I try to reply to all questions within 72 hours. Within 5 minutes of sending your question, you will receive an email that I received your question. You will get a direct email reply from me with your answer and my comments.

IMPORTANT — PLEASE READ:
Recently, I’ve been getting up to 10 questions each day. Therefore, I’ve started asking for donations of $25.00, 100% of which goes to charity. The charity is World Vision and here is my World Vision Home Page: http://connect.worldvision.org/person/tom_cordova/

You can also see current Sponsored Rock Blog children that your donation supports by going to my World Vision Children page.

I hope you can see by the hundreds of responses on this website that I can help you. Your donation is going to a great cause.

You can send your question below, but I will wait for a $25.00 donation before responding. Send donation via PayPal to tcordova@stonemanagementgroup.com and put ‘World Vision’ is the comment field of your PayPal payment. You do not need a PayPal account to pay via www.paypal.com.

I promise to reply within 72 hours and if my comments did not help you, your donation will be refunded immediately.

** Again, 100% of Donations go to World Vision to sponsor children.

Best wishes,

Tom Cordova

It is March 5, 2008 and I sitting in the airport in Guangzhou, China. This is my 16th trip to China in eight years. From here, I am going on to the Stone Fair in Xiamen and then back home to Los Angeles.

I wrote The China Factor Part 1 about a year ago. In it I presented what I saw as a significant future impact to USA small fabricators by aggressive Chinese stone companies. How did that play out today? No doubt there was windfall of profit for companies that embrace the prefabricated granite market over the past couple years. Not only did track home builders flock to the savings, but expert installation companies and procurement management brokers made big margins selling at the lowest turnkey pricing they ever imagined.

However, nothing last forever in this world, does it? There are several major current events that are unfolding that we are all aware of, but we must considered their collective impact. Let me share with you what I see and what I am planning to do about it.

The Unfolding Factors:

About 2 hours ago, I was dropped off at the airport after a day of inspecting factories. In the car on the way to airport I mentioned to my host that I was very impressed by the rapid improvements made to the roads in China since my last visit. She replied, “Tom, yes road improvement is a priority in China in order to adequately move products to the ports, but it is hard to be excited when the cost of pork has doubled since three months ago”. She continued, “The only thing not going up is wages!” I knew China was experiencing inflation issues, but still was at a lost for words to respond. Why, because the following is what else I know.

1: The China stock market is way overheated. It is hovering at a Price/Earnings ratio of about 40, while the US stock market is around 15. Investing at this level is like using all your wind to blow up a balloon and then putting the balloon on the nozzle of helium tank. Think about what has happened to the US markets recently. If you want to watch the movement of the Chinese stock market, check out stock symbol FXP, (note that is inversely waged (2x) against the top Chinese company stock prices). If it goes up, the China stock market is going down. It makes a roller coaster look like a merry-go-round. Secondly, we always considered the US Dollar pegged to the Chinese Yuan. Well, in 2007 the Chinese government allowed it to float but limited the increase to no more that 6%. In December of 2007, the rate of increase was raised to 12% per year. What will the next rate increase be? Here is a history currency table to show exactly how the US Dollar is no longer ‘pegged’ on the Chinese Yuan. Here is a graph for you:

(Click image to view full size)

2: A key WTO initiative rolled out in late 2006 and is gaining momentum. The initiative allows foreign banks will be able to conduct local currency business with Chinese individuals from 5 years after accession into the WTO. I believe this will create a major financial earthquake when the confidence level of the Chinese public diminishes. This initiative allows Chinese citizens for the first time in history to put their own savings in banks other than Chinese government owned banks. Through the power of the internet’s free information highway, Chinese citizens are realizing that their saved money stored in Chinese banks is used to give loans to State-owned Enterprises (SOEs). These SOEs have little incentive to be profitable and collapse regularly. So, what holds these banks together? Two things - government subsidies and the fact that Chinese citizens save more of their earnings than any other culture. The average Chinese citizen saves more than any other culture in world, 40% of personal income. It is this collective savings (in those banks) that robs from Peter to pay Paul. Once individuals are allowed to put their money in a safer place like CitiBank (with its strong branches in China’s major cities, the rapid withdrawals of savings will be like millions of straws sucking the water out of the same cup. The Government will come to the rescue but confidence will diminish and so will the stock market. It is my conjecture that many ‘smart suckers’ have already have inserted their straws. There is no greater economic force than human confidence, or lack thereof. If you think the US housing market is making a soft landing, then this event in China will be like Dorothy’s house falling in Oz. Ok, enough with my analogies but know this. Inflation will be fueled by this event.

