Antwerp Facets Special Report

The Antwerp diamond industry, as we all know, is more than 500-years-old. It has survived wars and economic crises. Despite the huge destruction of the diamond sector in World War II, the city's diamond business built itself anew. The global economic crisis that we have all lived through in the last 18 months and the sharp fall in demand for diamonds and business being transacted had a huge impact, but we battled through.

If there is one element of our diamond industry that has remained consistent in the last 500 years or so, it is that the backbone of our trade is the small and medium-size companies. It would not be an exaggeration to say that these firms are the unsung heroes of the diamond sector. They are the ones who keep the industry ticking over because they play a vital role.

They do not search for any unfair advantages. They have developed their own expertise over the years and a customer base that appreciates the highly specialized and dedicated service that they provide. They are almost never mentioned in the media, and they do not look for special attention. They simply want to continue to play their part in the modern-day diamond business.

However, their operations are under threat as perhaps never before. They do not have the huge financial power of the large players in our industry. They do not have the strength to demand lower interest rates from their bankers for loans and credit facilities. Indeed, many are struggling to secure these facilities that are the very oxygen that enable them to keep on existing. In addition, we are seeing the effects of globalisation which creates strong competition and continuously lowers margins.

I believe that the diamond industry as a whole has a duty to show solidarity with these companies so that they can survive. They are the basis upon which the pyramid of the industry is built. One vital role they play is to both supply and buy surplus diamonds to other companies. Large companies buy big parcels of diamonds, but they cannot always use all the stones and so they need a way to move these diamonds on.

They may not always have the contacts throughout the trade who need a certain type of stone. That is where the expertise of smaller firms comes into play. They can often use that type of diamond or know of another firm that needs them. In this way, they play a crucial part in the operations of the diamond industry.

Confirmation of the importance of this sector of the diamond industry came during the biennial Presidents’ Meeting held in Antwerp in November 2009. The meeting heard that the relative stability seen in the diamond business during the financial crisis was in great part a result of the role played by the thousands of smaller and medium sized firms that make up most of the membership of the World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers’ Association.

I can do no better than to quote the comments made at the meeting by WFDB President Avi Paz: “The reason our industry maintained its stability in a relative way during the past 12 months, is not only due to the large companies' reaction to the downturn but also, very much so, to the resiliency and leadership of the secondary market. The behavior of the small and medium size companies minimized the damage to the members of our industry and enabled the pipeline to continue working."

In the new global economy, large diamond companies need small and medium-sized companies, just as much as the small and medium size companies need the large ones.

What can be done to help the small and medium-size firms? I believe there are several ways to assist them. Firstly, the diamond industry should make representations to the regional and national governments. These smaller firms represent around 75 percent of the membership of the Antwerp diamond industry which, in total, provides employment for around 30,000 people. Small and medium-size firms are, therefore, providing vital places of employment for many people, both in the diamond trade and associated service industries.

Secondly, I believe the bankers should be more flexible in their relationships with smaller firms. We are all still living through difficult times despite the apparent recovery taking place, and the smaller companies do not always have the financial clout necessary to keep their operations ticking over. The banks can and should play a part in ensuring the continuing survival of smaller firms.

Thirdly, I believe trade fair organisers can help smaller firms. It is in the interest of the trade shows that they have representation that is as wide as possible at their event in order to attract many buyers and visitors. It is also in the interest of diamond companies, of course, to take part in these shows in order to make contacts and expand their businesses.

I also believe that mining firms should supply the small and medium-size diamond companies as they did in the past.

We are all committed – whether small, medium or large companies – to continuing our proud tradition as the world's oldest and most important diamond centre. The Antwerp diamond hub is bigger than any individual firm. It is a collection of many companies providing a diverse range of specialized services both to Antwerp and to the entire global diamond community.

Let us all work together – the bourses, federations, industry bodies and companies – to create a harmonious relationship that will benefit the entire Antwerp diamond sector and ensure that we can all survive and prosper for many years to come.