Germany’s Jewelry Centers

Two of the most famous jewelry and gemstone centers – Germany’s Pforzheim and Idar-Oberstein – have launched new projects to restore luster and add domestic and foreign customers to their troubled businesses.

Both have long histories as major suppliers of the international jewelry industry. Pforzheim traces its start as a jewelrymaking center to 1767; Idar-Oberstein celebrates 500 years as a gemstone industry this year.

But their historical importance has faded over time. “The gemstone and jewelry industries are facing difficult times, like so many other industrial sectors in Germany and elsewhere in Europe,” says Rainer Brüderle, minister of commerce for Rhineland-Pfalz, the state where Idar-Oberstein region is located.

Recession in Europe (especially in Germany), lower domestic sales, rising costs, foreign competition and reluctance to adapt by using new technology, innovative design or looking to foreign markets have hurt the industries in both cities.

Pforzheim

About two-thirds of Germany’s 620 jewelry manufacturers – most with fewer than 20 employees – are in or near Pforzheim, where 70% of German jewelry is created. A generation ago, some 25,000 people worked there in jewelrymaking. The number has fallen to 8,500. In the past 18 months, in fact, up to 10% of the work force has been idled as companies downsized or closed.

Might the situation improve? “After a difficult business situation, there is reason again for cautious optimism,” says Alfred Schneider, executive director of the Association of the German Jewelry and Silverware Industries (known by its German acronym VDSI). Domestic sales are up, layoffs are down and a stronger dollar has improved foreign sales, pushing more of Pforzheim’s manufacturers to widen their foreign markets, especially in the U.S. (see JCK, June 1997, pp. 166-174).

Pforzheim is widening its market in other ways too. The city’s long-time Ständige Musterausstellung Pforzheim (Permanent Products Exhibition), featuring samples from jewelry and watch companies, added a new wing this year to display the work of individual designers and smaller manufacturers and craftspeople. Interested visitors are encouraged to contact the companies directly. And at Basel 97 in April – the world’s largest watch and jewelry show – VDSI presented a well-received slide show of its jewelry and other products, similar to the more elaborate audio-visual production the Swiss have been doing for years at Basel.

Having its own trade fair is the one thing Pforzheim has lacked. “Most [jewelry] manufacturers for years didn’t think they needed one, or that they needed to be in other shows, because everyone came to Pforzheim,” says an official of one company. “Now, with all the other international shows, it’s too late.”

Maybe not.

In a joint project, the German jewelry and watch associations and Germany’s Sparkasse bank operate a trade show site on the World Wide Web to promote Pforzheim. The site went on-line in April. The “Virtual Pforzheim Jewellery Show” (http://www. schmuckmesse.de) is open 24 hours a day every day. “It opens the door to a new era of trade show events,” says Joachim Degel, director of sales promotion for Sparkasse- Pforzheim. The Web site provides the services and information of a trade show without the endless aisles.

“This is a necessary step which Pforzheim must take for its future,” says Schneider. “This Internet ‘fair’ gives its jewelrymakers access to new customer groups, both national and international.” There has been great interest from Pforzheim’s jewelry industry. At press time, more than 40 manufacturers were represented, a number that was expected to grow to 100 by the end of the year. The aim is to put most of the city’s jewelrymakers into the virtual trade show.

The site isn’t a video catalog, say Schneider and Degel. It’s designed to operate as much like a trade fair as possible. It aims for regional, national and international marketing and is available in German and English. French will be added soon. “Advantages of a traditional fair – such as concentration of supply and demand, and image promotion – are heightened by the special services this [virtual fair] offers,” says Degel. “It puts a wide vista of new markets and target groups for a jewelry manufacturer’s products at his finger tips. A customer anywhere in the world can reach him day or night. And a site can be used for low-cost promotions for conventional trade fairs.”

Idar-Oberstein

Idar-Oberstein’s gem industry has built an impressive network of institutions to support its marketing efforts, including a diamond and gemstone bourse, the Intergem trade fair, the School for Gemstone and Jewelry Design, the German Gemmological Association, laboratories for gemstone analyses and certification (such as the German Gemstone Research Foundation), and the German Gemstone Museum.

But the past 10 years have taken a toll on the gem industry of Idar-Oberstein (two cities divided by a river in Germany’s Nahe region). A decade ago, 8,000 people worked in the gem and jewelry trades in Idar-Oberstein. Today, only 4,000 are employed by 500 companies, most of them small family businesses. Competitors from the Far East – especially in India, Thailand, China and Sri Lanka – have become increasingly skilled, sophisticated and price-competitive, especially for mass-produced gems. As a result Idar-Oberstein is primarily known now for its unusual cuts and customized jewelry-making.

Technology also has created new problems. “This multimedia age has created business without frontiers, enabling almost any supplier to present his products wherever he assumes a demand exists, almost anywhere in the world,” says Jürgen Müller, chairman of the Association of the German Precious Stones and Diamond Industries.

Concern that Idar-Oberstein was losing its edge in the international gemstone industry led the German state of Rhineland-Pfalz, where the area is located, to sponsor a conference in 1996 on new strategies to ensure the industry’s future.

One result of the conference was the creation of the Progem Marketing Society, an umbrella organization for Idar-Oberstein’s trade groups. The organization has 220 member companies and an annual budget of $300,000. Dieter Brotzmann manages the organization and the Intergem trade fair. Progem’s simple purpose is to promote the region’s gem and jewelry industries, manufacturers and products.

“What has happened in Idar-Oberstein since the end of 1996 is truly remarkable,” Rainer Brüderle, the state commerce minister, told a gathering of the region’s jewelry and gem industry leaders at Basel 97 in April. “You have created an organization that brings together everyone important or with influence in the industry to strongly voice its ideas about the future.”

Progem’s long-term goals are to strengthen local industries, restore Idar-Oberstein’s international reputation and make the area’s name synonymous with high-quality gems and jewelry. “We must take matters into our own hands if we want help, especially

during this period of change,” says Müller, who also serves as Progem’s chairman. “Other regions are redefining their identities [to create a regional marketing image] for consumers who buy high-quality products and expect to buy a piece of that identity with them. We have to cater to this.”

Two projects have already been launched to meet Progem’s aims.

One celebrates the 500th anniversary of Idar-Oberstein’s gemstone industry. “It’s a starting point to focus public interest on the gemstone and jewelry region,” says Brotzmann. Events included a commemorative stamp issued by the federal government, a special exhibit at the German Gemstone Museum and a celebration attended by international guests and media at Basel 97, with addresses by Progem officials and Brüderle and the presentation of a 12-ft.-tall birthday cake.

The other project, a conference held in May in Idar-Oberstein, attracted some 150 retail jewelers. Progem and industry officials promoted the region’s gem and jewelry products and marketing programs at the conference.

“We’ll test our marketing initiatives in Germany this year,” says Brotzmann. “Then next year, we’ll take them into other European countries and abroad.” Plans call for promoting the region and its products at international trade shows and with competitions, promotional events in conjunction with retailers and seminars or panel discussions.

Brotzmann says Progem marketing aimed at U.S. retailers and wholesalers could start as early as next year.