UpFront

De Beers executives have been shuttling back and forth to Zaire in an attempt to keep their formal rough diamond marketing contract with MIBA, the state majority-owned mining operation.

Other companies, including American Mineral Fields, have moved into to the country to try to induce rebel leader Laurent Kabila to throw them the diamond marketing contract.

De Beers officials say privately that securing a contract with the new Zaire government is “important but not critical” to maintaining market stability because MIBA’s output represents only 15% of Zaire’s total diamond production by value. MIBA’s production totaled 6.5 million carats valued at $70 million last year. Zaire’s total production is estimated at 20 million carats worth $450 million. The remainder is mined “informally” by private diggers who sell their finds to licensed buyers – including De Beers – or smuggle them out of the country.

The majority of Zairean rough is smaller, highly included material. MIBA officials have claimed in the past their per-carat average is much lower than the general run of goods from the region. Many of the best pieces are purloined by mine workers or associates of exiting dictator Mobutu Sese Seko.

The civil war and the chaotic security situation throughout much of the country have slowed the normal flow of rough by as much as half. Most of the licensed buyers who export the informally mined diamonds have closed their offices in the regional diamond centers of Mbuji Mayi, Tchikapa, Kisangani and the capital of Kinshasa. De Beers has pulled its staff from its offices there and at the MIBA Mine. The mine is protected by a private security force and remained open at press time.

De Beers spokesman Andy Lamont says the meetings with Kabila’s Alliance Movement have covered “a broad range of issues, including future marketing arrangements.” He calls press reports saying the rebel government gave De Beers three months’ notice to end the current sales agreement “inaccurate” and says no decisions have been made.

One potential rival is American Mineral Fields of Vancouver, which recently signed a $1 billion development contract with Kabila’s provisional government to develop copper and zinc deposits in a province under Alliance control.

JEWELERS CALL FOR ACTION IN CAPITAL

The Jewelry Coordinating Committee, the lobbying group that worked to repeal the luxury tax in the early ’90s, has reorganized as the American Jewelry Council.

“Industry organizations have worked together in call-to-action groups since 1982, but it’s usually been in conjunction with some burning crisis,” says Matthew Runci, president of Jewelers of America, one of the organizations represented in the council. “Now we want to make that alliance more permanent.”

AJC’s revival was expected to be announced May 13 during Jewelry Industry Day in Washington, D.C. AJC includes JA, World Gold Council, Manufacturing Jewelers and Silversmiths of America, American Gem Society, American Watch Association, American Gem Trade Association, Jewelers Vigilance Committee and Jewelry Information Center.

Members identified six issues to pursue immediately. Among the most pressing is opposition to a national retail sales tax, proposed as an alternative to income tax. AJC also will aid MJSA in its fight to reduce export tariffs to help U.S. firms move into foreign markets and will support state estate tax reform to provide more tax benefits to families that pass their firms to the next generation.

BARRY’S FILES FOR REORGANIZATION

Barry’s Jewelers, the fifth largest retail jeweler in the U.S., filed for bankruptcy reorganization in May and closed 34 stores in six states. It was Barry’s second filing under Chapter 11 of the U.S. Bankruptcy Code in five years. Sam Merksamer, who joined Barry’s as chief executive officer in February, said the action should enable the company to obtain enough merchandise for the crucial Christmas season.

Merksamer also said Barry’s, which now has 130 stores in 11 states, will honor all obligations to customers and that there is no immediate need for debtor-in-position financing because of Barry’s “more-than-adequate” cash flow for all anticipated obligations.

Barry’s also plans to reposition its merchandise to appeal to the “mainstream jewelry market,” adjust pricing and commissions, seek alternatives to in-house credit and collections, improve customer service and target marketing with a modern point-of-sale system, create a consistent store format, consolidate trade names and create a vendor partnering program to bring in “substantial consignment inventory and return aged merchandise for new inventory.”

Krementz & Co. to sell divisions

Krementz & Co. of Newark, N.J., plans to sell its Krementz Jewelry and Shiman Religious Jewelry divisions, which produce the company’s 14k gold overlay, 18k gold electroplate and 14k gold religious jewelry.

“The divisions represent virtually all of Krementz & Co.,” says Ted Bonsignore, president and chief executive officer. “Krementz will sell all of its businesses, as well as its name and distribution channels.”

