Gulf Coast Jew elers Begin Recovery

Months after being hit by two of the worst hurricanes in U.S. history, jewelers, their staffs, and others in the trade on America’s Gulf Coast are still recovering. Only one jeweler is known to have died, but many suffered damage or destruction of homes or businesses and disruption of their lives.

Early insurance-industry estimates put damage costs at over $100 billion for Katrina in Louisiana, Mississippi, and Alabama, and over $5 billion from Rita in southeast Texas and southwest Louisiana. Red Cross relief cost $2 billion.

As of October 25, Jewelers Mutual had paid nearly $1.27 million to policyholders. Its officials said claims could top the $3.5 million paid after four hurricanes in Florida in 2004.

This report recounts the hurricanes’ effects on Gulf Coast jewelers, gives examples of how the trade responded, and considers how the jewelry business there will recover.

EFFECTS ON STATES

Alabama. Katrina was the fourth hurricane to hit southern Alabama in a year. Five weeks after it struck, the Alabama Jewelers Association still couldn’t reach some of its 400 members. Some stores were damaged, and some jewelers lost their homes.

AJA rallied to help, setting up a fund for members in south Alabama. AJA jewelers placed collection jars on their counters, and others—like president Marshall Sanford—went down to help, taking water, food, and other supplies.

Mississippi. Most jewelers weathered Katrina without destruction of stores, but many suffered damage, downed trees, power outages, or loss of homes. The owners of Light Jewelers in Hattiesburg, for example, lived in their store for a time, because of damage to their house and to protect the store from looters. Others waited weeks to return to see what remained of their properties.

Some weren’t so lucky. Jeweler David Logan, 42, of Laurel, Miss., north of Hattiesburg, died when a tree fell on him as he pushed his wife away. His was the industry’s only known hurricane-related death.

In October, the Mississippi Jewelers Association planned to create an emergency network so members can aid each other in future calamities. It also gave hundreds of dollars to benevolence funds of sheriff’s departments of the three hardest-hit counties. “Numerous deputies lost everything while helping others,” said MJA president Phillip Pitts.

Louisiana. Of 140 members of Jewelers of Louisiana, at least 50 closed indefinitely, and another 20 to 30 closed for days or weeks. “We have members who lost both business and home,” said former president Linda Norred. “Others report seriously damaged stores and homes. Most are small-business owners, and most employ family members, who are out of jobs, too.”

Zale Corp. closed 10 stores temporarily, mostly in New Orleans, including one that burned. Lee Michaels Fine Jewelry said its stores in Metairie and New Orleans were damaged, but “structurally fared relatively well.” Aucoin Hart Jewelers in Metairie was flooded, and the home of owner Thomas Aucoin Jr. was looted, as were a number of jewelers’ stores and homes in or near New Orleans. Jewelry supplier Stuller Inc. in Lafayette, 115 miles west of New Orleans, had minor damage, but “everyone here has or knows someone who lost a home or business, or who can’t be contacted,” said chairman Matt Stuller.

Many had to relocate. Savoie Fine Jewelry Appraisers in Metairie was destroyed, as was the home of owner Ira Savoie Jr. He evacuated to Texas but returned to Baton Rouge seeking work. Jeweler Trun Vu, who fled Vietnam in 1975, saw his Greta, La., home and job washed away. He drove his family of 20 in three cars to Lancaster, Pa., to start over.

The JL convention was in progress in Monroe (north Louisiana) when Katrina struck. Some members returned to get family; others were temporarily stranded. Norred opened her home for several days to JL executive director Caroline Bleakley and 25 members of Bleakley’s family.

Weeks later, many JL members still couldn’t return to assess property losses, said Norred. JL relied on e-mails to help with employment, housing, and other assistance, but many members were hard to reach because phone lines weren’t working.

Texas. Jewelers and other retailers in southeast Texas began closing before Hurricane Rita hit. Ben Bridge Jewelers shut its five stores in Houston and Galveston three days ahead of Rita, so people could prepare, said Jon Bridge, co–chief executive officer. Store managers in Dallas and Austin opened their homes to colleagues.

