Luc Claes, CEO of IGC Group, a long-time Belgian diamond manufacture and DTC sightholder specialized in finest make diamonds, told in his interview to the Rough&Polished correspondent about the company’s current business.
Could you say a few words about the history of the IGC Group and its present scale of business?
IGC Group is a Belgian diamond manufacturing company and DTC Sightholder headquartered in Antwerp, the world’s diamond capital. The company was established in 1912 and has high tech manufacturing facilities in Thailand, Laos and Botswana. The company is specialized in diamonds in the finest make and has become a strategic supplier to the Swiss watch industry and famous jewellery brand houses all over the world.
How the IGC Group was doing lately, in the first and second quarters this year?
Since the start of the economic crisis mid 2008 IGC Group has responded to the global decrease in polished demand by balancing its manufacturing output to the current market situation. While bringing down our production it has been our first priority to continue supplying existing customers.
What is your vision of the remaining business cycle in 2009? 2010?
All hopes of the polished market are on a “better than expected” season in the US market. Economic indicators have shown some initial signs of a recovery of the US consumer market. However, so far it has not resulted in a revival in the demand for polished at wholesale level. Confidence on retail level needs to be restored before the flow in the diamond pipeline gets going.
In case the US market has a normal season we would expect the market to normalize in the first half of 2010. A bad season would force many manufacturers to further downsize their operations.
Margins at manufacturing level are expected to be small in both scenarios. Strong demand in polished would lead to further price hikes in rough, weak demand would lead to declining prices for large parts of the polished output.
The IGC Group has been a DTC sightholder since 1955. What are the strong and weak points in the current Supplier of Choice System?
Being a long term customer of DTC IGC Group highly values the continuity of the relationship we have enjoyed over the years with the DTC. As a manufacturing in top make we also benefit from the strict and detailed rough assortments the DTC is offering to its selected number of customers.
Supplier of Choice is definitely put to the test under the actual market conditions. However we strongly believe only DTC has the long-term perspective which can guarantee a better profitability for the manufacturer in the coming decade.
Before the crisis the European Commission was intent on preventing De Beers and ALROSA from entering into a diamond sales agreement to avoid market monopolization. However, amid the economic slowdown the global diamond industry acted more or less concertedly to avoid a slump in diamond prices and so far the diamond market seems to benefit from this kind of monopolistic activity. Would you like to give your comment on this?
Stability in the rough market is essential to achieve long term profitability for manufacturers. In that respect it would be good if De Beers and ALROSA can cooperate as business requires. Obviously the rough market has become much more transparent with many important players and it is unlikely that we would go back to the old situation with a De Beers that has direct control on market prices in the rough market.
There are so many ways to cut and polish diamonds bringing their luster and brilliance to perfection. Some manufacturers make it a point producing diamonds with an ever increasing number of facets. What is the best cut in your opinion and has your company ever devised some special technique in diamond processing?
As a renown manufacturer in top make IGC Group’s first goal has always been to polish each and every stone to perfection, maximizing its brilliancy. Whereas the industry merely focuses on achieving excellence in larger stones IGC Group has optimized small brilliant cuts (3.7 diameter and smaller) by adapting the stone angles. Rather then adding facets, IGC Group decided to further research the original brilliant cut and increase its brilliancy and make consistency. This has lead to the development of a branded brilliant cut called EXIREÒ (www.exirediamonds.com).
It seems that diamond cutters often face a dilemma between preserving carat weight and making a perfect cut giving the best luster and brilliance. The well-known “Russian cut” practiced since the Soviet time has always been a sacrifice in carats. What is your company's choice in such cases?
As a strategic partner of high end luxury brand houses in both the watch and jewellery industry IGC Group’s first priority has always been to maximize cut and make consistency. To guarantee our partners a top product at a competitive price IGC Group has invested in high tech machinery and the best training for our polishers.
Collaborating with independent jewelry manufacturers in different parts of the world, how does IGC Group manage to control quality?
IGC Group offers its customers a jewelry manufacturing service. Through this service we assist our customer in outsourcing his jewelry collection to cost-efficient locations. The entire process from design through production and quality control is in the hands of our local jewelry manufacturing manager. IGC Group applies the same high quality standards to its jewellery manufacturing as it does to its diamond polishing.
Are you collaborating with Russian diamond cutters as well? If not, why?
At IGC Group , the focus has mostly been on cutting small stones, a labour intensive job that can only be performed in countries with low labour costs.
You say the IGC Group when engaged in outsourcing operations is familiar with its customers’ necessities and knows how to avoid common errors. What are these common errors?
When outsourcing one’s jewelry manufacturing to factories in China, Vietnam, India, etc., we have experienced that transparency and clear communication are the most difficult issues to accomplish. On-time delivery often seems to be another hurdle. As we have guided numerous customers along this path and we bring in only the best partners we are able to avoid these common errors and build success stories for our customers.
Have you got some Russian clients on your customer list?
We have only recently started prospecting on the Russian market. As the Russian cutting industry has moved away from small sizes there should be opportunities for IGC Group to supply its fine made fullcuts and melees to the Russian trade. Work in progress!
Could you expand on IGC Brand Services which is part of IGC Group?
IGC Brand Services distributes and markets jewellery collections that are based on the African origin of diamonds. Collections such as “Southern African Diamonds” and “Naledi” feature both African designers that find their inspiration within their own unique cultural backgrounds. As the natural origin of diamonds are becoming a point of interest to consumers, retailers are increasingly open to this idea of concept-selling. IGC Brand Services is currently active within the US market and will definitely expand into other geographical markets such as China and Europe.
Alex Shishlo, Editor of the Rough&Polished European Bureau in Brussels
