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Kimberley Process meeting no canned affair

It’s a hard week to grab headlines, with the untimely death of the man who will forever be known around the world as the King of Pop dominating nearly every news outlet.
(God be with you, Michael Jackson. May you find peace in the after life.)
Nevertheless, those that follow the diamond industry know that there was a virtual explosion of news this week regarding problems with the diamond industry worldwide, all as Kimberley Process (KP) officials held their sixth inter-sessional meeting June 23-25 in Windhoek, Namibia.
The week started out with a group of human rights organizations calling out the KP for, quite simply, being asleep at the wheel — not effectively attacking the very problems the system was created to address while issues rage in Guinea, Venezuela, Lebanon and Zimbabwe.
The inter-sessional meeting itself turned out to be an interesting one (apparently, it’s been less than interesting in the past — I wouldn’t know, I’ve never attended one), according to this account from my colleague Edhan Golan, an Israeli based journalist for IDEX.
The day after the meeting, the Human Rights Watch (HRW) issued a scathing press release designed to call attention to the situation in Zimbabwe.
You can read our account here, or read the HRW’s entire report.
All of this might seem like a bit much to absorb in just one short week.
It certainly was for me.
But, one thing is clear, so much so that it seems painfully obvious and cliché to state: the diamond industry needs to band together and do all it can do to address these situations.
First and foremost, it is, in the simplest human terms, the right thing to do.
Secondly, the industry definitely cannot afford a public relations storm right now.
I wasn’t the diamond editor here in 2006, when “Blood Diamond” came out, but it is my understanding that the Leo special had little or no impact on diamond jewelry sales in the United States.
But things are different today.
To start with, the economy has people hesitant to spend on non-necessary, luxury items and diamonds certainly fall into that category.
Secondly, I have been reading a lot over the past few months that consumers are becoming increasingly concerned with the genesis of the products they buy.
People want to know how the products they are wearing, driving or consuming impact the world around them, now and for future generations.
I personally think it’s a fantastic change in mindset but it won’t be for diamonds, if the industry doesn’t clean up its act.
Issues that missed most consumers the first time might not slide so easily the second, even if they arose during a week when the world was distracted by something else.

De Beers or Alrosa, who’s first?

As a journalist who follows the jewelry industry pretty carefully, it's always interesting for me to read articles by the non-trade press on topics as complicated as the diamond market.

Case in point this week: This now-infamous article about Russia and diamonds from The New York Times.

In the article, the writer states that “Russia quietly passed a milestone this year: surpassing De Beers as the world’s largest diamond producer.”

That’s an interesting statement, and one that certainly caught our attention over here at National Jeweler.

But it also raised a number of questions, including, based on what? The article provides no hard data of any kind from Alrosa, or De Beers for that matter.

In the story, the writer does mention that while De Beers shut down production at a number of its mines because of low demand, the state-owned Alrosa kept its mines open to keep workers on the payroll and avoid unrest. (What the article doesn’t mention, however, is that De Beers paid its workers their full salaries during mine shutdowns.)

It's unclear if the writer is giving this tidbit as an explanation for how Alrosa might have surpassed De Beers, though this doesn’t appear to be the case as the two statements aren’t linked together in the story.

We asked De Beers spokeswoman Lynette Gould what De Beers had to say about this article, and here’s her response.

“No, it’s not correct,” she said when asked if Alrosa has surpassed De Beers in terms of being the world’s largest diamond producer.

She went on to say that she believes this statement stemmed from a “misunderstanding that De Beers production is ‘down 90 percent’ which, although true for the first quarter because Debswana was closed for most of that, is misleading if they think that production for the full year is down 90 percent."

Gould said De Beers plans to reduce its 2009 production by more than 50 percent (more than 25 million carats) versus 2008, noting, “This could be increased if trading conditions merit it.”

In any case, it's an article that certainly got the industry talking, and the issue of which companies are gaining on De Beers--which is no longer the undisputed king of the diamond jungle--is worth keeping an eye on in the future.

De Beers leaving London?

De Beers spokeswoman Lynette Gould confirmed last week that the diamond giant is slashing 25 percent of its U.K. staff, cutting down the number of employees for the Diamond Trading Co. (DTC), Forevermark and "De Beers Group functions," from about 420 to 320.