THE INDUSTRY’S RESPONSE

Individuals. In Connellsville, Pa., West Side Jewelry owner Linda Sparks, helped by her children and friends, raised money by selling bottled water on street corners over Labor Day weekend and also got in-store donations for the Red Cross. They collected $10,011. Pittsburgh Steelers player Hines Ward was so impressed he doubled it to $20,022.

In Cohasset, Mass., owners of King Jewelers donated some proceeds from their grand opening to Salvation Army relief, while another King Jewelers, in Aventura, Fla., donated an $8,000 Cuervo y Sobrinos watch to a Red Cross fund-raiser hosted by Oscar-winner Jamie Foxx.

Harrisburg, Ill., jeweler Joe Bacher charged $10 for watch batteries in September, donating all proceeds to Katrina relief. By late September, he had over $300.

Some jewelers facilitated weddings disrupted by Katrina. Philadelphia jeweler Jerry Robbins, of Robbins Diamonds, gave platinum and diamond wedding rings to a couple who met as Marines in Iraq and married in Newfield, N.J., where they evacuated after the flooding in New Orleans destroyed all they had.

Jewelers across America offered jobs and their homes to those displaced. “I know we’re a long way away, but if someone—a jeweler’s wife/kids or an employee’s spouse/kids—needs a place while things get cleaned up and safe again, here it is,” wrote one Oregon jeweler in a private e-mail to the Independent Jewelers Organization. Surfside Beach, S.C., jeweler Marc McNeer traveled to Mississippi to help senior citizens in his parents’ neighborhood, while relatives—including his wife’s baby nephew and his 72-year-old great-grandmother—evacuated from Hattiesburg, Miss., to Surfside.

Companies. Stuller Inc. immediately launched what chairman Matt Stuller called “a strong multifold initiative to give monetary and personal assistance to our neighbors” and worked with civic and business officials on recovery. It provided the extended families of its 1,800 employees in Lafayette, La., with housing and assistance. (Employees donated money and volunteer work and took in family, friends, and strangers.) It set up a donation room, where people brought everything from baby formula to toothpaste. (One jeweler whose wife and child recently died in a car crash donated their clothes.) Matt Stuller said Stuller would extend credit and provide other help to affected jewelers.

The nonprofit Stuller Foundation, which receives 10 percent of the company’s annual earnings to support charities, worked with the Red Cross, churches, homeless shelters, and other relief efforts. It also set up the Stuller Hurricane Katrina Relief Fund at the nonprofit Community Foundation of Acadiana. At press time, it had collected over $30,000.

Other companies also offered help. Jewelry Television, Knoxville, Tenn., donated 5 percent of net sales from Sept. 1 to 4 ($200,000) to America’s Second Harvest. It also donated bottled water, and its Web site directed viewers to contribute. Zale Corp. matched employee giving and helped employees relocate, providing new jobs and keeping in touch through regional managers.

O.C. Tanner, a Salt Lake City supplier, teamed with relief organizations to collect donations and matched employee contributions. Luca Carati, an Italian diamond jewelry maker, is donating 5 percent of every Luca Carati Cloud Heart sold from Oct. 1, 2005, to Jan. 6, 2006, to the Bush-Clinton Katrina Fund. Jewelers Mutual Insurance gave $25,000 to the Red Cross Disaster Relief Fund, and its employees organized a fund drive. Sterling Jewelers Inc. donated $100,000 to the Fund.

Watch businesses made donations to Red Cross relief. Rolex Watch USA donated $1 million and matched employee contributions. Citizen Watch of America gave $100,000. German prince Wolfgang of Bavaria gave one of his watch brand’s luxury timepieces, worth $9,700, to auction to benefit Katrina victims, and Hublot sold a special version of its Big Bang watch on eBay, raising $18,000. Seiko Corp. of America matched employee donations dollar for dollar.

Associations. Jewelers of America created a Recovery Network (forum.jewelers.org/forums) to enable members to aid afflicted jewelers. “Our intent is to build a permanent resource jewelers can rely on for business recovery when faced with similar disasters,” said president and CEO Matthew Runci.

IJO donated $5,000 to start a fund for Gulf Coast members and offered to help colleagues restore their businesses. Retail Jewelers Organization named Sept. 24 as RJO Hurricane Katrina Relief Day and urged member jewelers and suppliers to raise money for the Stuller hurricane fund.

