Rapaport News:
How did you decide to enter the diamond industry?
YD:
A relative of mine in the business told me to give it a try and he was very persuasive. I decided to give it at least a year and that it is how I began.
I started out as a polisher and learned how to polish the entire stone. After a while, I understood that I would have to remain in the factory for many years before I was promoted to the bourse, so I left and started my own company, Y. Dvash Diamonds.
I opened Y. Dvash Diamonds in 1991 and little by little I managed to build my business in manufacturing fancy-cut diamonds.
Round diamonds are the most popular cut, certainly for wedding bands. But there is still a market among people looking for fancy-cut diamonds, which stand out because of their slightly different shape. Fancies may be a relatively small part of the overall diamond market, but the number of established suppliers of fancies is also small. This means that you have more of an opportunity to stand out and become a well-known supplier.
Over time, we began manufacturing rounds as well because we have offices in Hong Kong and China, where most of the trade is in rounds. Simply put, we wouldn't have much business in the Far East if we only offered square cuts.
Rapaport News:
Do you manufacture in the Far East to maintain competitive prices or to be closer to the Chinese market?
YD:
No, we polish our diamonds only in Israel, even the smaller stones. Although, nowadays we don't sell too many small-sized diamonds. We used to sell more pointers, but little by little we moved into larger sizes mainly between 1 and 3 carats.
For many years, we had a manufacturing operation in Thailand but we ended up closing it because ensuring quality standards was too difficult. If you want to maintain quality control at your operation its pays to keep things close.
This will be one of the major draws for Israeli manufacturers to join the new manufacturing facility that is being built in Ramat Gan. In fact, the bourse just announced that renovations have already begun at the factory site.
Rapaport News:
That is interesting since Israel doesn’t seem a natural choice for manufacturing in terms of labor costs or access to rough diamonds. Why would diamantaires want to bring manufacturing back to Israel?
YD:
The key thing to understand is that diamonds are not like textiles. If you manage a textile factory, your raw materials are relatively cheap. You are paying, let’s say for example, a few dollars per yard of fabric. Consequently, labor comprises a much larger portion of the total productions costs. When you manufacture diamonds, every carat is worth something like $1,000 or $2,000, so the cost of labor comprises only a small portion of the final price.
Diamond manufacturing has taken off in Asia, particularly in the last couple of years, but not for top-quality diamonds. Due to our technology and the expensive rough diamonds we polish, the disparity in labor costs between Israel and China as a share of the total cost of manufacturing is insignificant.
Some other important elements to take into account are the costs of shipping and insuring diamonds and the time it takes to ship diamonds from manufacturing centers to grading laboratories and trading centers.
Rapaport News:
What is your role in setting up the new manufacturing facility in Ramat Gan?
YD:
After the last election at the Israeli Diamond Exchange (IDE), I was chosen to serve as chairman of the IDE’s Industry Committee. I was also selected as chairman for the industry committees at the Israel Diamond Manufacturer Association and the Israel Diamond Institute – the other two diamond industry associations in Israel.
I also serve on other committees, but these three appointments were the most important because it was the first time that all three industry associations had chosen one person to represent the industry. For many years there were sharp political disputes between the different associations in Israel, but today when people meet outside the industry we present a united front.
I decided to volunteer to spearhead this process because I am at an age and place in life where I can give back a little to the community and this is the largest project taken on by the IDE in the past 20 to 30 years. To build a factory that will have close to 100 workers recruited from different sectors of Israeli society is no simple task.
We are already beginning to see the impact of the preliminary work done by the committee. Just a year ago manufacturing was not on the agenda here and the Industry Committee had a budget of just $4,250 (ILS 20,000). This year, our budget is $425,000 (ILS 2 million).
