Made In America

The “Made in the USA” label still has cachet for consumers both nationally and internationally. However, the American jewelry manufacturing industry has been shrinking as overseas manufacturing is increasing. Is there a way to turn the tide?

By Lara Ewen

It’s no secret that recent years have been rough on the American jewelry industry. According to the third-quarter 2016 report from The Jewelers Board of Trade (JBT), 400 U.S. and Canadian jewelers disappeared in that period, including 25 manufacturers. That brings the total number of manufacturers who have closed up shop in 2016 to just over 100, a 57 percent increase over 2015.
This isn’t startling news to anyone who’s been paying attention to the industry. The new statistics are especially troubling, though, in that they seem to indicate that the number of closures is increasing.

What’s Wrong?
When asked for explanations, the most common problem manufacturers cite is competition from overseas. “More than half of the Los Angeles manufacturing industry was wiped out in 20 years because people discovered China,” says Victoria Tse, founder, CEO and creative director of VTse, a jewelry design house based in Pasadena, California. “And over the past 20 years, the government did not help. It gave business to Mexico and Asia. The government let it slide and gave billions of dollars away, and no one threw a fit over it.”
Jack Kelége, owner and designer at Los Angeles, California–based Jack Kelége & Co., says that in addition to higher U.S. labor costs, there’s a lack of talented bench workers available. “You have a lot fewer people learning the trade in the U.S.,” he says. “You don’t have a lot of people willing to do bench work.” Kelége, who’s been manufacturing his collections in the U.S. since 1971, handpicks all of his bench jewelers and mentors each of them for an average of 20 years. He says he’s had to scale back in part because there just aren’t enough young people interested in learning the trade. “I’m a perfectionist,” he says. “And in my niche, we do okay. But we have a lot fewer people employed now than we did in the 1980s. Then, we had 60 or 70. Now we only have 35. No — not even that much. Just over 20.”
Jevan Fox, vice president of Burlington, Vermont–based bridal and fashion jewelry brand Devotion with Forevermark, also bemoans the shrinking number of artisans available to do work in the U.S. “The number of masters is lower that it ever was because they retire and they’re not passing it on to their sons and daughters,” he says. “Also, there aren’t robust training and apprenticeship programs. That has had a crippling effect on jewelry manufacturing in the U.S.”

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What’s Right?
The news isn’t all grim, though. Even as some manufacturers have scaled back, others have sprung up. Among them is Matthew Ego, owner and founder of Guild+Facet, a new 16,000-square-foot fine jewelry manufacturing facility based in North Bergen, New Jersey, that caters to independent retailers and targets Millennial audiences. Ego says he was driven to open his factory because he wanted to make sure there would be a new generation of jewelers to replace those who were retiring. “There was no succession planning at the manufacturing level like there was at the retail level,” he says. “So manufacturers got bought out or disappeared. I see a huge void, and I see a lot of people closing down. So I see that there will be room for manufacturing. I see an opportunity.”
Fox also sees the value in manufacturing within the U.S., even as he acknowledges the challenges. “There’s not a lot of jeweler manufacturers in the U.S., and the ones that are here are very expensive in relation to what’s overseas,” he says.
Devotion, which in 2016 partnered with De Beers–owned diamond brand Forevermark, produces all of its finished goods in North America, with some work done in Montreal, Canada, and other work done in its Burlington, Vermont, factory. It makes ample note of that in its marketing materials. “Manufacturing in North America is not expensive in our model,” he says. “It’s inherent to what we do,” he says. “To keep it very simple, it’s completely a marketing and branding exercise. But not in a hollow or shallow way. It’s about the integrity of the pieces, and the components that go into it, and the trust we have with our clients, which is everything.”
The ability to turn on a dime and have complete oversight of the manufacturing process is what makes U.S. manufacturing a core part of the business for Todd Reed, owner and designer at his eponymous Boulder, Colorado–based jewelry design house. “The advantages of manufacturing in the U.S. are control and creative freedom,” says Reed, whose firm is known for making one-of-a-kind jewelry using recycled metals and ethically sourced diamonds. “We create every piece in-house and utilize wholesale, retail, custom and ecommerce sales avenues, and we must be flexible and nimble with labor hours.” Like Fox, he also sees the manufacturing process as core to his brand’s identity. “An internal benefit is that we are a family,” he says. “Supporting our artisan jewelers is a vital part of our authentic experience and is relevant for our brand.”
Tse agrees that speed is a huge benefit to manufacturing locally. “I don’t want to have to wait 24 hours if a customer wants changes,” she says. “We can react to customer calls immediately, and we can turn around a sample in a week if we have to.” She also says that as Asia’s industry grows, its prices have gone up. “It’s a misconception that manufacturing in the U.S. is too expensive,” she says. “Today, Asia isn’t really more competitive.”

What’s the Solution?
Even with weighing the benefits, manufacturers say that saving the industry will take a concerted effort. One oft-heard suggestion is that the jewelry industry lobby the government to increase tariffs on imported goods. “Right now, if a finished piece, like a $1,000 diamond ring, is shipped into the U.S., duties and customs would be about 5.5 percent or 6 percent,” says Tse. “That’s $56 per piece, and if you’re shipping 100 pieces, that’s $5,600 added to the price. If we want to avoid people manufacturing outside the U.S., we could impose a higher fee, like 10 percent.” She also suggests rewarding manufacturers who work within the U.S. “There are so many laws and regulations that handicap us,” she says. “Give me credit for the amount of people I hire, or what I produce, and offset my costs and savings. If we had taxes and duties increased, and then got credits, you’d see more people manufacturing in the U.S.”
Educating the next generation of bench workers is also crucial. “The challenge is to save the skill set,” says Ego. “We can find people who can use CAD and design a ring, but you can’t find someone working the bench.” Ego says educating and encouraging young jewelers is critical if the industry is to succeed and survive. “We as an industry need to encourage bench setters,” he says. “We need to develop apprentice programs.” He suggests establishing industry-funded scholarships that cover schooling as well as post-school apprenticeships. “I think the responsibility lies between the education system and the bigger companies,” he says. “Rio Grande and Tiffany & Co. and Harry Winston. Even Berkshire Hathaway could help.”
Fox believes that another important step will be reestablishing the prestige of the “Made In the USA” label. “Your cost of goods and labor will be higher, but the marketing and branding is key,” he says. “The ‘Made in the USA’ brand is strong. Look at Harry Winston. Manufacturing in New York is inherent to that brand, even though they were purchased by Swatch.”
Whether the solution is one idea or a combination of suggestions, something needs to change, and soon, or there may be no industry left to save. “It’s a difficult situation for the manufacturers,” concludes Kelége. “We’ll always have small boutique manufacturers, for a while at least. But if we don’t fix this, it will all go away.”

Article from the Rapaport Magazine - February 2017. To subscribe click here.

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