The Last Facet

Diamond on cutting wheel at William Goldberg, New York City. Photos by Irena Sapilak.

Diamond cutters in the U.S. are having a tough go of it. The supply of rough materials is getting harder to come by and countries such as India are able to manufacture and sell finished goods for a fraction of the cost in America. Add to that the shrinking number of people who can actually cut and the field is looking at a real crisis.    Right now, there are still diamond cutters working in the U.S., but the number has dropped considerably. One of the reasons is that it became cheaper to cut outside the U.S., where wages were lower. “I’ve been in the business as a cutter since 1978,” says Jack Reiss, president of New York City–based Jack Reiss LLC, a third-generation diamond factory that specializes in cutting vintage-style cushions, old European rounds and other fancy shapes. “But as other places came on strong, people started leaving. The diamond industry had a strong infrastructure in New York, and now there’s no major center left here. The American cutting industry is getting smaller and smaller, and the American cutters are getter older.”    That sentiment is being echoed throughout the cutting field. “Unfortunately, the number of cutters we have has dwindled,” says Barry Berg, son-in-law of William Goldberg and executive vice president of New York–based William Goldberg Diamond Corp., which cuts, manufactures and sells diamonds and diamond jewelry, and patented the Ashoka cut. “We only have five cutters now and they don’t only work for us. They’re independent workers and they also take work from outside. In the past ten years, we’re cutting less and less rocks, partly because we’re no longer sightholders.”    Philip Van Emmenis, a master diamond cutter and owner of Van Diamond, a 6,000-square-foot diamond cutting factory spread over three acres in Augusta, Georgia, estimates that there may be only a handful of cutters left. “New York went from approximately 300 to maybe 30 cutters,” he says. Though there are no reliable statistics available to track exactly how many diamond cutters work in the country at large, it’s widely acknowledged that the figure is small and shrinking.    In fact, some cutters have a hard time seeing a future in the industry. “I’m looking at my business and seeing we’re all getting older,” says Barney Schumacher, president of Schumacher Diamond Cutters Inc., in Bismarck, North Dakota. In business since 1972, Schumacher’s firm recuts and repairs chipped and broken polished loose diamonds, cuts and polishes gem rough diamonds and works with the processing of specialized industrial diamond applications. But these days he’s looking at an uncertain fate. “What’s the future here? I’m thinking when we all get older, maybe the gig is up. Maybe we just close shop.” The Growing Challenges    One of the more depressing obstacles facing U.S. diamond cutters is the impression that keeping the skill set alive is not a priority for the industry. “If our industry felt it was crucial to have diamond manufacturing in New York, they would have done more to keep it here,” says Berg. “But except for a few people, they realize it doesn’t matter if goods come from India.”    Schumacher agrees, adding that the public is also uninterested in where their diamonds come from. “When I first got into this, I thought that ‘Made in America’ would matter,” says Schumacher. “But no one cares at all. ‘Made in America’ doesn’t matter to wholesale customers, and I don’t know that it matters to the American consumer. They care if their car is made in America, but maybe they even don’t care about that.”    Staying competitive price-wise, of course, is also negatively impacting U.S. cutters. Reiss says India sells polished goods for 20 percent less than his cost for rough, and Van Emmenis quotes numbers that are even more dire. “The cost of cutting in the U.S. is up to five times higher than in countries such as China, India and Botswana,” he notes. “It’s not possible for the U.S. industry to compete in large-scale processing.”    Another problem is the lack of rough diamonds available. Berg says that the supply of rough doesn’t come to the U.S. anymore. “There’s not enough rough in the New York market to keep cutters busy, let alone bring new cutters in,” he says. “My cutters are finding it difficult to get enough rough to keep busy and make a living. And now the workmanship overseas is just as good. But even Israel isn’t what it was ten years ago. Everything is moving to India.”    For cutters, grading standards are also taking a toll. “You don’t have the supply in the U.S., and the supply in Antwerp is also going bye-bye,” says Schumacher. “I don’t think U.S. cutting is going to last 50 years. You try and get a young guy to sit at a bench and look through a loupe for eight hours, and then be critiqued by some kid in a lab looking at it under 40 power? The GIA (Gemological Institute of America) is too tough on standards. We work under ten power and they work under 40, and that’s not fair. There’s no way I could have perfect lab conditions without charging three or four times more for my work, and I have plenty of work now for me. My customers won’t pay for that.”    