The organizations representing the local diamond industry are planning to build a shared manufacturing facility for polished diamonds larger than 10 carats to be located at the Israel Diamond Exchange (IDE) complex. A collaboration among the IDE, the Israel Diamond Institute Group of Companies (IDI) and the Israel Diamond Manufacturers Association (IsDMA), the move is part of a broader effort to improve Israel’s competitiveness as a diamond-manufacturing center as the overall level of diamond polishing declines across the globe. “We reached the conclusion some time ago that while Israel may be a large diamond trading center, there still must be a significant level of manufacturing here to maintain the long-term sustainability of the local industry,” said Shmuel Schnitzer, president of the IDE. The large diamond polishing facility will contain approximately 15 rooms that will be fully equipped and diamantaires will be required to pay a service fee for their use. Unlike the industry-run factory that specializes in small diamonds that the organizations launched in April 2015, the fees charged for using the large diamond factory will not be subsidized by industry organizations “The people who will use the new factory work with large diamonds and have the ability to pay,” said Yoram Dvash, overseer of the IDE’s factories and chairman of the IDE’s industry committee. “The factory initiative is designed to address the need for greater security in the manufacturing process.”
Dvash explained that many Israeli manufacturers today have to carry rough diamonds from the exchange to their polishing facility outside. Some of these manufacturing facilities may not meet the security standards requested by insurance companies, and even for the facilities that are adequately secured, the transportation route to the factory is not. As a result, some large diamond manufacturers find it easier to polish their rough diamonds in other polishing centers. The key point that the planners want to ensure is that the diamonds can be transported directly from the diamond exchange to the factory without leaving the IDE complex. This should drastically reduce the security threat and enable diamantaires to quickly walk from their offices to view their diamonds during the manufacturing process with a minimum of hassle.
The new factory is still in the planning phase, but service providers are interested in supporting the idea, such as manufacturing equipment maker Sarine Technologies. “We were partners in the establishment of the factory for small diamond manufacturers as a way of contributing to the smaller businesses in the local industry,” said Uzi Levami, Sarine’s chief executive officer (CEO), “and we will continue to assist the local industry as we have until now.” Levami also noted that large diamonds are already a big share of Israel’s total polished manufacturing and a part of the global diamond market that has not contracted significantly during the current downturn. “The demand for large rough and polished diamonds has not really changed since the downturn began a year ago,” he said.
On the trading side, activity in Israel declined dramatically at the beginning of August as the IDE trading floor was closed from July 27 until August 7 and most diamantaires went on summer vacation. Even after the exchange reopened, trading volume remained low as demand from foreign buyers remained seasonally slow and relatively high rough prices and declining polished prices discouraged interdealer trading. “My goal this year is to avoid losing money,” said a diamond manufacturer and dealer who wished to remain anonymous. “I have lost faith in the business during the current period.” He added, “I cannot make a decent profit with current rough and polished prices and I am considering moving into colored gemstones if things do not change.” To promote greater trading amid the weak overall market, the IDE board met before the summer vacation to come up with ideas for new initiatives for developing business opportunities for members. One measure chosen was to regularly hold Israeli Market Days toward the end of every month to promote greater trading on the exchange’s floor among Israeli diamantaires. The first such daylong event, held in July, brought a noticeable increase in trading and floor traffic at the exchange. “It was a very good idea and we thought we should do this once a month and bring to the bourse floor dozens of member companies that typically are not very active in trading at the exchange,” said Schnitzer. “It gives business a nice push, it is a good opportunity for diamantaires to get to know each other better and it’s also good for morale when people see a lot of activity on the bourse’s trading floor.”Article from the Rapaport Magazine - September 2015. To subscribe click here.