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GIA on Covid-19, Automation and Synthetics
Exclusive: Interview with Susan Jacques, CEO of the Gemological Institute of America, on the Rapaport Diamond Podcast
Sep 10, 2020 10:18 AM
By Joshua Freedman
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RAPAPORT... The Gemological Institute of America is pressing ahead with projects that may transform diamond grading, CEO Susan Jacques said in an exclusive interview on the Rapaport Diamond Podcast.
Despite the pandemic, the institute announced a collaboration with IBM on automated grading that could streamline the processing of high-volume goods. It began giving specific color and clarity scores for lab-grown diamonds, underlining the rising acceptance of the category among the trade and consumers. It also entered into discussions about shutting or scaling back its Antwerp laboratory and offices, only two years after expanding in the Belgian city.
Jacques explained the strategy behind its decisions and revealed how it saw the future role of artificial intelligence in diamond grading.
Listen to the podcast here:
Edited transcript of the conversation:
How has Covid-19 affected grading activity?
As with everyone else, we had significant challenges when the pandemic first started back in March [and] April. We had to close almost all of our locations. But I’m very proud to say that today we have been able to bring our staff back to work, and we are open in all of our 11 global laboratories, and we’re gradually adding hours and shifts to meet the increasing demand for our services. We have implemented significant safety and health protocols in every location, and thankfully have been able to bring our staff back into a very safe environment.
The recent sights, particularly last week’s De Beers and Alrosa [rough sales], and some of the tenders, as well as I think some of the rough that was already in the marketplace, have us eagerly anticipating much greater demand for our laboratory services in the weeks and months ahead. I think there’s a very shortened...window of time right now, with retail looming. Most retailers like to have their inventory in-house by November at the latest. So we’ve got September and October to get a lot of work done. And we are very confident that we’ll be able to satisfy the needs of our clients and get the goods back to [them]...as quickly as we possibly can.
Has social distancing impacted the way you grade a diamond now?
Definitely. We follow the rules in each country in which we are located, and obviously there are significant changes that had to be made within every lab: social distancing, hand washing, masks required at all times, together with all sorts of temperature screening and things that happen when our graders arrive to work.
But unfortunately, in some locations, there are still government restrictions as to the percentage of people that can come back to work, particularly in our India lab at this time.
We’ve installed plexiglass in many of our locations to ensure [a] separation between graders, and we’ve included...multiple shifts in certain locations now, so that we can certainly address all the [health and safety] protocols. Our incredible teams in all of our labs have really responded with great professionalism and dedication. We’re very well staffed and ready to meet the demand for the services.
Has the amount of time it takes to get a diamond graded increased as a result of all this?
Our processes have not necessarily changed significantly. Obviously, the way we’re doing work [has changed because of social distancing]. But no, the time it takes has not. Again, we’re anticipating significant volume in the weeks and months ahead, and we are staffing accordingly.
You are considering shutting down or scaling back your operations in Antwerp. Only two years ago you invested quite heavily there. Can you explain this apparent U-turn?
As any business does, we constantly evaluate our global footprint, how we provide services, what services we provide, what are the needs of our clients and how best we can satisfy those needs. So based on global and local market conditions and activity, and the impact that the global pandemic has had, we had to conduct an evaluation of the long-term viability of GIA Belgium.
As a result of that evaluation, we have the intention to close or significantly reduce the GIA lab and offices in Antwerp. And that, unfortunately, is likely to result in a reduction in our staff there.
We have not yet made a final decision about the closure or the near closure of the lab and offices in Antwerp. And we are currently in negotiations with our staff in that location and consulting with them and having conversations, following all Belgian law and regulations that cover such situations.
Antwerp clients are still able to submit and pick up stones from the GIA laboratory in Antwerp. And during this period, the GIA laboratory in Antwerp will continue operations as they are today.
If the decision is to significantly reduce the operation, rather than completely close it, what will be left there?
That is part of the negotiations that we’re having with our staff right now. Our consulting services to clients on large stones are a very important part of what we do there. And the evaluation of rough [for our diamond-origin reports] also happens through Antwerp. Those are a few of the things that we’re currently looking at.