3: Now back to the stone industry. In the last two years, more than 10,000 new Chinese businesses have entered the stone supply industry in China. More than 90% of these companies do not have factories, but they do have nice web pages! They are import/export companies with an office, a computer, and a fairly educated bi-lingual inexpensive commissioned sales person. This massive intrusion into the supply side of the granite industry provides enormous competition which has kept prices down as well as overall quality. The typical Chinese factory’s overhead is so low that you should not expect them to go away too soon. Out of the 200 Chinese factories that I have personally examined, there are 5 that I consider truly reliable. Working with the other thousands of companies is basically gambling - sometimes they work out, as long as you are prepared to walk away with what is in your pocket.

4: The Olympics are coming! In August 2008, China will usher in the 2008 Summer Olympics. The word for “eight” in Chinese (Pinyin: ba) sounds similar to the word which means “prosper” or “wealth”’. On 8-8-8m China will celebrate greatness! It certainly is not good timing for the Chinese government to deal with their current unpleasant economic issues. Hosting the Olympics is an awesome responsibility and along with should come the glory and national wonders presented to world. Combine that with the overwhelming governmental culture of ‘saving face’ and you get what I call, ‘a stale cupcake with new frosting’. China is not quite a stale cupcake but in August 2008 you will not see below the frosting. I predict that soon after the Olympic a serious downturn will begin, generated from a higher exchange rate, extreme inflation, the foreign economic recessions and financial lack of confidence. All these factors will feed on each other in a downward spiral event. At that point, inflation should be at an all time high, individuals with be increasing their withdrawal of savings from Chinese banks, and the US economy will still be declining.

The state of the Chinese economy and the lives of the folks that live there are in big trouble, but those are issues we can not control. As a stone fabricator in USA, you might think that your world is trivial compared to these big problems but let me give you my advice as to how you catch the next wave for profit or at least not become a small sacrifice in this globally unfolding story.

Step 1: If you are doing multi-family granite work and import from China, qualify your proposals based on the current exchange rate. This used to be a common practice when we all bought from Europe so the big builders should not be too surprised. I believe that a fair qualification is to state, “Costs impacts created by an increase of 5% in exchange rates from time of acceptance of proposal to time of order may affect our price”.

Step 2: Diversify now. Without a doubt, the next big wave in profit is custom residential and hospitality. If you are not trying to take a bite out of these pies, you are not only missing out, you are letting your competitors grab crucial market share and establish relationships. Out of the two, hospitality is the strongest growth path but custom residential is growing because homeowners are now staying at home rather than upgrading to an entirely new residence. Just talk with your local granite suppliers and you will find that the sales of exotic granites are increasing.

Step 3: Reorganize your labor. Consider new ways to itemize your labor cost. If you pay by the hour, consider if paying by the piece is more profitable to you and your employees. This can allow you to get more work done in a shorter period of time.

Step 4: Keep your eyes out for ‘almost new’ equipment. There has never been a better time to buy equipment. There is a ton of good machinery being sold at low prices due to companies going out of business. Check Youtube, Craigslist, Ebay, GraniteStock.com and leasing companies.

Please share your thought with me by writing to me at tcordova@StoneManagementGroup.com

Best wishes to you and your company

These world vision children are supported every month by donations from homeowners on The Rock Blog. 100% of your one time $25 donation is applied to support and add to the Rock Blog family of World Vision Children. Help us to add at least 1 child per month.

