Re: You and your ilk are on the way out, farva old boy.
- From: "Acolyte Of Glorious La Parka~, King & Master of Men" <titanic@xxxxxxxxxxxxxx>
- Date: Sat, 28 Mar 2009 21:42:24 -0800
Deluxe Powder Blue Stickler Boy wrote:
Diamond trade loses its luster
Americans are buying less bling, and the effects cross the globe
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. No signs of a resurgence
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. Indian industry in crisis
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. "Ours is a $15 billion industry," Vanani said. "But right now, only 15
percent of diamond cutting and polishing work is going on." Government officials tried to prevent the closures. "We requested the
owners to keep their businesses open for the benefit of the workers. But
they don't listen. What can they do?" said Rajnikant Patel, labor
secretary in the Gujarat government. "They are in a crisis; their
business is down." Mines shuttered in Botswana
In Botswana, Debswana Diamond, a joint partnership between De Beers and
the federal government, last month imposed a 50-day "pause" on
production there, temporarily closing three mines until mid-April. A
fourth mine will remain shuttered indefinitely. The company produces 22
percent of the world's diamonds. The slowdown comes a year after De Beers invested $83 million in a
cutting and polishing facility, an effort aimed at putting more people
to work. "Clearly, reduced production means reduced [number of] diamonds going
into those factories that were newly established," said De Beers
spokesman David Prager in a phone interview from London. He added that
the company believes that demand for diamonds will resume, eventually
outpacing supply. Prager said a joint venture between De Beers and Namibia is planning a
similar furlough on operations there. Like their counterparts in
Botswana, the workers in Namibia will be paid during the pause, he said. Still, Botswana's new president, Ian Khama, said in recent media reports
that the nation faces a deficit and will have to dip into its reserves
and borrow to make up for lost revenue from the diamond mines. Consequences ripple outward
When workers lose their jobs in India's polishing plants or are
furloughed from Botswana's diamond mines, the consequences ripple
outward. The cobblers, restaurants and others supporting them suffer, said
Russell Shor, senior analyst for the Gemological Institute of America.
Closing the mines "has a devastating effect on surrounding businesses." Last year, 1,137 jewelry businesses closed in the United States, while
bankruptcy filings rose 18.5 percent, according to the Jewelers Board of
Trade. Nearly a third of the closures occurred toward the end of the
year, after a disappointing holiday season. December jewelry sales for
non-anchor tenants in U.S. shopping malls were $718 million, down 20
percent from the previous December, according to the International
Council of Shopping Centers. Earlier this month, Tiffany announced that
it was closing its 16-store Iridesse pearl chain. "In order to keep a business thriving, you need people to spend money,"
said Mitchell Engle, who managed Lynn Jewelers and worked with his
brother and mother. Engle said he plans to establish a new operation
specializing in customized jewelry and online sales because the
traditional jewelry-store model -- with high rent and hundreds of
slow-selling expensive products on display -- doesn't work in a
contracting economy. "It's harder to get loans to maintain the level of
inventory we'd like to get." Bright spots
The wedding market has been a bright spot for many jewelers. Officials
at Mervis Diamond Importers, which operates four stores in the
Washington area, said sales of engagement and wedding rings are strong. Until business picks up, many retailers are trying to make do by tapping
into growth from another recession-related phenomenon: Customers, taking
advantage of rising gold prices, are selling their used jewelry. Justin Carmody, co-owner of Diamond Exchange USA in Rockville, said
just-because purchases of bracelets and necklaces have nearly dried up.
People are buying smaller, less extravagant engagement rings. But the
store's used-gold buying is up fourfold. "We've pursued that out of a need," he said.
Titanic?
.
- References:
- You and your ilk are on the way out, farva old boy.
- From: Deluxe Powder Blue Stickler Boy
- You and your ilk are on the way out, farva old boy.
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