone World Fabricator Survey 2019-2020• Others – A complete list of sources can be found on page 97 in the Appendix

A total of 13 in-depth interviews were conducted with market participants including:• Stone Machinery equipment companies• Quarries• Fabricators• Monument companies• Distributors

ICE CHICAGO401 N. Michigan Ave, Suite 1720Chicago, IL 60611T. +1.312.670.4360F. [email protected]

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