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Profile: Eric Braunwart
Feb 2, 2014 8:58 PM
By Rapaport News
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RAPAPORT... Columbia Gem House, Inc. is a vertically-integrated gemstone mining, cutting and marketing company founded in 1977. Columbia Gem House holds itself to strict Quality Assurance and Fair Trade Gems Protocols standards.
 Name: Eric Braunwart
From: Vancouver
Company: Columbia Gem House – President
Columbia Gem House, Inc. is a vertically-integrated gemstone mining, cutting and marketing company founded in 1977. Columbia Gem House holds itself to strict Quality Assurance and Fair Trade Gems Protocols standards.
Rapaport News: What prompted you to pursue a career in the jewelry industry?
EB: I have degrees in Landscape Architecture and Environmental Design and Fine Arts. I worked as an environmental planner for a bit, but it bored me. I decided to do something else and just sort of ended up here. It was never really a plan to open a business in the jewelry industry, but I loved the stones so that's the direction I went. And 37 years later, I’m still here.
Rapaport News: Do you have an overall business philosophy that guides you in your work?
EB: The origin and story of the stone were always very important to us. As a company, we always try and learn more about the stone so that we can tell that story to the consumer and make that story part of the gemstone’s value.
Around the year 2000, I did a consulting project for the World Bank in Madagascar on how to help gemstones be part of poverty alleviation. Until then, we focused on where the gems came from and how they were produced, and if we saw something terrible, we wouldn't work there. But after the World Bank project, we also began to assess how gemstones can help the diggers to come out of abject poverty.
At the same time, shortly after 9/11, the Patriot Act came into play. So not only did we want to know where our goods were being produced, but we also were required to know by government regulation. That's when we developed our Fair Trade Protocols and set requirements on ourselves.
Rapaport News: What differentiates Columbia Gem House from other companies?
EB: I think we have the best cut volume gemstones in the world. We started 32 years ago cutting in Taiwan, then Korea, now China, where we've been cutting for 18 years now.
In almost every case, we know everything about those gemstones. We know where and how they were mined, the date they were shipped out of the country and the date they arrived in the U.S. We trace them to our cutting facility in China and back, then to the retailer and even to the consumer, if necessary. We know if there were any treatments done or not, because if there were, we did them. We make sure that no one suffers from silicosis at our cutting factory because we put in low-tech but effective air filtration systems.
Our customers can purchase with confidence and with a whole wealth of knowledge about the stones, which they can use to help sell them to the consumers. Every gem variety we have, we have guarantee cards for; our commitment to Fair Trade and Supply Chain goes with every gemstone that we sell.
Rapaport News: Source verification is very important in the diamond industry now. How different are the models in the gemstone industry and can they be transferred to the diamond industry?
EB: Rules within the gemstone industry would be stricter than in the diamond industry. The colored gemstone industry is unique. The same color goods coming from one location can be much more valuable than those coming from another.
Origin reports, which you don't see in diamonds, are very common in high-value colored stones because a Paraiba tourmaline that actually comes from Paraiba State in Brazil is worth five times more than the same stone from Nigeria; which is worth five times more than the same stone from Mozambique; which is worth 40 times more than the one from Afghanistan.
Traceability is important because the origin enhances the sale value in the West, not for Corporate Social Responsibility purposes. Very few do it to develop a transparent supply chain that shows the good and bad effects that our industry has worldwide.
Rapaport News: What have been the most notable changes in the gem and jewelry industry during the course of your career?
EB: One thing I've seen is an absolute proliferation of treatments and synthetics being mixed into the natural supply chain. When I started 37 years ago, amethyst cost more than it does today. It's not because there's more amethyst mines, it's because the supply is polluted with unchecked synthetics. Citrine's the same way. Peridot coming out of China, 15 percent is barium glass, it's not even a synthetic. We spot check and monitor our supplies so that those synthetics do not get mixed in.
