| CURRENT TRENDS IN INDUSTRY |
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issue time:2006-06-22 10:24
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LOWER AND LOWER PRICES While production in the granite industry has increased dramatically in the last decade, the decline in prices has also been impressive. Not all the decline can be attributed only to reduced costs as a result of technological improvement. Gross margins have come sharply down, and unless a production unit is extremely efficient or the material being worked with is highly exclusive, the chances of making any profit at all is low.
THE STRONG COMPETITION FROM CHINA. China, as mentioned earlier, has become a serious factor in the world markets in granite tiles especially in greys, pink and other light colours. Its fast increasing presence has sharply accelerated the trend of lower prices. Many knowledgeable people suspect they may be practising dumping. But China is still, as of now, almost absent in the slab segment in the international market and in the export of imported materials elaborated locally.
NEW MATERIALS ALL THE TIME More and more new materials are appearing everywhere and all the time. New quarries are being opened every day of beautiful materials in Brazil, India, Africa and elsewhere. There is a lot of choice of materials nowadays of a very wide range. Many of the big granite factories have decided that one way to prosper in the highly competitive industry is to work with materials no one else has, and thus are either operating their own quarries in far away countries, or arriving at agreements to buy the whole production of certain quarries. The access to raw materials has become a key aspect of competitive advantage. There are a lot more quarries but the fact is also that the production of many quarries is sometimes too small to be able to offer the materials for big projects.
THE BIG COMPANIES SETTING UP OWN WAREHOUSES. Some of the biggest companies are setting up their own warehouses in other countries so as to be closer to their clients and also make sales of small quantities instead of having to sell only full trucks or containers. There are now many warehouses of granite companies in the different cities in United States, Italy, Spain, Portugal, France, Holland, Poland.
INCREASING POPULARITY OF GRANITE IN MAJOR PROJECTS. One of the most positive developments for the granite industry is the greater awareness of it among the architects, and its growing popularity in major projects. Whether it be office buildings, airports, commercial centres or even hotels, granite is becoming more and more popular for the big projects all over the world. Most airport projects in recent years have used granite as the flooring material.
INCREASING DIFFICULTY IN OBTAINING PAYMENT GUARANTEES There used to be a time when exporting was risk free in terms of payments because all buyers were expected to open letters of credit. Nowadays, letter of credit has practically disappeared in the United States except for projects and even in Germany, which was considered among the safest countries to do business without guarantees, obtaining letter of credit from buyers is becoming difficult and non-payments has become common. The option of exporting is becoming more risky than ever.
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