Are you reconsidering any other GIA locations around the world?
A year ago, we closed our school in Tokyo. Two years ago, we closed our very small intake operation in the Middle East, in Dubai. So we constantly look and review, but there are no imminent plans to make drastic cuts to GIA anywhere else in the world. And we will continue to evaluate how best to serve the clients that we have, and encourage new clients to GIA through the services that we provide and where we provide those services.
You recently announced you were working with IBM on automated clarity grading, and that it was already in limited use in your labs in New York and Carlsbad. Can you elaborate on how much you’re using this technology?
Our skilled graders — and we have many across the world at GIA — will always be the foundation and a very important part of the grading services. So, while the AI [artificial intelligence] clarity system will change some processes, the graders will continue to apply their talents and expertise to the most important and challenging stones.
We are in the pilot phase right now. So it’s not throughout all of our labs and it is not through the entire process at this time. But we really do believe that adding this advanced AI capability to our grading process is 100% aligned with our mission: The more stones that are accurately, consistently and independently graded based on GIA standards, the more consumers are protected.
Are you saying there could be a bifurcation of the grading sector, where the highest-value stones will be graded by a human and the lower-value ones by machine?
What we see is the technology becomes part of the process. It doesn’t take out the human grader in all aspects.
What it doesn’t take into account is how you identify the treatments, how you identify things that are being done to stones. If you’re relying purely on the AI and the information that has been previously input into the system, you don’t have those eyes and gut reaction of seeing something that just doesn’t seem right. This is an important part of what cannot come about through total automation.
If you look way back to the late 1990s when [High Pressure-High Temperature (HPHT)]-treated diamonds first came into the marketplace, none of that would have been detected if it was just going through a process based on what was already known. So we will continue to use our graders in many, many steps throughout the grading process at GIA.
Why would higher-value diamonds require more human input than the lower-value ones?
We have built the AI to be responsive to the vast majority of stones that come through GIA. But the higher-value [diamonds are rarer]. So flawless stones, internally flawless stones, perhaps even VVS stones — those will all continue to have human interaction to be sure that we are [grading] accurately.
Will the AI continue to grow as we continue to input more and more data and information? Absolutely. But at this moment in time, we’re focused on the importance of the human grader in those…rare categories of diamonds.
Will AI in the long term mean that you need fewer people working for the GIA?
No, thankfully. One of the great things is it will afford us the ability to redeploy our graders to other services that we are considering producing and providing to the industry and to our clients.
At the moment, does every diamond still get checked by a human grader at some point?
Yes, it does.
Do consumers care if a diamond was graded by a human or by a machine?
I don’t think they even know. This is very much internal industry knowledge. As a retailer for 30 years, I [saw] that, for many consumers, [buying their first diamond] is the first time they understand that there is a grading report that comes along with a diamond. [They’re not interested in] whether this was a machine-graded diamond or a human-graded diamond.
A few months ago, Sarine Technologies announced it was introducing a system that enabled manufacturers to grade their own diamonds in-house, obviously still approved by and audited by Sarine. This sounds like a natural progression once you’re already involved in automated grading.
I think there is opportunity there. [As I mentioned,] one of the challenges with that is how you do the detection of the treatments or detect nuances that are happening. But I do think that’s a potential, possibly in smaller, more plentiful goods in the marketplace, but not necessarily in the higher[-grade], rarer stones.
Roughly how far are you from implementing that?
We’re in the pilot program with our AI currently in Carlsbad and New York. We would need to be rolling it out through other labs [first]. But this is something we have taken into consideration as a potential for the future.
You recently announced that the GIA would be offering specific color and clarity grades for lab-grown diamonds, as you do, obviously, for natural diamonds already. Many people in the industry will see this as a validation of lab-grown diamonds. Was this your intention?
No. Our intention is to be able to provide consumers with what consumers request and desire. It is fully aligned with our mission to protect all consumers and not just consumers of natural diamonds and colored stones. And so there will always be a market for the amazing treasures of Mother Nature. But there is a new generation of customers who do view laboratory-grown diamonds as an option. And we at GIA truly believe that they also deserve GIA’s protection.