Chairman Richard Krementz Jr. announced his decision to sell the divisions at a management group meeting held in April following months of planning. “We recognized the business needed to be larger,” says Bonsignore. “We explored the possibility of acquiring other businesses, but ultimately decided it would be best to be part of a larger corporation.” At press time, Krementz & Co. was in talks with several potential unidentified buyers.

Richard Krementz plans to concentrate his efforts on Krementz Gemstones, an affiliated company that produces colored gemstone jewelry by designer Judy Evans.

Krementz & Co. is a 131-year-old company long known for its diverse production of gold overlay jewelry. The company sold and disbanded several divisions in 1990 to concentrate on the remaining religious jewelry, traditional overlay jewelry and gemstone lines.

DETROIT-AREA POLICE, JEWELERS UNITE TO FIGHT CRIME WAVE

Since the beginning of the year, at least seven stores around Detroit, most of them upscale jewelers, have been robbed. Now merchants and law enforcement agencies are fighting back.

The Michigan Jewelers’ Coalition Against Crime, formed in mid-April and now with almost 30 members, offers a $50,000 reward for information leading to the capture of the bandits. A task force of several area police agencies is working with the jewelers with some help from the FBI.

According to police and jewelers’ reports, the robbers wear ski masks and enter a store firing semiautomatic weapons or handguns. In at least one case, they blasted through a store’s buzz-in security door. They shoot out jewelry showcases while ordering everyone in the store to lie on the floor, scoop the best jewelry and watches into bags, flee to a waiting car and escape.

The attacks, which have occurred during business hours, are usually over in two minutes. Jewelers who have been robbed include John Derakjian Jewelry, M.B. Jewelers, Tapper’s Fine Jewelry, Sidney Krandell & Sons and Service Merchandise.

Descriptions of the thieves are sketchy; most witnesses say they wear dark ski masks and are of medium build. Though usually two robbers enter the store, more may be involved, say published police reports. At press time, it was uncertain where the group is based.

The task force – which includes the police departments of Oakland, Southfield, Troy and West Bloomfield – has stepped up street patrols and questioned suspects. Local police are concerned for three reasons, says Joseph Thomas, chief of police in Southfield, Mich. “These are not your average holdup people,” he says. “First, they know where and what the best stones, jewelry and watches are and go right for them, leaving others in the same case behind.” A typical thief, he says, would take everything. Second, they seem to know the jewelry business and police procedures. And third, they use a dynamic entry [firing weapons] for shock effect on victims.”

The jewelers’ coalition was created when Anthony Gerard of Christopher Gerard Jewelers in Southfield and Glenn Bednarsh of Antwerp Jewelers in West Bloomfield posted a reward, though their stores were untouched. “We did this to be proactive instead of complacent, with our heads under the covers,” says Gerard.

Within hours of the announcement of the reward, 16 retail jewelers called to pledge their support, and the coalition was born. There are close to 30 members, including Service Merchandise, the first national chain to lend its support. In addition, a local criminal attorney has offered his assistance, and a local bank has set up a fund for their reward pledges.

The coalition’s offer has been effective, says Thomas. “Leads have poured in since the reward was offered, and some of them look promising.” He expects the case will have a successful conclusion.

Anyone with information about the robberies should call the Southfield police department at (810) 354-4720, (810) 354-4205 or (810) 354-4756 and ask for Detective Lloyd Collins. Or call the Lathrup Village police department at (810) 557-3600.

SPRING AUCTIONS TOTAL $43 MILLION

The spring auction season in New York City was generally successful if unspectacular. The combined total of Sotheby’s and Christie’s auctions was $43.1 million – about the total of a single sale two years ago.

The reduced totals result from three factors:

  • Top jewelers are rebelling against paying ever-higher prices for very large diamonds.

  • Dealers are shying away from holding large inventories – especially when they have to pay cash and carry.

  • There was little action from the Middle East. Neither Ahmed Fitaihi nor the Mouawad family – regularly big buyers at auction – were in attendance, though they did buy sparingly through representatives. Meanwhile, London jeweler Laurence Graff attended but didn’t battle for the top lots. Another major dealer, Sam Abrams of American Siba Corp., New York City, bought actively, but much of his competition was from private buyers.

Still there was strong demand for really top pieces. At Sotheby’s auction, sales totaled $25.6 million, says John Block, jewelry director. This includes $3.3 million paid for a 13.83-ct. yellow diamond (a record $239,000 per carat and nearly four times the presale estimate). The diamond was from the estate of socialite Julie Burden.

