THE OLD ASSUMPTIONS ARE NOT VALID

Normally it would make sense to first focus on macroeconomic trends. If a country’s economy is doing well, it is reasonable to assume that construction and renovation activity will also see some upturn in that country, be it a developed or an emerging market. Stone companies in that country will also benefit in the benevolent environment. This has been a very basic and safe assumption during the last four decades.

However, especially during the last five years, the very strong link that existed between economic dynamism in a market reflecting in greater or less demand for natural stone, has loosened. The growing popularity of quartz in many important markets along with the appearance of a new generation of ceramics due to technological innovation, is the reason. This weakening of the linkage between economic growth and demand for stone should have served as a warning to the natural stone industry that a more fundamental change was taking place in the competitive dynamics. However, by and large, the natural stone industry, conservative, inward looking, almost ‘ narcissistic’ in nature, chose to ignore the signs.

Most businessmen adopted a ‘wait and see’ attitude.

That link broke completely during 2018. Last year the world economy grew at a very healthy rate in most major markets( there will always be some countries among more than hundred fifty that will be in a crisis). Yet, in spite of overall strong world economic growth, by and large, the natural stone industry companies all over the world were struggling, many barely surviving. Real production of natural stone was much less compared to the installed production capacity in 2018.