RAPAPORT… For many at JCK Las Vegas, the show was much more than the hustle and bustle of buying and selling. Attendees were offered a variety of featured seminars on the future of the diamond and jewelry industry. Two such discussions were hosted by Martin Rapaport, chairman of the Rapaport Group. Their focus was on the challenges of certification labs and fair trade, and included a wide range of speakers from different niches of the jewelry world.
Certificates For All?
Rapaport framed the debate at the Rapaport Certification Conference by asking: “What is the state of standards and certificates today and what needs to be done?” He then handed the discussion off to panelists Peter Yantzer, executive director of AGS Laboratories in Las Vegas, Nevada; Jerry Ehrenwald, chief executive officer (CEO) and president of IGI North and South America; Ronnie VanderLinden, vice president of the Diamond Manufacturers & Importers Association of America (DMIA) in New York and Don Palmieri, president of New York–based Gem Certification and Assurance Lab (GCAL).
Palmieri suggested that the state of the industry is unstable, as the proliferation of many new labs is diluting the effectiveness and integrity of certificates and standards. “I think that we are in a race to the bottom,” he said, noting that dealers can get favorable certificates by shopping around to desperate companies. “When times are good, certs seem to be tough to get, but when business is bad, they seem to be easy,” he said. “I don’t think it’s something certification companies want to stop necessarily — especially when they can make 10 percent or 20 percent extra.”
Others on the panel were reluctant to characterize the growth of new certification labs as detrimental to the overall trade, especially when the Gemological Institute of America (GIA) dominates the certification market. “GIA is the eight-million-pound gorilla in the room — and all other labs on the planet get compared to them,” said Yantzer.
The predominance of GIA certificates, many on the panel argued, establishes a de facto, though informal, standard that all others are compared to. “The core of our business was that there is a system out there and GIA created that system,” said Ehrenwald. Having one established lab, he added, safeguards consumers against fraudulent certificates by giving them power to dispute them.
“Theoretically, a person can go in and buy an overrated diamond, wear it for three or four years and come back and say, ‘Hey, this stone is overrated’ and exchange it for one that is right.”
Ehrenwald did, however, concede that there is always going to be a level of incongruity with any type of certification or standard. “When you are grading the quality of a diamond, there is subjectivity involved. Grading is a science — but yet, not a perfect science,” he said. He was sure, however, that this issue will soon be a thing of the past. “Eventually, within the next decade, we will have machines that can grade color, clarity and size.”
For the time being, many expressed concerns that the current marketplace makes it easier for less-established labs to exploit naïve customers. “We are very concerned that consumers do not understand,” Rapaport exclaimed. “We have no red line at all — someone can just print out a certificate.” Rapaport noted that a good strategy against disreputable labs would be for the industry to shun them, something Rapaport’s online auction services are looking into. “We are talking about throwing some labs off RapNet,” he said.
VanderLinden argued that it is not just labs and suppliers that have to bear the responsibility of accurate certifications, but retailers as well. “How many retailers have graduate gemologists on staff? It is up to the retailers and those who are getting the diamonds in to say, ‘We cannot accept this, it is bad for the store’s image,’” he said. “At the end of the day, someone in your store has to understand diamonds and has to at least understand Grading 101.”
In closing the discussion, Rapaport ominously asked panelists “How bad does it have to get before we take action?” Palmieri said that was difficult to know for sure, but that, with such a diverse number of standards and certifications currently circulating around the industry, it is not far-fetched to expect legal issues at some point in the near future. “Is there going to be a class action lawsuit? There certainly is a possibility.”
Transparency And Trade
At the second debate of the day, Rapaport opened the Rapaport Fair Trade Conference by declaring “the issue of establishing fair and ethical trade in the diamond industry is probably one of the most important things I can think of.” Picking up the discussion were panelists Toby Pomeroy, eco-friendly designer and founder of Toby Pomeroy in Oregon; Eric Braunwart, president of Columbia Gem House in Vancouver, Washington, and John Hall, general manager of corporate relations for Rio Tinto. They expounded on the best ways to move fair trade forward and highlighted the individual ways in which their companies are making an impact.
At the start of the discussion, there was a broad consensus on the need for transparency in jewelry and diamond supply chains, with many arguing that if fair trade is ever really to become an industry staple, it needs to be based on a foundation of trust and transparency. Pomeroy noted that fair trade will never get off the ground until “we know where stones are mined, we know where they are refined and we know where they are sold.”
Hall added that while it is important to be transparent and honest about where stones are mined, it is equally important to be open about how they are mined — even though the process can, at times, be environmentally harmful.
“It’s quite true that you can’t mine without disturbing the earth, and it is not always sensible to fill a hole you left behind. But ideally, you should leave a place better than you found it,” Hall said. “Ultimately, there should be a set positive environmental and social gain from doing mining, like ensuring that the wealth that you create enhances life, educates children, creates better healthcare and improves the environment.”
Mining, however, observed Braunwart, is only one part of the supply chain that needs to be opened up to scrutiny. “The one thing I want to point out to people is that when we think about responsible producing, mining is not the only step in the supply chain. Cutting and jewelry manufacturing — there are some issues there as well.”
Braunwart discussed his own experiences working as a gem manufacturer, including his efforts to make gem cutting, which is a leading cause of the incurable respiratory disease silicosis, safer for his workers.
“We were able to cut the silicon dust by 90 percent. I don’t know if that saved 10 people or not — but why not? That whole system costs very little to do.”
Being educated on your specific company’s supply chain, Braunwart said, is pivotal to pinpointing health or safety problems that can be easily fixed. Small, targeted efforts, he added, are just as important as broad industry changes. “I look at it sort of as the U.S. State Department versus the Peace Corps — they are both trying to convey American values and what the country stands for, but it’s on a very different level,” he said. “We tried to do it the Peace Corps way — we worked on the ground.”
Many also agreed that tantamount to any fair trade effort is the need to get consumers on board. “How do we get the industry to move on it more? That’s simple — just get consumers to want it,” said Hall. Rapaport pointed out, however, that the consumer base is already changing in favor of fair trade. “I am anticipating a tsunami wave of socially conscious consumers,” he said. Rapaport added that retailers and manufacturers need to get on board with a new socially conscious marketplace, or face being left behind. “It’s absolutely absurd that the jewelry industry doesn’t meet the demand out there for fair trade products.”