There are many good companies out there that try really hard to avoid cheating and mixing in synthetics or treated stones, and they do a good job; we are not unique in that regard. However, unfortunately, there are those in the industry that make extra money doing that. So as color gets mixed and spread around the world, you really have to be vigilant in making sure you're not a part of it.
I've also noticed an industrialization of our products, although this has happened more so in diamonds. To handle the impact of increased labor costs in the U.S., the industry started moving away from "handmade" jewelry to volume-cast jewelry. That has sort of commoditized the product and made color much more popular and much more available, but it's also caused part of the story behind the stone to be lost.
When it's sold on the internet 10,000 at a time, it expands the market, but the personal connection to the product and the consumer is lost.
Rapaport News: How has the color gemstone market performed since the 2008 downturn? How has economic uncertainty affected the market?
EB: It's been really devastating. In colored gemstones, there are no big mining companies like De Beers and ALROSA. There are mainly small and family-owned mines.
So when the market crashed, within a year retailers saw their sales were down 20 percent and decided to cut back. They cut back by 50 to 60 percent to wholesalers, so our sales were down by 60 percent, and we cut back. Our purchases from small miners were cut by 90 percent. So while the retailer got hit by 20 percent, the miner got hit by 90 percent and they just closed. There's going to be an enormous supply problem over the next five years if things start picking up again, which it does seem to be doing.
Prices were negatively affected until China did their stimulus package at almost the same time that Obama did the U.S. stimulus package. So then we had an influx of cash to the two biggest economies and people started buying gemstones again. That started pushing prices up overseas, but it didn't really filter down to the miners that quickly.
Right now, there are some mines that are starting to reopen. Now we’re seeing a shortage of supply and increases in prices almost across the board for gemstones.
Rapaport News: What do you expect in 2014?
EB: Prices are increasing almost faster than we can keep up with. Chinese demand is slowing, but it's slowing down at about the same rate as the West is picking up, so demand is still strong. Supply is down and I don't see that imbalance changing. It's moving from a buyer's market to a seller's market.
Rapaport News: How volatile is the influence of fashion in the colored gemstone market? What is the most popular and in demand now?
EB: Fashion definitely plays a role. In one area it plays a good role, and in another area it plays a terrible role. In the good area, we'll use sapphires as an example. Sapphires are on fire right now. And it's not just blue sapphires. Five years ago we couldn't sell green sapphires, now I can't get enough of them. And that's definitely because of fashion.
There’s also a trend for more white metal, which sets off the color of some stones and has allowed a lot of different stones to come on the market.
The downside is there's a lot of fashion jewelry being made, and natural gemstones, particularly as they're increasing in price, do not meet the right price points. So there is an immense amount of imitations that come onto the marketplace.
Rapaport News: What advice do you have for someone starting out in the gem and jewelry industry?
EB: People need to start at the bottom and work their way up, especially in the U.S. and Europe where the industry isn’t booming with opportunities. The challenge is that both in the U.S. and Europe, they've lost people that know the bottom end – how to solder, polish and lacquer. Cutting and manufacturing has all moved overseas. China and India now have better jewelry factories than the U.S. and Europe. But how do you bring new people into the U.S. and European markets?
Young people coming into the market need to have an idea of what their goals are and need to try to figure out how they can cater to consumer needs. Then, from there, they need a set of beliefs on how they want to produce their jewelry. Without it, they will find themselves trying to explain why their jewelry was produced at a factory with unethical working conditions, which is not a position they want to be in.
They need to develop design, skills and a moral standard. They need to know what they want to produce and how. If they want their goods produced in an ethical, honest, transparent manner, they're going to have to start at the beginning.
Rapaport News: Where do you envisage your business 10 years from now?
EB: My hope is that this company continues in the colored gemstone industry and keeps everyone tied together from mine to market. My vision for the company in 10 years would be to stay in colored stones and colored-stone jewelry but tied together with retail jewelers as a larger community through the web.
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