Diamond Summit insiders predict 10% fall in demand

Isaac Mostovicz writes...

500 diamond industry insiders gathered over the weekend at in Antwerp, forming workgroups and discussion groups to discuss the way forward for the industry – prior to the industry’s emergency Diamond Summit on Monday.

The Chair of that meeting, industry guru Chaim Evan Zohar, predicted a 10% downturn in diamond sales…

He said:

“This crisis…

…will translate to a decrease in demand for loose polished diamonds at wholesale of about 20 percent, and a 35 percent fall in the amount of rough diamonds required. [But] Let us keep things in perspective …under current circumstances, a 10 percent fall in demand at retail is not the end of the world.

He’s is right of course.  When the car industry is imploding and being bailed by government, 10% sounds pretty good.  Even so a market shrinking by an optimistic 10% is still going to be the end of the road for many cash-strapped jewellers and over-leveraged wholesalers.  And let’s face it, no government is going to bail out the diamond industry. We have to find our own solution..  As Chaim has previously said in his memo at diamondintelligence:

A review of major industry bankruptcies in recent years shows that these were triggered by a combination of mismanagement of assets (money, stocks) and the resultant cash flow problems – exacerbated often by a bank that tries to be the first to put hands on collateral. Too many diamonds – too little cash.

The Antwerp council was productive on many fronts, but the most positive thing to emerge from this session was the debate prior to the event.  It was clear to me that there is a groundswell of desire among participants to return to marketing generic diamonds, something I have long-advocated.

And this in turn, creates a necessity for new forms of collective and collaborative leadership.

We cannot simply ignore the reality of the situation.  As I wrote in Strategic Change magazine…

It is vital for the industry to rally around a new breed of leader, and a new self aware and confident style of engagement. The diamond industry must find a leader who is able to guide the industry’s actors to examine and share their appreciation of these paradoxes, rather than merely cope with, or suppress them.

Looking into ’09 I remain optimistic that we can climb out of this mess.  But not by pretending it doesn’t exist.  We must take a blank sheet of paper and draw ourselves a better future…

This was a good, constructive and hopeful event for the industry.  I am off to buy a new, and brighter-coloured pencil.

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