Not having covered this industry all that long, the gravity of this statement did not hit me fully until one of our readers pointed out (via the virtual comments section of the National Jeweler Web site) that the DTC alone used to employ about 1,000 people in London.

Now they have less than half that amount for three operations.

Checking this figure with Gould, I found out that our reader's observation was indeed correct: The DTC had about 1,000 employees in London in the mid 1990s.

Since that time, however, that number has been dwindling, not because of De Beers shifting sorting operations to Africa—aggregation to Botswana, Gould told me, accounted for only about 30 job losses in London—but rather to "streamlined efficiencies."

All of this begs the question: Will there come a time, perhaps sooner than some have predicted, that we will see the last of De Beers in London?

Thoughts on economy run wild

I don't know what to think of the economy anymore.

It goes without saying that as of right now, the world is in the midst of a recession that's comparable to the Great Depression.

But just how bad is it? And how long will it last?

It seems that there have been some cause for a bit of optimism lately.

While this survey is still far from optimistic, the latest data from the Jewelry Consumer Opinion Council, outlined here, shows that consumers were slightly less pessimistic in February and bought a little bit more jewelry (probably due to Valentine’s Day).

The latest report from the National Retail Federation, which you can read here, wasn't completely depressing either.

And, as I write this blog, The New York Times has posted this story detailing how an uptick in housing starts made the Federal Reserve's Open Market Committee feel a bit warm and fuzzy.

Will the coming of spring also thaw out our frosty economy? Is a recovery in the early part of the summer, or a bit later this year, too much to hope for?

Billionaire investment genius Warren Buffett certainly seems to think so.

And the latest unemployment data is a huge cause for concern.

So, the question remains: Are things starting to get a little bit better or is the worst yet to come?

If I had the answer, I bet I'd be almost as wealthy as Warren Buffett.

 

Stumped for holiday gift ideas?

A recent survey from the NRF indicated that, as of the second week of December, 41 million people had not yet started their holiday shopping, and 47.1 percent didn’t have it all done.

If you are among those still searching for suitable holiday gifts, than this blog is for you.

Remember that during tough economic times, nonprofit organizations and charities tend to struggle along with everyone else, perhaps even more, and, in turn, so do the people in need they work to support.

Donating to one will not only potentially help out somebody in great need, but it will make you feel good as well.

Below are a few charities I feel are worth supporting.

Happy holidays to everyone! 

— The Diamond Empowerment Fund (DEF). I think this charity, co-founded by music mogul Russell Simmons, is a great cause. Founded in 2007, the DEF is a nonprofit international organization established by individuals in the diamond and jewelry industry, including Simmons.

The DEF’s mission is to raise money for education for economically disadvantaged nations in Africa where diamonds are a natural resource.

The DEF’s first beneficiary is CIDA City Campus, an institution of higher learning in Johannesburg, South Africa, that offers scholarships for economically disadvantaged students. I can personally attest to the validity of CIDA, which I visited during a trip to Africa this past May.

The DEF already has donated nearly $10 million to the school and is looking to do more.

Both individuals and businesses can donate to the DEF.

To learn more, visit DiamondEmpowerment.org.

— Star of Africa. Last month, the Royal Asscher Diamond Co. held an event to launch “Star of Africa,” its new charity program focused on helping the people of Sierra Leone.

Civil war once raged in this nation, noted for being the center of the trade in blood diamonds (it was, in fact, the setting for the 2006 film Blood Diamond).

Today, civil war has left the country rife with poverty, but Royal Asscher, a diamond company with a history dating back to 1854, wants to help change that.

The goal of Star of Africa is to raise money to work with various charities to help the people of Sierra Leone rebuild the cornerstones of their society: health care, education, economic stability and societal relationships.

The first stage of the program is a partnership with nonprofit World Vision that aims to get the children of Sierra Leone out of the country’s diamond mines and into school.

To donate to the Star of Africa’s effort with World Vision, download the form at left and fax it to (646) 861-4975.

For more information about Star of Africa, contact Rebecca Smith with Royal Asscher, (212) 922-1908 or rebecca@royalasscher.com.

— Love Heals. I wasn’t familiar at all with this cause when I attended a benefit for Love Heals on Dec. 10 at Kwiat’s beautiful flagship store in Manhattan.

But I think lack of education is at the core of so many societal ills that you can never go wrong when you empower people with knowledge.

