Investing in the Stone Industry

In the U.S. it is common for an industry to join together and create a "check-off" program. Currently there are 18 federal check-off programs with numerous others authorized at a state level. You likely know of several such check-off programs: National Dairy Board (Got Milk? ®), Cattlemen's Beef Board (Beef. It's What's for Dinner®), Cotton Board (The Fabric of Our Lives®), plus several more. Combined, these boards/councils raise almost $800 million dollars to promote their respective products to consumers every year or address critical research priorities as needed. The "Big Idea' for the stone industry is to develop an industry-wide campaign to promote of the use of Natural Stone using a model that has brought success to so many other industries.

Development Process

The first step in the development a Natural Stone Check-off program was the determination of an industry need. Multiple surveys conducted between 2008 and 2012 ranked the need for an industry-wide campaign promoting natural stone as a high priority.
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History / Timeline

The following section details a simple listing of milestones in the exploration and development of a Natural Stone Check-off program.
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Objectives

Check-off programs are designed to provide funding for product research, industry education and promotional campaigns. They cannot pay for lobbyists or other advocacy efforts which are considered to be the responsibility of the trade associations.
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Frequently Asked Questions

The following are considered the Frequently Asked Questions (FAQs) about the Natural Stone Check-off Program.
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Impact of an Assessment to an Average Stone Consumer

The following details a typical cost impact of a natural stone check-off program to a consumer.
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For more information about getting involved with this "Big Idea" industry initiative, contact:

Marble Institute of America
28901 Clemens Road
Suite 100
Westlake, Oh 44145
miainfo@marble-institute.com
440-250-9222


Development Process

Step 1 - Determine the Need
The first step in the development a Natural Stone Check-off program was the determination of an industry need. Multiple surveys conducted between 2008 and 2012 ranked the need for an industry-wide campaign promoting natural stone as a high priority. With this objective in mind industry leaders engaged in a careful analysis of various promotion activities settling on check-off programs as the most effective way to achieve the objective. Their analysis included examining the successes and challenges of other industries that have pursued and implemented check-off programs.

This website is also part of the campaign to educate the entire natural stone industry on the value and benefits of implementing a check-off program.

Step 2 - Pursue the Legislative Process
After garnering/determining sufficient industry support, we are requesting that Congress pass industry proposed legislation to authorize the creation of Natural Stone Research and Promotion Board. NOTE (March 2013): this step is currently being implemented.

Step 3 - Develop the Program
Success if it comes will still be a few years down the road, after much thought and participation by the stone industry. After the development of the terms and conditions of a check-off proposal, they must go through a lengthy administrative process before any final check-off program is implemented. USDA will not consider a proposal for which there is not substantial industry support.

NOTE: There are bound to be concerns about a check-off by some. The process of developing an industry promotion program will require consensus among all industry participants - large and small - and representation by all affected stakeholders. All stakeholders will have a say in the development of the program and the apportioning of the funds.

"What the industry is doing at the moment is laying the groundwork, by pursuing legislation that would give the industry the ability to create an industry promotional board."- Dan Rea, Cold Spring Granite


History

The following section details a simple listing of milestones in the exploration and development of a Natural Stone Check-off program.

2008-2012:
Several stone industry groups discuss the formation of an industry promotional campaign. Multiple survey's conducted rank the need for an industry-wide campaign promoting natural stone as a high priority.

January 2012:
MIA board of directors authorizes the staff to investigate the concept further and establish a program if supported across the industry.

March 2012:
85.6% of MIA members surveyed ranked the need for an "industry-wide campaign to promote the use of natural stone" as their highest priority.

April 2012:
MIA creates a leadership team to facilitate the development process.

April-December 2012:
Industry leadership team utilizes a lobbying firm to explore support to authorize the creation of a check-off program as part of the U.S. Farm Bill.

December 2012:
U.S. Farm bill extended without revision (note: the stone check-off authorization would be an amendment to this legislation).

January 2013:
MIA board of directors meet to discuss continued development into 2013 and how to share information with the rest of the industry and ultimately bring it to fruition.

March 2013:
MIA President Jonathan Zanger publishes an article in the MIA newsletter about check-off being a "Big Idea" that the industry should embrace. Further details are also published on the MIA website educating the stone industry about this program.

June 2013:
The amendment to the Farm Bill which would authorize the stone industry to pursue a natural stone research and promotion order (see also FAQ section) was defeated by 4 votes in the House of Representatives. The MIA has put this project on hold with the hope that a future opportunity will present itself.

"I believe that this work may turn out to be the most important thing that your association (and the industry) can do for you in the 21st century"- Jonathan Zanger, Walker Zanger


Objectives

Check-off programs are designed to provide funding for product research, industry education and promotional campaigns. They cannot pay for lobbyists or other advocacy efforts or engage in political activity.

These objectives are considered to be necessary to ensure that the resources of a check-off program are expended for legitimate purposes that will strengthen the position of the industry in the marketplace and maintain and expand domestic and foreign markets:

Improve an industry's competitive position in the short and long term.
A larger market share and an increase in product sales are the key indicator of a program's success.

Complement associations.
With proper funds, trade associations will be able to focus their efforts on advocacy and other industry issues such as leaving research, education and promotion of the product to the check-off program. With their insight and experience, national, regional, state and local associations will continue to be a vital part of the industry's efforts to succeed. Associations can suggest industry initiatives designed to have an impact on the marketplace and take-on management of specific programs. While the check-off board will work closely with industry associations, it will operate independently with its own board and funding.

