The Jewel Trade's Fading Luster
Saturday, March 28, 2009
Last fall, recession-wary Americans more concerned about basics than bling began to lose interest in diamonds and other jewelry, and now the sales slump is reverberating around the world.
Retailers are taking a big hit. Tiffany said Monday that its profit dropped more than 75 percent in the fourth quarter. Lynn Jewelers, a downtown Washington presence since 1946, closed its doors last month. Christian Bernard Jewelers, a national chain with several stores in the Washington area, has shut down, as well. They are among 1,000-plus jewelers across the country to go out of business in the past year.
In India, drought-ravaged villagers who found salvation in the diamond-polishing factories of Gujarat have been let go in recent weeks, and thousands are migrating home. And Botswana, which depends on diamonds for more than 30 percent of its economy, has put all four of the mines it operates with De Beers Group on furlough.
Even the world's wealthiest are feeling the effects. In a recent television interview, Warren E. Buffett reported that his Dairy Queen holdings were fine, unlike his jewelry interests, which "just get killed."
Americans buy nearly half of the world's polished diamonds, and when they pull back, it's noticed.
The market for jewelry slowed in September, when credit markets tightened after the collapses of Lehman Brothers and American International Group. Sales showed little sign of recovery, even through the typically bustling Christmas season and Valentine's Day. And there are no signs of a resurgence anytime soon.
Ask Hala Meiser of Fairfax, who was relaxing with a friend at Tysons Galleria in McLean on Monday. Meiser, a retired teacher, said her mother gave her a sizable cash gift last month to splurge on jewelry.
"There are more significant things" to buy than jewelry, said Meiser, who used the gift for something more practical -- a new tile floor for her kitchen.
Jewelry "sales were down 10 to 20 percent last year -- I can't imagine they won't be again this year," said Dione Kenyon, president of the Jewelers Board of Trade, a credit-reporting agency for the industry. "I hear people say, 'Oh, things will [improve] and go back to the old days.' You don't go back to the old days -- there is a new order."
About 60 percent of diamonds cut and polished in the western Indian state of Gujarat are sold to the United States, and the region accounts for about 72 percent of the international processed-diamond industry.
Plants are being shuttered, and perhaps thousands of people are losing their jobs. The 50-year-old industry is in the midst of crisis after three decades of soaring business that provided work for about 1 million people, mostly poor migrants fleeing drought-ruined farms. They earned about $130 a month polishing diamonds, nearly four times what many made as farm laborers. The Indian media has recently reported a few suicides because of joblessness and debt.
"About half our business units have shut down, and many workers have either gone back to their villages or not returned from their vacation last October," said Champakbhai P. Vanani, president of the Surat Diamond Association. He said about 50 percent of the total workforce in the local diamond industry is now jobless, though officials said workers float between companies, making it difficult to give exact figures.