Diamond polishing in USA is not the 'Greatest'

[Garry H (Cut Nut)]

In this article https://member.rapnet.com/news/News...8526&RDRIssueID=0&ArticleTitle=The+Last+Facet
The Last Facet
IF THE JEWELRY INDUSTRY DOESN’T DO SOMETHING, THERE MIGHT NOT BE ANY DIAMOND CUTTERS LEFT IN THE U.S. 15 YEARS FROM NOW. IS THERE ANYTHING THAT CAN BE DONE — AND IS THERE ANY REASON TO DO IT

Several cutters lament the issue.
But they missed the real reason: not keeping up with technology.
Here is an example in a 8 minute video showing how diamonds are polished in the state of the art LTM factory in Surat India:

All the people interviewed missed the point. The industry moved with the technology and the traditional US cutters never kept up.

Sarine, OctoNus / Lexus, OGI and other technology companies make almost all their sales in India.and other "low wage" centers. The idea that one person takes a rough and produces polished moved to 20 or more specialists working on each rough stone all connected to computer databases. If you estimate the cost of wages plus depreciation of technology it probably costs more to polish in India than New York.

Its more or less the same in Antwerp and othe traditional centers except for the few companies using state of the art hi tech to cut and polish the rare very large stones that are being found by innovative small miners and many of those bought old De Beers mines and introduced Xray scanning of pre and partially crushed ore.

So if anyone wants to manufacture polished anywhere in the world, low wages are just a part of the input costs. Perhaps India's main point of difference is the million young engineers graduating each year?

 

[ChristineRose]

So what I want to know is...

Is the huge rock in that video real?

 

[Garry H (Cut Nut)]

So what I want to know is...

Is the huge rock in that video real?

Absolutely. Ihave personally seen a larger stone being planned there a few years ago.
LTM are contract polishers specializing in planning complex stones such as very large, heavily included, rare fancy colored stones etc.
Large manufacturers split huge parcels of very consistent rough and send half to LTM so they can quality control and compare their own operation and look for improvements.

 

[distracts]

I don't know much of anything about this topic but I found the article and the video you linked incredibly interesting - I watched the video twice lol. Thank you for posting!

 

[Renjith Kumar]

Which are the Most Popular Shapes And Cutting Styles?

 

[Garry H (Cut Nut)]

I should add - there are some boutique cutting and polishing firms in all centers, Antwerp for example is home to CBI under the careful management of Paul Slegers who posts here, Lieve, John Pollard sales and Wink.
I am sure there are some other companies like Graff's cutting house that he owns half of who work out of South Africa and Antwerp.

 

[denverappraiser]

Thanks for the good info Garry. Bad polishers are making America grate again.

 

[Rockdiamond]

Interesting subject Garry- and one close to my heart. I think the other side of the coin is much bigger than just the technology.
As an "old timer" I can remember the days of cutting factories dotting 47th street- and there's still a few left.
Initially, it was high labor costs which were driving cutters off the NY scene- but for the past 3-4 years, I believe it's Indian companies- being bolstered by the Indian government who've taken over the cutting market.
It looks to me that India has taken a massive gambit to corner the diamond market. As it stands, it's almost impossible to buy rough for many smaller cutters today.
The entire diamond industry in Israel has been decimated, partially due to this situation.
The positive side is that cutting in India has gotten exponentially better- so we now have lovely Indian makes- 10 years ago "Indian Make" was synonyms with "badly cut"

 

[Paul-Antwerp]

I should add - there are some boutique cutting and polishing firms in all centers, Antwerp for example is home to CBI under the careful management of Paul Slegers who posts here, Lieve, John Pollard sales and Wink.
I am sure there are some other companies like Graff's cutting house that he owns half of who work out of South Africa and Antwerp.

Hi Garry,

Thank you for that mention. It is highly appreciated.

While I agree with your view, it is only part of the story, I think. True, using cutting-edge-technology in rough-selection, planning and production is a huge competitive advantage. In this, I am happy to state that we are using all such technology throughout our process, and we take this even further with our entire production-process and inventory-management being directly related to sales.

That is the aspect your post seems to be missing: the fact that not only production-technology, but the entire process of value-addition (or should I say, the avoidance of value-destruction) is the main competitive difference between various cutting-houses and sources.

