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Hill Street: The Quiet Diamond Center
Mar 8, 1999 4:13 PM
By Daniel Parker
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By Daniel Parker
U.S. Correspondent
When one thinks of the world’s major diamond trading centers, Los Angeles is not the first to come to mind. New York, Antwerp, Mumbai and Tel Aviv are by far the largest and most active centers, but with a strong jewelry manufacturing base, a host of glitzy designers, and a wealth of talented professionals, LA is fast becoming recognizable as a major diamond capital.
LA’s diamond story began in the late 1970’s and early 1980’s, when three ethnic groups began immigrating to the city in large numbers: Armenians, Iranians, and Israelis. According to Moshe Salem, partner of A & M Diamond And Jewelry Inc. on Hill Street, LA’s scaled down version of 47th Street, "the Armenians were the craftsmen, the Iranians had a strong knowledge of jewelry designing and casting, and the Israelis had the business know-how to put it all together. This melting pot created a very strong diamond and jewelry industry."
The unification of these diverse groups allowed companies to master their own business strategies, and today LA has developed a strong niche in the market.
A Diamond Center Without Cutting Wheels
The most important factor separating LA from the other major centers is cutting — there are virtually no diamond manufacturers in LA. Therefore, polished diamonds must be imported from the other centers in order to be put into jewelry. This limits the large majority of LA diamond and jewelry companies to focusing their energies on the U.S. market.
"In order to do international business, like going to the Far East to sell diamond jewelry, you must compete with the other international markets. International businesses must produce goods themselves, so that they are able to sell them at better prices. Since there are no manufacturers in LA, we are not set up for international business," continued Salem. In other words, by not cutting diamonds, LA companies have placed themselves far enough down the pipeline that international profits are unattainable.
Home Sweet Home
Luckily, the U.S. market for diamonds and jewelry remains by far the strongest in the world, and West Coast companies are reaping the benefits. But in the same manner that foreign companies are coming into New York to take advantage of the strong U.S. market, competition in LA has also grown fierce in recent years.
Nirmal Jain of Hill Street based Neon Gems, which imports diamonds directly from India, said the increased competition makes business tough. "There are 70 or 80 Indian dealers on Hill Street, and lately the are more and more people coming into the business. People are coming to America because it is a better market, and these new companies tend to be more aggressive. They will sell at lower prices (no profit) just to build their business. This hurts everyone else."
Jain, however, remains confident that the basics of his business remain strong. "Because we have been here for a long time, people know us well. We have established personal relationships with long-term clients, who prefer good service to a one-time bargain from another dealer, but if you have a nice selection of product, you can really sell anywhere."
The Advantages and
Disadvantages of the West Coast
Importing goods into LA is no more difficult than in New York. Large shipping companies like Brinks and Malca Amit have offices in the city, and getting goods is not a problem. One disadvantage, according to Daniel Udi of LA Gems Ltd., is that "access to the European market is better in New York. A dealer from Europe is more likely to visit New York than LA Also, New York has easier access to goods from Europe."
Neil Aronow, of Aronow & Ross, Inc., notes that due to the sheer numbers of dealers in the two markets, a different climate is created. "There is more trade in New York among the dealers — it is a more active dealer-to-dealer market due to the number of businesses on 47th Street compared to Hill Street." Aronow also noted that New York companies tend to be bigger and wider in scope. For this reason, LA dealers don’t do as much business with mass merchandisers. They tend to deal with small chains and mom and pop operations throughout America.
"In my opinion there are more advantages than disadvantages," said Rahul Parikh, president of K.R. Gems & Diamonds International and president of the Indian Diamond and Colorstone Association (USA), Inc. "We have cutting- edge facilities and technology for jewelry manufacturing. In addition, being on the West Coast, we have the advantage of the time zone. When jewelers across the country need a stone at 7 or 8 pm for next-day delivery, the only place open is the LA market. That gives us a very good advantage."
"In addition, we have access to the Gemmological Institute of America (GIA) and the European Gemmological Laboratory (EGL) right here in LA, which improves turnaround time and communication. I think the interaction between the industry and the labs is much greater here than on the East coast."
LA Dealers on the Market
LA’s diamond wholesalers report much the same trends as New York wholesalers. The mood of the market still reverberates with the strong showing of U.S. consumers at retail during the 1998 holiday season. According to Udi, "consumers have become more educated about diamonds and as a result, they demand better and better goods. The low qualities are becoming more difficult to sell."
Indian dealers note that the overproduction of small sizes has hurt their value. "Melee prices are going down. Right now you can buy melee at $30 per carat—three years ago that was impossible. For now we buy cheap and we sell cheap."
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Tags:
Consumers, GIA, India, Jewelry, Labs, Manufacturing, Shipping Companies
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