Asia Demands US-Cut Stones
FROM Thanksgiving to New Year's Day the United States diamond industry makes 40 percent of its total sales. And exports, especially to Asia, are increasingly important to dealers. The growth of the Asian market is just one of the developments down at ``Diamond and Jewelry Way'' - New York's West 47th Street between 5th and 6th Avenues.Skip to next paragraph
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The area looks much as it has for the past several decades. Brightly lit jewelry outlets compete for space with small eateries and crowded diamond-cutting shops. Many workers are Hasidic Jews dressed in black clothing and dark hats. In the 1960s they could be seen trading small packs of stones right on the street. But not today. Armored cars surrounded by gun-toting guards pick up or drop off valuable cargoes.
But underneath the traditional trappings of one of Manhattan's best known blocks - the headquarters of the US diamond industry - signs of change are evident:
Newcomers from Puerto Rico and Asia can now be found working in many of the stores and cutting rooms.
Many of the smaller cutting shops are gone - a result of the economic difficulties that socked the industry in the recession-years of the early 1980s.
The industry is stepping up efforts to market its products, domestically as well as abroad. Indeed, the American Diamond Industry Association (ADIA) has just produced for the first time a quarter-hour promotional videotape.
US diamond center
The US diamond industry is now increasingly looking outward, especially toward Asia, says Lloyd Jaffe, chairman of ADIA. The industry itself, he says, is more international than ever, employing more than 2 million people worldwide - 700,000 in India alone. But ``several hundred thousand of those workers can be found in the US,'' Mr. Jaffe notes, with West 47th still the diamond center of the US, if not the world.
The growing importance of the international trade can be seen in a number of trends:
In dollar terms, some 10 percent of the world's diamonds are now sold in Southeast Asia. Efforts are underway to develop a diamond industry in China.
Hong Kong and Japan alone buy over two-fifths of total US diamond exports (box). Based on figures collected through July, exports to Hong Kong are up this year.
The US continues to win praise for its larger, high quality stones. Smaller diamonds, those of less than one-half carat, are now mainly cut abroad where labor costs are cheaper.
According to Jaffe, US diamond exports this year are running well ahead of last year. For the period from January through July, exports of cut or processed stones (not yet set in jewelry) had a dollar value of $620 million, compared to $491 million for the same period in 1988.
For 1988 as a whole, exports soared 37 percent to nearly $909 million, up from $660 million in 1987. For the period from 1984 through 1988, exports jumped 145 percent.
Changes in the exchange rate of the dollar can cause sharp fluctuations in the dollar value of exports. That aside, US diamonds are in major demand abroad, Jaffe points out in an interview in his office overlooking West 47th.
The value of US imports of cut but not-yet-set stones far outweighs US exports, since the US produces few diamonds. Imports are about $2.3 billion for the January-July period this year, compared to $2.1 billion for the same months in 1988.
Some potential flaws accompany the growing importance of the huge Asian market to US exporters. One risk arises from the reversion of Hong Kong to the political jurisdiction of Beijing in 1997. Jaffe believes that Chinese authorities will continue to welcome US diamond trade. Beijing, like Moscow, needs hard currency that could be raised in part by the sale of diamond products, he notes.
There are also some questions about whether Japanese consumers will continue to buy large quantities of diamond products, given a slightly slower growth rate in that country compared to the go-go years of the mid-1980s. Indeed, earlier this year there were concerns that the death of Emperor Hirohito would prompt a drop in diamond purchases. In Japan, forgoing expensive purchases can be a sign of respect for a departed leader. But so far, the drop in exports has been minimal.