In a generalized way, while many Indian cutting-houses are using cutting-edge-technology in planning and production, reality is that they produce a flood of goods, which do not pass the minimum-criteria of most PS-ers, and surely do not reach mine. While cutting-technology may be a value-add, this overproduction of 'undesirable' diamonds, ending up mostly in virtual inventories, hoping for the odd sale to a consumer happy with 'good enough', is pure value-destruction in my view.

Live long,

 

[Rockdiamond]

Hi Paul!
When referring the the flood of Indian goods- are you specifically referring to Round Brilliant cuts? The fancy Shapes I've been seeing from India have been beautifully done- the caveat is that I am speaking of Fancy Colored, and Cape ( WXYZ) diamonds. That might account for the differences we are seeing. I have not specifically looked at colorless Fancy Shapes or rounds from India.

 

[Paul-Antwerp]

Hi Paul!
When referring the the flood of Indian goods- are you specifically referring to Round Brilliant cuts? The fancy Shapes I've been seeing from India have been beautifully done- the caveat is that I am speaking of Fancy Colored, and Cape ( WXYZ) diamonds. That might account for the differences we are seeing. I have not specifically looked at colorless Fancy Shapes or rounds from India.

You do not understand what I mean, David,

Following Garry's post, he presents cutting-edge technology as the competitive advantage. I agree, but state that it is not the full story. If the technical advantage is not coupled to marketing-knowledge in producing what the consuming public desires, it is not efficient.

What I observe is a high quantity of diamonds being produced without immediately finding a sales-channel, ending up often in virtual inventories, where essentially (potential) value is destroyed.

Live long,

 

[Karl_K]

Paul, isn't part of it that at that scale they don't really have the option of not cutting rough that is not economical for the best cuts?
It is a lot easier to cut better diamonds when you can pick and choose which rough you cut.

 

[Rockdiamond]

You do not understand what I mean, David,

Following Garry's post, he presents cutting-edge technology as the competitive advantage. I agree, but state that it is not the full story. If the technical advantage is not coupled to marketing-knowledge in producing what the consuming public desires, it is not efficient.

What I observe is a high quantity of diamonds being produced without immediately finding a sales-channel, ending up often in virtual inventories, where essentially (potential) value is destroyed.

Live long,

On the point in bold, we are in total agreement Paul. The automation of diamond sales may be "efficient"- however it overlooks much of why people buy diamonds in the first place. In general I see a degradation of many markets due to this automation. Not only the retail market, but a once thriving wholesale market is now withering on the vine.
Where I had a question was the quote below.

In a generalized way, while many Indian cutting-houses are using cutting-edge-technology in planning and production, reality is that they produce a flood of goods, which do not pass the minimum-criteria of most PS-ers, and surely do not reach mine.

If we're speaking of rounds coming out of India, and comparing to what you cut, I agree.
However the Fancy Colored Fancy Shapes I've been seeing are definitely well cut by any standard.

 

[Serg]

However the Fancy Colored Fancy Shapes I've been seeing are definitely well cut by any standard.

David,
recut of fancy color diamonds shows it very well.
Compare 13.07ct color distribution of Fancy pinkish brown with 14.54ct color distribution before recut.
many fancy color diamonds had been cut early in USA , Antwerp is source for recut in India now.

Also I saw many very interesting DZ oval, cushion cuts from India with very good Fire and Brilliancy . Such cuts become compete with RBC in optical performance . Main polishing technology improvements are coming now from fancy cuts and fancy color.

 

[Paul-Antwerp]

Rockdiamond,

You are still missing my point. Cut-quality as such is a laudable goal, but a side-note. This may sound weird coming from a cut-quality-geek, I know, but in this case, it is not my topic.

In the same way, I agree that cutting-edge-technology in rough selection, planning and production is immensely important, but again, it is only a side-note.

More important, and what Garry's original topic is missing, is the following: US-diamond-market-analysis shows that diamonds and diamond-jewelry has a turn of 0.7. In other words, it takes about 17 months for diamond-inventory to get sold. For our production, turn is now nearing 2.0, and hopefully increasing to a higher number. In other words, we are selling about 3 times faster. It is the importance of that market-intelligence, which is missing, in my view, in Garry's original post.