Be fair, inclusive, and equitable to participants.
The check-off board will be made up of a cross section of the industry, balanced by company size, geographical location, and other demographics. The assessment will be based on a formula that makes sure all pay and all benefit from the program.

Establish a steady stream of revenue for industry programs.
Although the amount of money generated each year will go up and down depending on the economic strength of the industry, a check-off program will provide a somewhat consistent funding mechanism for programs. This will allow critical programs to be continued during down business cycles rather than being terminated until the economy improves.

Provide funding for national, regional, and state programs.
Resources will be allocated to support programs that benefit all producers. Since markets often vary, resources should be dedicated to programs national in scope as well as those that meet the unique needs of specific states and regions of the country.

Support programs to benefit all industry participants.
Board representatives and various committees will create the program's objectives and have oversight on the check-off's various projects. During the planning and evaluation process, they are charged with the responsibility of ensuring every industry member that contributes to the check-off benefits from its programs.

They must make a positive return on investment.
The return on investment (ROI) achieved by other check-off programs ranges from 4 to 8 times the investment made. This check-off program will be expected to undertake economic analyses to determine its ROI on a 5-year basis and to report its findings to its constituency. Check-off funds are often leveraged with other funds through the check-off programs to improve their effectiveness.

"Once implemented the global stone industry will benefit from the research and promotion of natural stone."- Arik Grebelsky, A. Grebelsky & Son (Israel)


Frequently Asked Questions

The following are Frequently Asked Questions (FAQs) about a potential Natural Stone Check-off Program. We will add to the FAQs as more questions arise.

What is being proposed right now?
An amendment to existing statutory authority that would authorize the industry to develop a proposal for a research and promotion board (a.k.a Check-off program). Any final terms and conditions will be developed with industry input and approval.

What is a Check-Off Program?
A check-off program is an industry initiated and referendum approved marketing and research program funded by assessments, designed to increase domestic and/or international demand for that industry's commodity. This is accomplished through promotion, research, new product development, and a variety of other marketing tools. Check-off programs are largely self-governed by a board of directors nominated by the industry, within established rules, under Government supervision. These programs raise money from assessments on specified products (in our case stone slabs or tiles).

What industries currently use Check-Off Programs?
Most check-off programs are operated within the agriculture sector. They include the National Dairy Board (Got Milk? ®), Cattlemen's Beef Board (Beef. It's What's for Dinner®), Cotton Board (The Fabric of Our Lives®), plus several more. Outside of agriculture, there is the check-off program for the propane industry, the Propane Education and Research Council (PERC). Combined, these boards/councils raise almost $800 million dollars per year to promote their respective products to consumers every year or address critical research priorities as needed. Other industries are working on Check-off programs, including the masonry industry.

What is the purpose of a Check-off program?
The purpose of the program is to strengthen the industry, and to maintain and expand consumption of natural stone in the United States through research and promotion.

Who pays for Check-off programs?
Each check-off program is supported entirely by its own industry. No taxpayer or government funds are involved. Assessment rates vary among the different check-offs. The rate of assessment for the natural stone industry has yet to be determined, however, for discussion purposes a preliminary rate of 1% or less of the value of each slab (produced in or imported into the U.S.) is used. SEE: Impact of an Assessment to an Average Stone Consumer section.

How long will the process take?
The development process will take, at the very least, two years and there will be many opportunities to survey and assemble affected stakeholders for participation and input into the process. Together the industry will further define the program and address open questions that will provide the terms and conditions of any proposed order, such as:

  • What is the rate of assessment?
  • How will the assessment be collected?
  • Who will sit on the board?
  • How will members of the board be selected?
  • Will there be exemptions?
  • And much more.

Remember that we are very early in the process. Look for ongoing updates and opportunities to get involved! This provides a unique opportunity for us to control and influence our future. If you would like to become involved, please contact us:

Marble Institute of America
28901 Clemens Road, Suite 100
Westlake, OH 44145
440-250-9222
miainfo@marble-institute.com

"I wish that we had the kind of funds that the engineered stone and laminate industries have, to promote their products. If everyone spends a few cents more per slab, and we use the money to educate the public on the benefits of natural stone, I'm all for it..." - Marco Duran, Atlas Marble and Granite


Impact of an assessment to an average stone consumer

In the FAQ section of this website, it was detailed that the proposed rate of assessment will be ½ of 1%, ($0.005) of the market value of the natural stone. The following details a typical cost impact of a natural stone check-off program to a consumer (assuming a typical square footage of stone used):

 Before Check-off FundAfter Check-off Fund
Cost of stone at the factory$10.00$10.00
Cost of freight/duty/tax $ 2.00$ 2.05
Total cost to the importer$12/sq.ft.$12.05/sq.ft.
Margin of 30% for importer$ 5.14$ 5.16
Selling price to the fabricator$17.14/sq.ft.$17.21/sq.ft.
Selling price to retail buyer (30% waste, 30% margin)$34.96/sq.ft.$35.12/sq.ft.

While there are number of variables (type of stone, type of stone installation, etc) that would impact this example, however, an assessment of ½ of 1% is something the market can bear.

"Such an assessment will account for a few pennies on every square foot of stone, but it could raise millions of dollars for the industry."- Scott Lardner, Rocky Mountain Stone Company