U.S. Diamond Industry's Call to Action

May 27, 2005

U.S. Diamond Industry's Call to Action

New York City's diamantaires, who say they're facing radical transformation in the global marketplace, convened an "Industry Call to Action," May 25, 2005. The Diamond Industry Steering Committee sponsored the event, held at the Mark Hotel in New York City. Maurice Tempelsman, chairman of Lazare Kaplan International, and considered by many as the elder statesman for the diamond industry, delivered the keynote address. "Now is indeed the right time – and as my remarks will make clear, I believe this city is the right place – to summon our common talent and wisdom in our common interest," he said.

The Changes
Tempelsman outlined the transformation that's occurred in recent years. "First [there is] an exposure all along the diamond pipeline to previously unknown price volatility, as DeBeers has in the face of outside market pressures and internal strategic rethinking, stepped back from its old role of underwriting market stability," he said.

Tempelsman said other changes include the heightened consumer scrutiny of the diamond industry, along with the pressure coming from governments and non-governmental organizations. "Finally, there is a fourth force that must be embraced rather than resisted, and one that compounds the first three. By this I mean the impact of technology – technology that makes natural diamonds easier to find and mine, that makes substitutes for natural diamonds easier to create, and that makes diamond price and other information more instantaneously and widely available. A particular focus of the industry now is on 'synthetics,' which I have little doubt are here to stay, and which will find a place in the marketplace alongside mined diamonds."

Several speakers, including Tempelsman, offered insights to cope with the changes in the industry. Tempelsman urged diamantaires [and diamond centers] to seek a position of comparative advantage and differentiation in the trade and to cultivate their strengths. He noted that a shift in the industry's center of gravity from upstream to downstream toward the consumer was a factor that had to be understood. "Consumer behavior is the principal determinant of where our industry is headed," he said. He noted that New York City's infrastructure, intellectual capital and financial underpinning could be used by diamantaires to their comparative advantage. Tempelsman singled out Tiffany & Co, Julius Klein Diamonds and Stuller as companies who have successfully adapted to the changing market.

Another speaker, Steven Droullard, author of the book Attention Mechanics, suggested American disclosure standards for the U.S. industry. He said complete adoption of standards would bring unquestioned integrity to the business and would anticipate changes for the coming era, which he described as the attention age. "Your strategic goals are two, No. 1 of which is to have the best information. You must develop the systems to acquire it, verify it, deliver it and back it up," he said. "Secondly, you must develop the ability to command mass attention. If you lead, you defend attention values. You will be the ones people turn to for correct answers." He noted that the word "diamond" is a value presently sitting unguarded.

New York City Mayor Michael Bloomberg attended, partly in a bid to gain diamantaires' support for his re-election. "Your industry supports 25,000 jobs in New York City," he said. "That forms a tax base of some $60 million annually." Bloomberg pointed to crime statistics which have fallen steadily under his tenure, noted that real estate value is rising while vacancies are at an all-time low. Bloomberg said his daughter is getting married in two months and told the assembled diamantaires it is a good thing that obtaining an engagement ring is not up to the father. "I understand that a two- to three-month salary guideline is required for making a purchase," the billionaire said. "As mayor, I only make a dollar a year in salary."

The Diamond Industry Steering Committee is made up of members of several associations. The associations and the committee members who represented them are: New York Diamond Dealer's Club, represented by Jacob Banda, Sylvain Ringer and Dr. Martin Hochbaum; Diamond Manufacturers & Importers Association of America, represented by Ronald Friedman and Ronnie Van Der Linden; Indian Diamond & Colored Stone Association, represented by Basant Johari.

by Robert Weldon, G.G.

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