Live long,

 

[Rockdiamond]

HI Paul,
No, I'm not missing your point in any way.
We also experience a far quicker turn rate as compared to industry average.
Another important advantage we have ( you too probably) is a far lower return rate as compared to the "virtual" sites. This is yet another negative aspect of moving towards automated sales.
I know that cutters that are super specialized ( like you- and Yoram) are less affected by the shift. But for cutters, and sellers offering "normal" goods, these negatives can be a death knell.
Slower turn, and greater percentage of return are aspects that contribute to the loss of profitability in cutting centers in NYC and Israel.
But you've missed my point- you mentioned a "flood" of badly polished diamonds coming out of India.
I have seen many many stones like the one Serg posted- where the improvements in cutting are obvious. Stones being cut in India. So there are positives to this story.

 

[Texas Leaguer]

David,
recut of fancy color diamonds shows it very well.
Compare 13.07ct color distribution of Fancy pinkish brown with 14.54ct color distribution before recut.
many fancy color diamonds had been cut early in USA , Antwerp is source for recut in India now.

Also I saw many very interesting DZ oval, cushion cuts from India with very good Fire and Brilliancy . Such cuts become compete with RBC in optical performance . Main polishing technology improvements are coming now from fancy cuts and fancy color.

Interesting point Serg. Advanced technology possibly benefits Fancy Color cutting more than white goods. Color concentration is very dependent on ray paths, and different ray paths can have opposing values to brightness and scintillation. Those trade-offs are hugely important to lab color calls and value.

Knowledge once confined to the minds of individual cutters can now be objectively calculated by computer programs. Better decisions can be made with this technology to bring out the very best from extremely rare rough.

 

[diagem]

Interesting point Serg. Advanced technology possibly benefits Fancy Color cutting more than white goods. Color concentration is very dependent on ray paths, and different ray paths can have opposing values to brightness and scintillation. Those trade-offs are hugely important to lab color calls and value.

Knowledge once confined to the minds of individual cutters can now be objectively calculated by computer programs. Better decisions can be made with this technology to bring out the very best from extremely rare rough.

Hi Bryan, I am afraid it's not as simple as it sounds, just like with other colored gemstones, the material itself has more surprises than current technology can help control (kind of like a life of their own). The color results are not only dependable on ray path calculations, there are more considerations like zoning, type of cut utilized and most importantly "cutters" physical behavior in the actual cutting stages.
As with the colorless Diamond counterparts and as long as current measuring technologies keep offering results with wide margins of error, we still greatly depend on human intervention and intellect to get the job right! In order for a cutter to achieve superior optical symmetr/precision the knowledge and understanding of the cutter in 3D structures is a must.

 

[Texas Leaguer]

Hi Yoram,
No doubt that the value of the experienced and skilled craftsman will not be replaced by these technologies. Mainly I would think that they can help avoid costly mistakes in planning. Even if the technology only serves to validate a cutter's instincts, it would be an enhancement to efficiency. When you read stories about important diamonds that were months and even years in the planning stage you can only imagine the amount of additional resources, angst, and premature aging that is must be involved. Not to mention that time is money!

Clearly, every piece of rough has it's own individual characteristics that must be dealt with, some don't reveal themselves upfront. Especially fancy colors! The new technologies are simply additional tools to gain a measure of predictability, and which would give advantages to those who invest in them and learn to use them effectively.

And, not being a cutter myself, that's my story and I'm sticking to it

 

[diagem]

I respectfully agree, BUT..., those are indeed tools that revolutionized the cutting and manufacturing industry. But these tools also prevent evolution. Because most cutters today use those tools (almost) blindly, it halts moving forward out of the current comfort zone.
In order for cut quality to move forward to the next stage (as mentioned both fancy colored and fancy cut) the technology must also evolve into more precise measuring results. Or cutters will need to depend on their own intellect to surpass these limitations. So far I don't know of anyone who dares to jump these waters. I have been suggesting for a few years that cutters must adopt "REAL ETAS" in order to evolve, at the moment it's the only tool which can show you precise technologies margin of error limitations. But no one I know is willing to delve to such depths.

That's my story and I am sticking to it

 

[Serg]

Yoram,
who uses blindly such instruments in order to cut better fancy color diamonds, and specially to recut fancy color diamonds? Do you have any example? Few companies use such instruments and even if all of them use it blindly it can not prevent the market evolution. I know personally some of these cutters and they do not use it blindly. I doubt that it is possible to use such instruments blindly.
I introduced ETAS 13 years ago and I am happy that you like this research instrument. At the same time I do not see big advantages to use ETAS with a goal to achieve higher level precision in cutting technologies. ETAS does not give direct instructions which particular facet and in what way you have to align to improve a diamond symmetry. There are better ways to do it.