My World Vision home page is located here: http://connect.worldvision.org/person/tom_cordova/

Name: Luz Carina
Gender: Girl
Country: Peru

Luz Carina lives with her parents and has no brothers or sisters. Her parents struggle to provide for the family.

Luz Carina is growing up in a rural community where streams run through the irregular terrain. A typical family home is constructed of sun-dried bricks, with a straw roof and dirt floor. Children and their families eat a diet high in carbohydrates like corn, potatoes, quinoa, broad beans and cereals like wheat and barley. The climate is mild and slightly cold.

Luz Carina is not in school at this time. She helps at home by learning to do small tasks.

Name: Kadiata
Gender: Girl
Country: Mauritania

Kadiata lives with her parents, 6 brothers, and 7 sisters. Her parents struggle to provide for the family. Her father is a subsistence farmer. Despite their efforts, it is difficult to meet the family’s needs.

Kadiata is growing up in a poor community in the African country of Mauritania. Typical homes are made of concrete or mudblock. Vegetables are hard to grow so rice and couscous are staples of the local diet. The climate is hot, dry, and dusty with afternoon temperatures ranging from the 80s to 100s (F). The terrain is primarily desert.

Kadiata is not in school at this time because the school has not yet started. She likes to play group games. She helps at home by running errands.

Name: Cinthya
Gender: Girl
Country: Peru

Cinthya is growing up in a rural community located in the Andean hills of Peru.

Cinthya is not in school at this time. She likes to play with dolls. She helps at home by learning to do small tasks.

Name: Jhon
Gender: Boy
Country: Peru

Jhon lives with his parents and has no brothers or sisters. His parents struggle to provide for the family. His father is a daily wage earner. Despite their efforts it is difficult to meet the family’s needs.

Jhon is growing up in an urban community within Lima, the capital city of Peru. The typical family home is constructed of cement bricks and wood matting. The local diet consists mostly of potatoes, noodles, bread, and rice. The climate is arid and humid with high temperatures to 86 degrees and lows to 53 degrees. The land is very dry.

Jhon is not in school at this time. He likes to play soccer. He helps at home by working his mother doing household tasks.

Name: Merly
Gender: Girl
Country: Peru

Merly Nayeli lives with her mother, 4 brothers, and 3 sisters. her mother is an agrigulture laborer and struggles to provide for the family. Despite her efforts, it is difficult to meet the family’s needs.

Merly Nayeli is growing up in a poor community in the Latin American country of Peru. Merly Nayeli is not in school at this time. She likes to play with toys. She helps at home by learning to do small tasks.

This article was written on December 2, 2005.

The following is from my many years of experience with Chinese factories in the granite industry. It also comes from being an avid ‘China Watcher’.

This is an article that will cause friction. It will polarize readers and be controversial.

China will eventually snap the baseline pricing structure of the granite countertop industry in the USA.

First, let me explain the “baseline” to which I am referring. This is the lowest prices at which American granite companies will offer their services, in order to meeting the basic needs required to maintain established lifestyles. This does not mean that Americans cannot survive below the baseline. It just means that they are very unhappy to do so, in part because changes must be made to their lifestyles.

So, why will China eventually snap the baseline? They will do so because they have no baseline. The baseline of a Chinese factory is a non existent. As they strive to compete for market share in the granite industry, the typical Chinese company is working with employment costs that are closer to the levels of slavery rather than to a realistic minimum wage. It cannot be stopped. Not only has their cultural momentum eliminated the baseline in China; we Americans actually embrace it. We thrive for lower costs, as long as the laborers live outside the USA. While we calculate US unemployment in single digit percentages, China measures their unemployment rates in the kilometers of willing workers lined up at the granite factory every morning. If one individual does not want to work for a certain wage in China, there are a thousand others waiting to do so.