Schumacher lays out an example of why the costs are so untenable. “Here’s the deal with rough,” he says. “You think you’re going to buy rough for $100, and cut it and sell it for $200. But if you make 5 percent you’re lucky. And you have to pay cash for that rough. De Beers, or whoever, runs a cash business. Then you have to sell it on credit to a jeweler who’s struggling to pay his bills, with a real tight margin in between. And that’s why a lot of these guys go bankrupt.” New Opportunities    Nonetheless, there are people trying to save the industry and repopulate it with young blood and new cutters. Nizam Peters, founder, director and senior instructor of the American Institute of Diamond Cutting, in Deerfield Beach, Florida, is one of them. “When I first came to this country, my father and I opened a retail store,” says Peters. “There wasn’t enough traffic, so we went into the education business. We started in the back of the store.” That was 30 years ago. Today, Peters runs the only licensed school in the U.S. that teaches diamond cutting. He teaches beginner, intermediate and advanced diamond-cutting programs. Each segment lasts three months and costs $7,500, including the textbooks, and at the end of each course, students get certification. “It’s training toward self-employment,” says Peters, who trains approximately six to eight students each year.    For students who decide to work as cutters in the U.S., Peters sees certain advantages. “You have the availability of the buyer’s market,” he says. “A stone is readily salable in the market after it’s cut, so if you’re an individual cutter and you can purchase raw materials, and bring them back, and cut and polish the stones, then you can sell them and make a decent profit margin.” Peters says that for the right kind of industrious individual cutter, there’s still a good living to be made. “Whether they buy from an individual cutter or a factory, the wholesale prices are the same,” he says. “But the individual cutters may have lower margins.”    For Van Emmenis, another big advantage for U.S. cutters is trust. “The U.S. consumes a massive diamond inventory and has a history of large diamonds that came into this country through immigration,” says Van Emmenis. He says many of these antique diamonds, which were brought by immigrants as family heirlooms, are bought from the public and need to be re-cut before going back out into the market. “Trust is a huge part of this business,” Van Emmenis says. “Nobody wants to send these goods out of the country to get processed. And it’s important for the jeweler or wholesaler to personally know the cutter and his ability so that a diamond will be cut to increase its value.” Cost and Benefit    Without a change in the price of raw materials, though, Reiss believes that there’s not going to be any work for cutters coming up in the field. He says a price correction is needed in the global market before U.S. diamond cutters can compete. “We have to engage the Indian government, and the playing field has to be even, or even tilted, so that we can get our heads above water, before we can even think about bringing in new people and training cutters,” he says. “There are so many people out of work who could be trained to cut diamonds. But we would need to know that we would have the rough supply at the right price.”    In order to gain a foothold in the global market, Reiss suggests leveraging the value of the American customer. “America is the biggest consumer of diamonds,” says Reiss. “The American consumer is our ace in the hole. If the diamond industry can get the attention of the American government, and if the government would make a deal with all the producing countries, and say, ‘You want to sell your diamonds in America? Great. But you have to put a certain percentage of your large rough goods into the American market for American manufacturing.’ We could put a 10 percent tariff on all diamonds above a carat, and make ‘Made in America’ goods 10 percent cheaper. Or even a 50 percent tariff.” Path Forward    Another suggestion for increasing the profile of American cutters is to showcase the skills involved to the public. Peters is a big proponent of raising awareness. “We should talk to people at mom-and-pop stores,” he says. “I don’t know how much of a dent it would make in the business, but it would be a good thing for a retail establishment, because it’s an additional revenue stream,” says Peters. “Plus, it’s uncommon. I’ve seen where retail stores set up a bench with a cutter in the window to bring in store traffic. It adds conversation.”    Despite the current difficulties the industry faces, Peters believes that there’s a path forward, even as he acknowledges that the industry isn’t what it was. “There have been downturns in the industry,” he says. “When that occurs, like in the early 1980s, a lot of manufacturing operations go out of business. There was a weeding out of the cutting establishment. But I think we’re in a building place now, and I think the market is relatively stable.”    The people working in the industry are used to fighting for their place in the pecking order. On the plus side, most believe that New York City — and the U.S. at large — has a special value in the diamond world. “We’re at the point where the cutter in New York is almost extinct,” says Reiss. “But diamond producers have to look at America, because there should be an industry in New York. Everyone wants to be in this country. And we have an infrastructure here. It’s small, but it’s still here. The day we lose the infrastructure, it’s all gone.”