Platinum Guild International USA partnered with Clothes Off Our Backs in a charity Internet auction of $250 bottles of platinum nail polish, signed by celebrities. Proceeds went to the Red Cross and children’s charities. Jewelers for Children gave $250,000 to the Red Cross.

The American Gem Society Web site updated the industry on Gulf Coast members and listed jobs for those displaced. Other organizations that made donations or raised funds include the Diamond Dealers Club of New York and the Iowa Jewelers Association. The Arkansas and Texas associations gave JL job information for displaced jewelers.

Designers. Mandeville, La., jeweler Anne Dale (www.annedale.com) created the Katrina Relief Badge (aka the I Love New Orleans Badge), produced by Stuller, to aid hurricane victims and support New Orleans’s recovery. Actor Dan Aykroyd bought 500. President Bush, entertainer and New Orleans native Harry Connick Jr., Mayor Ray Nagin of New Orleans, and Governor Kathleen Blanco of Louisiana all have one.

New Orleans jewelry designer Mignon Faget, who had to evacuate, gave a portion of her sales to the city’s recovery and asked her retailers to match her donation. Designer Erica Courtney, a Louisiana native, donated a pair of $30,000 platinum and diamond earrings she designed for tennis star Serena Williams to auction for hurricane victims.

At September’s spring 2006 Fashion Week in New York City, some designers lent support. Kenneth Cole and his models donated part of their fees. Luxury watch and jewelry designer Chris Aire donated jewelry to the Red Cross through the Morgan Freeman Auction on CharityFolks.com. He also donated Aire watches and jewelry to his own auction on eBay for groups including Habitat for Humanity, the Tyrone Hill Foundation, and The Humane Society of the United States.

ECONOMIC FALLOUT

In addition to multibillion-dollar losses, a Congressional Budget Office report says Katrina alone will cost over 400,000 jobs, slow economic growth, affect the supply and cost of gas and oil, cut federal income and gas tax revenues, and temporarily reduce consumer savings and consumption.

“Everyone is suffering economically, even where there isn’t much physical damage,” said James Patterson, former Mississippi Jewelers Association president. “It’ll be years before business is back on a level playing field.”

“Katrina and Rita’s effects depend on where your store is,” said Norred. “North Louisiana wasn’t directly affected, but in the south, some jewelers may be closed for months, even a year, meaning no holiday season, money, or income.”

Yet, even in hard-hit areas, seeds of renewal began sprouting soon after the storm. Some jewelers near New Orleans returned days after evacuating and initially sold scented candles. In those first weeks, many cleaned customers’ jewelry of flood muck; polished silverware; and did appraisals, repairs, and replacements.

Recovery created some business. Metairie, La., jeweler Tom Aucoin Jr., whose store was nearly destroyed, sold Rolex watches to police and construction workers earning double overtime.

Many jewelers expect business to rebound, citing federal recovery funds and new residents. “For stores not so much affected, there’ll be a huge increase in business, because there are more people now who need a new personal jeweler,” notes Norred. “Every day in our own business [Hollis & Co.], I’m meeting many newcomers who don’t plan to return [to their former homes].”

“It will be a challenging holiday season, but not impossible,” said Aucoin, who reopened in October. “People are slowly returning, and even though we didn’t advertise, our traffic, phone calls, and transactions are 60 percent of what they were this time [mid-October] last year. That’s better than we expected.”

Promised federal dollars for reconstruction and revitalization also spur hope. “In the next couple of years, billions will go into this economy,” said Aucoin. “As things get better, people will feel better. As they get back to a normal life, business will get better.”

MJA president Phillip Pitts takes the long view. “Mississippi will have reconstruction on a scale it hasn’t had before,” he says. “There’ll be an influx of people moving or resettling here, and with them, more money to spend on items for loved ones or themselves. I think the future is bright for Mississippi.”

Louisiana jeweler Anne Dale anticipates an economic boom. “I’m expecting a fantastic Christmas,” she says. “Our area was hit hard, but now people are hungry to celebrate life after this tragedy.”