Shmuel Schnitzer has stepped down as IDE President, and replaced by Yoram Dvash who was elected at the end of December. In this exclusive interview, Schnitzer discusses some of his accomplishments and the issues that still need to be addressed at the bourse.
What were your biggest accomplishments as IDE President?
I had several goals when I took office. One of them was to reach an agreement with the Israeli tax authorities. Considerable progress has been made, and after two years of negotiations, I can say that we achieved 90% of what we set out to realize.
Another issue I’m proud of is the financial changes we’ve introduced to our industry. The credit ceiling for the industry went down from $2.8 billion to $1.2 billion. That’s a big drop, and it bothered me considerably. We haven’t gone back to the way things were, but we have managed to maintain good relationships with the banks. They are more open today to giving bourse members credit.
We also set out to bring more financing from other financial institutions, such as joint financing by banks and insurance companies. This has never been done before in the bourse, and I see it as an important milestone. In the current state of the industry, diamantaires do not seek to borrow heavily, and they conduct themselves responsibly. In the future, when things get back to normal and the industry recovers, I think that more credit sources will be vital.
Another issue I’m proud of is the progress in Israeli manufacturing. I’ve always claimed that without significant production, we can’t sustain the industry. We have to have some basic production infrastructure, and it’s important that some of the diamonds we export are polished by Israeli polishers. We’ve opened a plant that services small manufacturers, polishing contractors and independent polishers, and it’s already hired several dozens of workers.
Is there something that you wished was done, but wasn’t?
One issue is the rough supply to Israel. We signed an agreement with Alrosa for more rough supply, and entered into a unique agreement with Panford Ltd. for a monthly allocation of rough goods to young bourse members. The agreement with Panford was not implemented. The rough was so expensive, that a young bourse member would have ended up losing money. Therefore, we decided to postpone the implementation of that agreement until rough prices stabilize. We’re experiencing the same thing with Alrosa. We have the option to buy more rough from them, but the imbalance of rough and polished prices rendered that agreement unprofitable, for the time being.
I’m a manufacturer, too, and I’m intimately familiar with the state of rough and polished diamonds. When the option for profitability arises, I’ll recommend the bourse to revisit the implementation of these two agreements. I’m sure that the newly elected IDE President, who was one of the driving forces behind these agreements, will be happy to do it.
What are the biggest challenges for the diamond industry in 2016?
The global diamond industry has been in crisis mode for the last two years. It doesn’t necessarily have to do with diamonds, but with a global financial downturn. I believe that when things pick up, the industry – both global and Israeli – will recover.
I don’t see many major weaknesses in our industry. We owe less to the banks, we’re more flexible in manufacturing, and we enjoy the benefits of advanced technologies. When things pick up globally, I’m sure we’ll be among the first to enjoy it.
Many analysts speak of a recovery in the second half of 2016. I believe that too, and I’m much more optimistic now than I was a year ago.
It’s time to start adopting changes. The young people in our industry must lead new processes. The new elected board and head committees cleverly integrate veteran bourse members with new ones, I believe that Yoram and the new management have everything they need to succeed.
With thanks to the Israel Diamond Institute