The event, sponsored by Kwiat and Gotham magazine, featured actress Julianna Margulies (nurse Carol Hathaway for you ER fans, pictured above, fourth from left, in the black dress), who was decked out in Kwiat diamond earrings and bracelet. 

The mission of Love Heals (officially called “Love Heals, the Alison Gertz Foundation for AIDS Education”) is to educate young people about HIV/AIDS so they can make informed choices as they mature.

Since 1992, New York-based Love Heals’ HIV-positive speakers and trained health educators have reached more than 300,000 young people, parents, educators and community leaders.

For more information, visit LoveHeals.org.

— Treatment Action Group (TAG). The Diamond Information Center’s Sally Morrison recently was honored by this organization for her years of work in the fight against AIDS (congratulations again Sally!).

The group fights for better treatments, a vaccine and a cure for AIDS.

For more information, visit TreatmentActionGroup.org. 

Manage your fears

In this business downturn, fear could be running rampant through organizations—yours included.

But keep in mind that just because you read about the economic crisis in the newspaper or hear about it on TV, that fear might be unfounded.

Nevertheless, don't show your fears to your employees. It sends the wrong message and can cause your employees to lose faith. Instead, manage your fears by finding an outlet for releasing them.

Exercise and healthy eating are always good: The fitter you are, the stronger your emotional well-being. Some find hope in their faith, which can powerfully release fear. Others find it in helping others; for example, by coaching a Little League team or by teaching at an adult education center. Finally, watch a favorite comedian: Laughing out loud can help chase the demons away.

Once the recovery starts, you, and your company, will be stronger and healthier.

Jan Brassem is founder of Eclipse Global Consulting, LLC, a firm that assists jewelry retailers who are expanding into foreign markets and/or sourcing globally. You can e-mail him at Jan@EclipseConsulting.com.

No downturn in Dubai?

I’ve been back a few weeks now from my latest trip, this one to Dubai, United Arab Emirates. It was one of those trips where I was gone less than a week (after flying for 12 hours), but it felt like I had been gone for a month, so much happened while I was there.

The conference I was sent to attend—the Middle-East China Diamond & Jewellery Summit—didn’t result in any spectacular revelations—more, seemingly, was said at the recent “emergency” summit in Antwerp, Belgium—but I did gain a better understanding of what’s going on with the diamond supply pipeline in light of the global financial crisis, and I did take away some impressions about this particular corner of the world, which is always essential when traveling, whether for business or pleasure.

During the conference, several speakers talked about the growth of markets in both the Middle East and China, and growth indeed seems to be the watchword in Dubai. 

Anywhere you go in the city, everywhere you look, there are towers going up, with seemingly no master plan for connecting them, creating neighborhoods, unclogging the roads and making it livable. In fact, the Almas Tower (pictured here), a vertical version of Antwerp's Diamond Square Mile, if you will, which will essentially house Dubai’s growing diamond industry, is part of a development called Jumeirah Lakes Towers, a development of 87 high-rise buildings, (yes, you read that correctly), both residential and commercial. 

Is it just me, or does this seem just a wee bit overly ambitious in this economy? While the super-rich were at one time shielded from the downturn, talk to any analyst today and they will tell you this: Today, nobody is immune. The downturn is going to hit everyone, everywhere, even if certain people, areas of the world, or industries don’t want to admit it.

Now, don’t get me wrong—I enjoyed my time in Dubai. There was a lot to see and do, and I met some fabulous people during my six-day stay there. And, as always, I enjoy traveling to new places as it gives me yet another perspective on the world. I just have to question how much they are growing in Dubai and if today’s economy can support such growth in any market.

A gallon of gas

I'm not a conspiracy theorist. Nor am I a whiz financier. So it's tough for me to fathom how we could go from paying nearly $5 a gallon for gas a month ago to under two bucks now. 

Our family's like many. Though I drive a put-put with 160k miles on it back and forth to work, my wife schlepps the kids from soccer to karate to school, etc., in an SUV. Fourteen miles a gallon.

Needless to say, like all the other Tony Soprano wannabes in their Suburbans out there, we got to wondering through 2008 where all the money was going. With $80-plus fill-ups, it was going up in fumes.