Jewels from the estates of socialites Martha Phillips and Evelyne V. Johnson also fetched higher-than-expected prices. Thanks to the strong action in estate jewelry, Sotheby’s reported 80.2% of its lots sold, representing 76.5% of the dollar value expected from a fully sold auction.

Christie’s auction pulled in $17.5 million. Without the high-profile estates that Sotheby’s had, Christie’s sold 68% of its lots, representing 72% of the expected dollar total. The dollar percentage was higher because a number of top signed pieces far exceeded their presale estimates. “These sales demonstrate how important the estate market is to the jewelry market,” said Simon Teakle, Christie’s jewelry director. “The estates not only draw dealers, but private buyers as well.”

Dealers added that estate pieces generally carry lower reserves than new pieces consigned by gem cutters or jewelry manufacturers.

As with Sotheby’s, most of the top lots at Christie’s auction were colored diamonds. With a few notable exceptions, however, prices and reserves tended to be lower. Dealers made a point of staying away from any diamond they deemed too expensive, notably a 7.5-ct. pink diamond with a top presale estimate of $1 million. It failed to attract a bid.

Hawaii asses stamping act

The Hawaii state legislature signed a Gold and Silver Stamping Act into law in April.

Designed to make state stamping laws consistent with the National Gold and Silver Stamping Act, the act designates all merchandise in violation of stamping standards as contraband.

“The law really puts its teeth into enforcing stamping laws,” says Brenda Reichel of Carats & Karats, Honolulu. “California, West Virginia and New York all have similar laws, but I think ours has the best teeth. We want to make sure that all jewelry that is imported or brought into Hawaii is trademarked, and if it’s questionable, it can be seized.”

Merchandise that is underkarated, misidentified as silver or gold, or stamped with a karat gold or sterling silver mark but lacking a registered trademark is considered contraband and is subject to seizure and forfeiture under the new law. Proceeds from the sale of the seized articles may be awarded to victims who make valid claims of loss or damage against the manufacturer or dealer in violation. The act does not include antique or secondhand jewelry.

Reichel worked for three years with the state legislature, writing letters, talking with representatives and senators, and providing testimony as a jeweler and appraiser. Other jewelers appealed to the legislature through the Hawaii Jewelers Association, and about 50 consumers wrote letters, Reichel says.

The law was put to its first test at the end of April during a trade show in Honolulu when a number of vendors said they had applied to the U.S. Patent and Trademark Office for trademarks but refused to provide documentation.

“The detective from the Honolulu Police Department said the papers taped up on the wall [showing the companies’ proposed trademarks] would suffice,” Reichel says. At press time, she was contacting the Department of Justice and Federal Trade Commission for confirmation of the law and help enforcing it in conjunction with interstate commerce laws. “We need to reeducate [the police department] now,” she says.

Kentucky jewelers save store in need

When A.J. Sales, vice president of the Kentucky Jewelers Association, first visited Falmouth, Ky., after the March flooding of the Ohio River, all he could think was “despair.”

The National Guard took over muddy streets and businesses pushed their soaked and swollen equipment out to the curbs. Bands of children carried pushbrooms to help clean debris from churches and businesses downtown. Falmouth had endured nine feet of water in some areas and heartbreaking devastation almost everywhere.

Lemmon Jewelers in downtown Falmouth was equally affected. Though owners Bill and Ruth Ackman managed to move some items to their home garage, their showcases, equipment, supplies and much of their inventory were ruined.

Sales and fellow KJA members Hazel and Robert Sherrard of Sherrard Jewelers, Irvin, Ky., and Tim Dwight of Motch Jewelers, Covington, Ky., pitched in. “The whole community of Falmouthunited to help each other out,” Sales says. “We wanted to let them know we were there for them and to get other jewelers to rally behind us.”

KJA representatives visited the store in May with a check from Jewelers of America for replacement showcases, boxes of display material, office supplies, ring boxes and other supplies and a one-year free KJA membership. Sales saw a completely different store than when he visited several weeks before. “They have worked very hard to clean up and fix their jewelry store that a few days ago was five feet under water and mud,” he says.

At press time, Sales was attempting to contact jewelers in Grand Forks, N.D., who were in the midst of an even more serious and widespread flood. “We would like to relocate some of our resources to help them out if we can,” he says.

Correction

A list at the end of “Modern Granulators” (JCK, May 1997, p. 130) should have included the address of Dennis Arsenis. It is 1630 N. Main St., #391, Walnut Creek, CA 94596; (510) 932-7599.