And so as more retailers begin to pick up and carry laboratory-grown diamonds in their stores, and as more new consumers around the world are interested in buying this product, we also strongly believe that the overall market will continue to grow and bring new consumers into the marketplace, many with an aspiration to possibly own a natural diamond at another stage of their life. That’s what we’ve learned through focus groups and through consumer interaction.
But there was confusion, and our desire is to educate the consumer and make sure that…they…100% understand…the product that they are buying and that this is a man-made product produced in a couple of weeks versus a natural product, possibly more than a billion years old, that came to the surface of the earth through a volcano. So they’re distinctly different products, but both are diamonds. And we feel that this is the right step to ensuring consumer protection.
Many big players in the natural-diamond industry have argued that only natural diamonds deserve a specific grade because the whole concept of grading is about scarcity. How do you respond to that argument?
We believe very strongly that, through the grading reports, we are protecting consumers, and we are protecting both the consumers of laboratory-grown purchases as well as natural-diamond purchases.
There are always going to be those that are fearful of change and fearful of the adoption of new products into the marketplace. And it’s from self-preservation and survival. We understand the position of many. But our focus is on consumer protection.
There will be clear indication and education for the consumer about the product being produced in a couple of weeks in a factory, as opposed to being created by Mother Nature.
Will you continue to offer the old-style paper reports for lab-grown diamonds?
No. This is moving strictly to a digital report. We believe that the consumer of much of the laboratory-grown diamonds is a tech-savvy type. I don’t mean to pigeonhole everybody into that, but we believe that they have a different expectation on how they would receive this document.
Are you considering digital-only reports for natural diamonds too?
It is something we’re working on and have been working on for quite some time. Very few people print a boarding pass today; nobody’s traveling today [because of the pandemic], but most people are using their phones for everything. And I think it’s the wave of the future.
It’s not that we will necessarily revert all reports to digital, but that is definitely a trend that we are looking at and looking to answer for our clients and consumers. It is one of our key strategic initiatives, and we’re hoping to bring it to market in the near future.
Your current grading reports for lab-grown state that a stone may have been treated after growth. How far away are you from being able to declare categorically that a lab-grown diamond has or has not been treated, and what the treatment was?
We’re able to identify that through our grading process with our research team. But at this time, we didn’t feel that it was essential for consumers to know [whether] it has or has not been treated. Consumers are not that granular in the expectation of what they’re learning, but where it is necessary, we will provide a letter of such, much as we do for the natural-diamond trade. But we will keep that [more general] disclosure on the new...digital lab-grown diamond reports.
Do you expect strong demand for your origin reports this holiday season?
People want to know where their $5 cup of coffee comes from today, and therefore they have a right to know where their $5,000 diamond comes from. And I think there has been strong interest in our diamond-origin report.
There is some optimism about people’s inability to travel and perhaps those travel dollars [going] towards a diamond or jewelry purchase instead. [So] we’re very optimistic that we’ll have a very strong response to the diamond-origin report.
We’re very confident that consumers, as they learn more and more about this new report, will be asking retailers for it. We’ve got many retailers that are extremely interested in being able to provide that, because they want a product that answers the question when the consumer walks in the door.
When you say that a consumer wants to know about the origin, how are we defining origin here — is it the country it’s from, the mine it’s from?
I don’t know that consumers are as interested in the granular information of what mine. I think they have interest in knowing what country their stone came from.
The Chinese market, for example, is very interested in stones from South Africa, and a lot of that comes [down] to the history of diamonds coming from South Africa. But the Canadian market is very, very strong, particularly in North America. In Canada, a lot of people want to buy a stone that was mined in the country in which they live and [that] they are very passionate about.
There are different reasons why people are interested in that origin, and oftentimes it’s very much tied to a personal passion for something.
Images (left to right): A GIA grader, Susan Jacques, and a GIA report. (GIA)
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Tags:
Gemological Institute of America, GIA, grading, Joshua Freedman, lab-grown diamonds, Podcast, Rapaport Diamond Podcast, US
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