In the granite industry, the writing is on the wall, or perhaps it is more fitting to say etched in stone. In this decade, industrial domination is controlled by costs, and China is the undisputable leader. The only thing that is slowing China down is their software. I do not mean a computer program. I am referring to the muscle between the ears, designed to run programs all day long and solves complex relational problems. This is not to call the Chinese unintelligent. In fact, they are industrially and creatively brilliant. The fact remains that the Chinese are just beginning to understand that they will never dominate the granite market without making partnerships with American companies. China needs relationships with American clients, which can be accomplished with American business partnerships.

The same cultural trends which enable China to dominate the labor sector have created communication barriers that are thicker and higher than the Great Wall. It is not about the speed or the size of the airplane that makes a person feel safe. Rather, it is how the airplane takes off and lands. In the granite industry, China allegorically has the biggest airplanes and the biggest fleet. American clients, from hotel chains to homeowners, will have no problem choosing their airline once the Chinese acquire capable American pilots via a partnership.

Now, let me speak on gradual evolution. The Chinese are already dominating the product supply of granite vanity top and prefab kitchen countertops, but the real domination is around the corner. Contracting Services are the hallowed ground of installation, built on developed communication skills and customer service, which will not be replaced. Instead, it will undergo a cultural transformation. No culture works harder than China’s. Americans do not want to compete at their level unless it is a matter of survival. As American Company Organizational Charts increase with Chinese middle managers, company production will increase as well. This is because the Chinese middle management will be able to hire culturally related associates in greater percentages.

For small granite shops, the situation is even worse. As a whole, we are watching one of two things go down on a monthly basis: prices or volume. If not, then the granite shop is truly at the apex of the localized area. Don’t look down! One might think they have a good custom market that can not be replaced with prefabricated countertops. While this may be true for a little while, this is only a product issue. Builders are gradually maneuvering their kitchen designs to standardize the granite sizes so that they can take advantage of the lower costs of granite prefabricated in China. However, what a person needs to be concerned with most is the labor issue. Once a Chinese company enters a local market, buys the latest equipment and hires American pilots, the small American granite fabricator is in trouble unless there is plenty of work to go around.

In this article, I want most to provide these realities to think about. I would also like to add some possible strategies to consider. First, small granite shops need to keep their eyes wide open. Once the Chinese company is seen in the local area, research their history and establishment as soon as possible. If their shop is very strong, I highly suggest trying to establish a strategic partnership with them. It is not wise to compete if one does not have to. The Chinese are always thinking about partnerships and many desperately want them. It is the drastic cultural differences which lead to miscommunication. If a person steps into the Chinese world while they are in the localized American area, a bond can be established in which the American is the mentor. The key is timing. Keep all eyes open!

For a large American company doing 20+ kitchens everyday, the bigger they are, the harder they fall. There is no way that large American companies are going to form a strategic partnership with a new Chinese fabricator. They are the new little fish in the sea, while the American companies are sharks. One would need to eat the little fish before they get too big. Hiring a Chinese middle management in at least once division of the American company is advisable. It is important to increase communication with the Chinese culture, starting from within the American companies. One will see production increase and the company will be well rounded and prepared for the gradual evolution of the granite industry.

This article has been moved to GRANITEstock.com

1 1/4 (3cm) vs 3/4 (2cm) Thick Granite

In this article, I want to focus on the question, “When should I use 1 1/4 thick granite”?
First of all, 1 1/4 is also commonly called 3CM (3 Centimeter). This is because it is actually cut to 3cm thick in another country and …
(Continue Reading…)

This article has been moved to GRANITEstock.com

Using Granite Outdoors

The most important issue you need to know about using granite outdoors is that Ultraviolet rays from the sun breakdown polyester epoxy resin.
Basically, there are two places that polyester resin is used during granite fabrication. First, …
(Continue Reading…)

This article has been moved to GRANITEstock.com

The Homeowner’s Checklist

The Hand Selection Process of Granite Slabs
Perhaps the most important step in meeting expectations is hand selection of granite slabs. The specific slabs that will be used for fabrication should be hand selected and tagged by the homeowner. Keep the following criteria in …
(Continue Reading…)

My advice comes from 18 years of managing stone projects and consulting on thousands of kitchen remodels.  I’ve traveled to more than 15 countries to source stone and establish quality control processes.  The natural stone industry is getting more complex everyday due to the massive marketing behind everything that can be extracted from the earth. Technical information and design advice are essential components in making the right decision; therefore, I created The Rock Blog. 