 

[diagem]

Yoram,
who uses blindly such instruments in order to cut better fancy color diamonds, and specially to recut fancy color diamonds? Do you have any example? Few companies use such instruments and even if all of them use it blindly it can not prevent the market evolution. I know personally some of these cutters and they do not use it blindly. I doubt that it is possible to use such instruments blindly.
I introduced ETAS 13 years ago and I am happy that you like this research instrument. At the same time I do not see big advantages to use ETAS with a goal to achieve higher level precision in cutting technologies. ETAS does not give direct instructions which particular facet and in what way you have to align to improve a diamond symmetry. There are better ways to do it.

Hi Serg, you are right, my intention was to point towards colorless material, Mia Culpa, although I know some cutters who were introduced to fancy colored aid technologies and said it wasn't too useful but that doesn't mean anything except maybe it still in its infancy. But in the colorless arena most cutters use it blindly to achieve the broad end results (majority for triple x),

I truly appreciate the fact that I was introduced to ETAS trough you (Octonus & PriceScope) and I really think you are belittling it's potential. "Real" ETAS (non-virtual scanner based data) gives us basically the whole picture! Everything as far as information regarding 3D optical light precision is there. It's true we can't read, fully understand and translate the information offered (yet) but it does give us light, angle, azimuth, symmetry and much, much more.
We started researching and attempting at decoding the information of "Real" ETAS a few years ago but it was taking way to much time and energy from a small Company like GemConcepts. We reached out to quite a few institutions but we were mostly brushed off as not relevant for "present" needs, that was 3-5 years ago. (That we were running to far ahead of ourselves). Since then not too much happened in the colorless world, did it?
Serg, in order to evolve in the colorless and fancy "shape" arena we must as cutters overcome the obstacles -- the margins of error current technology offers. If we don't, the cuts will never achieve the full optical potential a Diamond can offfer. We (at GemConcepts) were lucky enough to have the understanding and practice of identifying those specific margin of error locations on the Diamond and fix them intellectually and manually, but the greater majority of cutters employed in our industry don't have the knowledge/education required to identify such nano error locations and fix them on the material itself (plus the fact that they are extreme labor intensive). That's why we (as industry) must evolve technologically to be able to offer such solutions in the future sometimes. Otherwise this Diamond world will remain a Round Brilliant dominated world in terms of products, technology and design.

 

[Karl_K]

Since then not too much happened in the colorless world, did it?

That is the downside of cut grading.
It killed the incentive to go beyond for many companies.

 

[Serg]

Yoram,
A cut Technology is not main obstacle for improving colorless cut optical performance and craftsmanship. Sells traditions , weak and poor marketing are main obstacle . Even if cutter have nice fancy cut he can not sell it with good premium as serial product. He may sell 1-10 unique diamonds per month , but he can not sell thousands of such diamonds. Now we pay for marketing mistakes had been in 10-50 years ago. We did not even start to pay for marketing mistakes had been done in last 10 years. A soon we are going to start pay for mistakes had been done by majors in last 10 years . Price for these mistakes will be huge.

 

[diagem]

Serg, marketing is the other side of the coin..., not instead. Here on PS we can very well witness the retreat of specialized LP cuts. Like I said previously, it's a round brilliant kind of industry, all roads lead to Rome!

 

[Texas Leaguer]

Returning for a minute to Garry's original premise, I think it is pretty clear that US diamond industry was remiss in not adopting advanced technologies sooner. Why that has happened is probably the result of various factors. The cutting industry in NY has been in decline (in terms of number of cutting houses and cutters) for as long as I have been in the business. NY eventually became known for big diamonds, because labor intensive smalls could not be cut cost effectively with the high overheads. But one wonders how the business in bigger stones continued to slip away. With the overall money involved in bigger diamonds, a small recapture of value from high skilled processing could easily compensate for even significantly higher percentage in overheads. How did we lose that edge? Most probably because competitors like India mastered the tools to minimize our advantage, leaving our higher overheads as a determinate factor
.
And why were they able to do that? Probably, as Garry suggested, because of all the high tech students they have been producing over the years, who were quite comfortable moving into any industry and using the modern tools available. Encouragement and assistance provided by the Indian government no doubt helped this transition to take place. Unfair trade practices? Arguably.