I just don't get it. Was it a sitting president with familial ties to the oil business helping the fat cats line their wallets? Was it a global rebalancing of energy footprints, with China, India and other developing industrial economies pressuring prices up through broadened demand? Was it owing to wars being fought in oil-producing countries? Was it natural disasters impacting production capacities? 

Who knows? Certainly not me. But what I do know is that $1.85 a gallon this weekend sure put me in much more of a holiday mood. 

And I can't imagine that it won't do so for many others. While you might argue that European motorists historically have paid multiples of what we do for gas, you just can't change a culture overnight. Americans love their cars, and our society is structured around driving. 

But what could be a more visible representation of price inflation than those rolling figures on the gas pump, scrolling ever higher right before your disbelieving eyes? And when the expense began tallying into the hundreds each week, it had to have a dampening effect on consumer confidence and spending.

So the reverse must also be true. For someone who drives 500 miles a week, like I do, gas at $5 per gallon costs $400 a month. Throw in my wife's mileage, and we're talking $500 a month as a conservative estimate. At $1.85, we reduce to $185, or a savings of $315 a month!

Now that's not going to buy me a yacht. But it will buy me some peace of mind. All of a sudden, I stop counting nickels. And when my spending patterns loosen up at the low end of the scale, it carries across into my mindset when I consider making more significant purchases.

OK, that might be some pop-psychology. But I have to feel that I can project my own feelings on this one. And ultimately, what it all means is that it's got to help out for jewelers over the holidays. 

The official holiday selling season begins in four days, right after turkey. It's a lot easier now for you to throw in a tank of gas with every diamond purchased.

I want to feel good

OK. It's a bit before 7:00 a.m. on a cold late-November morning in New York City. Winter's here too darn early this year. I live on top of a small mountain in extreme western New Jersey, and we've already had a freak snowstorm.

It was incredibly contained, just my town and two others to the east and north. But it dumped a foot of wet snow on trees that still had leaves. The result was a disaster. 

It's a rural area with heavy forest. Falling trees knocked out electricity for three days. A large beech in the woods adjacent to our yard split like a toothpick, destroying some of my home-customized picket fencing and taking out two ornamental trees and additional landscaping.

We're looking at more snow this week, with some days barely getting above freezing. And it's only November. 

What's worse, I'm checking the market's results for yesterday. The Dow was down another 225 points. And futures are off 150 leading into this morning. 

I'm sure everyone out there has heard the wise approach to investing of not reacting to market swings. But this cycle really stinks. They used to talk about swings of 10 percent to 20 percent. But the Dow is off over several months from 14,000 to 8,000. That's huge. 

In a world where we all make choices between instant and delayed gratification, many people have got to be questioning all the scrimping and saving. I have to wonder just how many people want to say screw it at this point and spend some money on something to make themselves feel good. 

Cold, poor and despondent is no way to go through life. I've got to believe there are many who are thinking about that warm glow that comes from buying jewelry. It may seem counterintuitive, but there could be some upside to the current misery.

Start looking in the rear view mirror

With the election over (finally), it's time to forecast where our industry is heading.

If we're not in a recession now, we will be shortly. What was learned during the recessions of 1980, 1990, 2001, etc., should test your leadership as well as your management expertise. More than 10 percent of U.S. companies disappear annually, often because of their leaders' denial that consumer needs and distribution channels are always changing. Recessions just speed these downfalls along. 

For example, Henry Ford failed to notice in the late 1920s that consumers wanted more from a car than transportation; they wanted status. His denial gave General Motors a chance to seize market share. In the 1970s, with oil expensive and stagflation rife, the Big Three automakers denied that consumers wanted reliable, affordable transportation—not gas-guzzling status symbols. So the Japanese swept in with precisely what Americans wanted.

To stay ahead of competitors, jewelers need to understand that every product or service has a primary purpose (with jewelry, it's probably appearance) and a secondary purpose (such as enjoyment, status). The line between the two inevitably shifts, depending on what's happening in the economy and society. Detect when it shifts—from high-end to low-end, or from yellow gold to white gold—and you stand a better chance of offering consumers what they want.

We would all like to hear—and learn—what you did to manage your jewelry company during past recessions. We could all benefit from the information.

Jan Brassem is founder of Eclipse Global Consulting LLC, a firm that assists jewelry retailers who are expanding into foreign markets and/or sourcing globally. You can e-mail him at Jan@EclipseGlobalConsulting.com.