I believe that bringing natural beauty and elegance into a home, business or hotel is presented best by using a product formed when the earth began. However, the feel good experience of natural stone comes to a crashing halt when the selection and installation is performed without professional advice regarding design and function. My intent with this website is to provide good feedback to homeowners, installers, contractors and architects.

I have written some articles on this site that may provide you with some immediate information. If you don’t find the answers you are looking for, you can ask a question on this website.  This is a 100% charity driven website that sponsors World Vision Children (see World Vision Link on left).  I try to reply within 24 hours. I wish you the best with your stone project and I hope I can help.

Best Regards,
Tom Cordova

This article has been moved to GRANITEstock.com

The #1 Reason a Homeowner is Unhappy

Setting the Expectations

Although each inspection in which I take part has different issues, it is no surprise that the problems begin because the client’s expectations were not met. …
(Continue Reading…)

This article has been moved to GRANITEstock.com

Granite Radiation Danger (It’s a Myth)

What you should know:

A while ago a story was published in a solid surface trade publication about the use of granite countertops and the release of Radon gas. This produced a myth that granite countertops are dangerous. …
(Continue Reading…)

This article has been moved to GRANITEstock.com

Sealing and Cleaning Your Granite

All you need to know:

There are only two required procedures to take care of your granite countertops. If you do these properly, you will enjoy the natural beauty of your granite for a lifetime …
(Continue Reading…)

To ask a question, go to any topic under the Catagories on the bottom left. Then, hit “Leave a Comment” after any of the current postings.

I reply to all questions within 72 hours. Within 5 minutes of sending your question, you will receive an email that I received your question. You need to reply to it so that I have your email address. You will get a direct email reply from me with your answer and my comments.

IMPORTANT — PLEASE READ:
Recently, I’ve been getting up to 10 questions each day. Therefore, I’ve started asking for donations of $18.00, 100% of which goes to charity. The charity is World Vision and here is my World Vision Home Page: http://connect.worldvision.org/person/tom_cordova/

You can also see current Sponsored Rock Blog children that your donation supports by going to my World Vision Children page.

I hope you can see by the hundreds of responses on this website that I can help you. Your donation is going to a great cause.
Please Send donation via PayPal to tcordova@stonemanagementgroup.com and put ‘World Vision’ is the comment field of your PayPal payment. You do not need a PayPal account to pay via www.paypal.com.

I promise to reply within 72 hours and if my comments did not help you, your donation will be refunded immediately.

** Again, 100% of Donations go to World Vision to sponsor children.

Best wishes,

Tom Cordova

I created this website to answer your residential and commercial related questions regarding design and function of granite, marble, limestone, travertine and slate. The purpose is to provide you with expert information and my suggestions so that you can make well informed decisions. My experience comes from over 17 years in the granite industry.

There two ways to get good information here.

1) Use the Search Bar to find my responses to many already asked questions. Just type your search word(s).

2)Ask a question. Ask your question here and get answers regarding your residential or commercial issues. I always try to answer all questions within 72 hours.

If you’d like to know more about me please see the “About Tom” page.

My very best regards,
Tom Cordova

For Granite Resources, I recommend the Links on the right of this page. See details below.

Home Granite: This is a website for HomeOwners. You can start a quote on-line for your new granite kitchen.

Granite Stock: The Worldwide Granite Community, showing hundreds of granite colors and where they are in stock in the USA.