But here's another possible reason. I say it with apprehension because it sounds like 'blaming the victim'. The US industry (and others) has been historically very opaque about the business. This has led to an attempted 'monopoly' on information. Diamond cutting was done in a secretive fashion and proprietary information was guarded jealously. Too much emphasis was placed on preserving a culture that promoted myths and nepotism (comes in handy when secrecy is desired) at the expense of open and objective information. This form of anti-science stifles progress and will eventually lead to loss of competitiveness.

Is there a way back for the US cutting industry? I believe so. Martin Rapaport is famous for asking audiences where the biggest diamond source in the world is found. After people have guessed South Africa, Russia, etc. He says, "No. It's south Florida!" The recycled industry is huge and gives the US cutting industry a path back to prominence. And that can be a foothold to not only re-cuts but to once again procession mine rough. But only if the industry adopts a modern attitude towards technology and information sharing.

 

[Karl_K]

Bryran, I think you have some very good points.
Easy capital is one of the biggest reasons for the rise of India which was the result of government support. I don't think that can be argued.
Getting capital from anyone outside the diamond industry has been a huge issue historically due to the closed nature of the business. I think expensive capital is one of the biggest reasons behind the decline in US cutting.

 

[Serg]

The interest rate in India was much more higher than in USA( after you account rupie inflation) last years.
There are many reason why Indian diamond cutting industry is more competitive than USA diamond cutting industry. But cost of money is not reason, here India has not any advantages. Cost of many in developing countries usually is much higher than in developed countries.
Many indian manufactures used bank loans to do invest in to stock market, real-estate business,..because profit was much higher than from diamond cutting.

 

[Texas Leaguer]

Agreed Karl. It is a hugely capital intensive business, especially considering that most players are relatively small enterprises. I do think there is a responsible role for our government to play, without engaging in unfair trade practices or encouraging risky financial schemes. Especially in this day and age of bringing back jobs!

I don't pretend to understand the issues enough to prescribe a plan, but I think the potential is there to reverse the decline and breath new life into diamond manufacturing here in the US. I think some sort of public/private partnership is probably the way to go. Trouble is, the industry is probably too "niche" to ever get the attention it would need from the government.

Overall, as Garry suggested, and as is true of so many industries, the ultimate solution lies in education and having enough newcomers who want to join the trade and who have the modern skills to compete globally. That, and a modern mentality towards the business that favors science and collaboration over secrecy.

 

[diagem]

It's all about education..., in our industry especially, but it's also a matter of calculations, we can not keep managing ourselves as we did a decade or more ago (the industry is changing too rapidly). The Indian calculations are completely different than ours as Serg mentioned, Indian Manufacturing Companies might be realistically loosing on their Diamond productions while making money somewhere else utilizing the enormous bank credit aimed for Diamonds, that's their business. We must differentiate ourselves with our product offerings, marketing and added values.
We (and it's not just the US, it's Belgium, Israel et-al) must be able to bring a different conceptual product, for this to happen, technology, education and cut creativity must evolve, if we keep calculating costs based on world wide Diamond production average we have no chance.

Bryan, Serg, Garry etc...., how much do you guys pay for cutting a 1ct triple X/0 cut? I bet most independent cutters of those craftsmanship levels get payed a similar per carat price everywhere..., those costs are and were not realistic, they are based on Historical calculations and payment methods. If you look at the our old timers (cutters), it will be difficult to find one with an up to date comfortable retirement plan. Most of our retired cutters are to be found in bad economical shape growing old, why? Because all these years they were not taken care off, most don't have pension plans, retirement savings and such. (I am not sure, but perhaps in Belgium it's a bit different, perhaps Paul could give his insight?)

Cutters today have the potential to bring in different innovative products, much more precise, beautifully cut Diamonds that takes between 2-5 times longer to produce than the average triple x/0. The problem arises when the value of the end product sticks out (value-wise) when comparing to what everybody calls "perfect" mass-produced Diamonds (triple X/0). Where are the incentives? The marketing of such products obviously not doing their jobs. How would you expect to develop a new generation of smart, educated cutters in the present situation?