IDMA president says tenders are real threat to future diamond industry, calls on large diamond suppliers to return to direct supply method
Moti Ganz, president of the International Diamond Manufacturers Association, published an article last month warning that by selling their production through tenders, the large diamond producers are upending the sustainability of the diamond industry at large.
In the article, which appeared last month in HaYahalom, the Israel diamond industry magazine that is published by the Israel Diamond Institute, the IDMA president did not mince his words. "There are so many tenders that the trend is threatening to interfere with our lives. And if the rough producers don’t wake up in time, it won’t be a mere interference, but a blow to our very existence, capabilities and survival," Ganz wrote.
Ganz emphasized he is not against tenders per se. "When the large rough producers add a tender here and there, as a window to the market, to sell especially large goods or for other special reasons, everyone can continue to breathe normally. But when the tender becomes a method in its own right, when it becomes the central marketing channel, increasingly pushing regular supply to the margins, it’s time to put a foot on the brakes – and the sooner the better," he noted.
Tenders, Ganz argued, make sense in a world where tenders are one of many instruments of supply, but not when all or most supply is based on tenders. "It’s true that we have seen manufacturers collapse after losing their sight, but on the flipside, we haven’t yet seen any manufacturer open a factory on the strength of its participation in tenders – for if you don’t win tomorrow’s tender, what will you do? Who will pay the workers’ wages? Who will pay the taxes, electricity, water and all the other bills?" he asked.
"Manufacturers that engage in occasional diamond processing might be able to survive in a world where there are only tenders, and even then with difficulty, first because they have no choice but to pass their gain on to plant owners, and second because those who manufacture in large quantity can dominate the tenders and push prices to a level that medium-sized manufacturers can’t reach. But these are only part of a long list of shortcomings.”
“When we examine these aspects of tenders, we realize that they weaken each and every link along the diamond value chain. The most prominent victims are manufacturers and retailers. However, there is also another victim – the rough producer, so dazed by the hefty profits that it doesn’t notice the danger lurking around the corner," Ganz warned.
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Distributed by MarketDirect Business Communications on behalf of the International Diamond Manufacturers Association (IDMA).
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