On March 1, 2018, Kristall, the diamond manufacturer based in Smolensk, turns 55 years old. In the now distant 1963, the factory launched in this city was the first in the domestic industry to start cutting diamonds. It still remains the largest diamond processing center in Russia, providing significant additional value to the precious stones mined in the country.
The highly professional work of Smolensk’s diamond cutters contributed to the fact that the world market began talking about the "Russian Cut" as a way to cut top quality diamonds. For diamonds cut this way, buyers were willing to pay and paid premiums - sometimes as high as 10 percent.
On the eve of its jubilee, Smolensk's Kristall organized a tour of the diamond manufacturing factory for mass media, during which journalists were familiarized with a number of its units, including the diamond marking center, the laser sawing section, the diamond cutting and polishing shop, and also visited the factory museum. Upon completion of the tour, the CEO of Kristall, Maxim Shkadov gave a press conference.
He said that the outgoing year proved to be difficult for Kristall due to a number of factors that arose in previous years. Last year, Russia zeroed the customs duty on the export of rough, which led to its appreciation for Russian buyers. At the same time, there was registered a speculative increase in rough prices on the backdrop of a decline in polished prices. In addition, the diamond market witnessed a sharp escalation of competition. In India, which has practically turned into a global monopoly of diamond processing using cheap labor, diamond manufacturers are switching over to the latest technologies and now producing all categories of diamonds, although earlier they produced only small-size stones.
Nevertheless, in this environment Kristall manages to maintain the highest quality of work and thereby maintain its position in a highly competitive market. Smolensk’s company is one of the few in the world that manufactures "Triple Excellent" diamonds on a mass scale. According to Maxim Shkadov, this is what helps Kristall survive.
Speaking about the fate of the diamond industry in Russia, Maxim Shkadov mentioned the decrees issued by the President of the Russian Federation, which point to the need of creating new jobs in the country, and said that natural resources should be processed within the country and it is in this area where new jobs can be created. The country’s government is moving in this direction developing a "road map" for the domestic diamond industry, the purpose of which is to develop the industry and liberalize trade.
At the end of November, Sergey Ivanov, President of ALROSA paid an official visit to Kristall, where he noted that despite the fact that diamond manufacturing in Russia is stagnating Kristall continues to develop and has good prospects. Currently, both companies are about to sign a three-year contract for the supply of rough diamonds, which will allow the Smolensk-based company to have a full workload and keep jobs intact.
"Currently, we have a manufacturing base, which is one of the best in the world. Our diamond cutters and our specialists just cannot be left undemanded. This is absolutely obvious," Maxim Shkadov said. In his opinion, the fact that Kristall is in the process of signing a new three-year agreement with ALROSA, which expanded the scope of the previous agreement in terms of volume and product range, permits to see a certain perspective.
Touching upon the situation in the global diamond industry, Maxim Shkadov mentioned the latter’s excessive crediting, which reached $ 15 billion, and the role played by India, which, in his opinion, creates a certain danger for all stakeholders in the world market.
Since the bulk of Kristall's goods goes for export, it is important for the company to have safe sales channels in the world market, where, however, competition is increasing from other luxury goods, as well as from synthetic diamonds, which, according to Maxim Shkadov, gradually kill the market of small-size natural diamonds.
In these conditions, he noted, the activity of the Diamond Producers Association (DPA) aimed at generic promotion of natural diamonds is important.
According to Maxim Shkadov, Kristall has practically no outflow or turnover of its workforce. The company has its own licensed training center, which issues diplomas of the state standard. In addition, Kristall in team with the Smolensk branch of the Moscow Power Engineering Institute developed a program for those wishing to obtain a state higher education diploma of "Diamond Processing Manager." The profession of diamond cutter in the present conditions is unique, and those who own it value their jobs, he said.
"It takes three years to prepare a good diamond cutter," the CEO of Kristall said. “Our initial cycle of training in this profession lasts six months. And then people come to fulfill the company’s output rates, which are rigid enough, in the course of three years. Besides, up to 25% of trainees fail to continue their study, because, as it turns out, not everyone is ready for this work - it is quite complicated. According to our statistics, around 25% of trainees drop out in the process of training and another 25% of them leave the factory while trying to meet the company’s output rates. So, approximately 50% remains." This year, Kristall enrolled 80 students to teach them the profession of diamond cutter.
Currently, Kristall relies on increasing its labor productivity and efficiency in processing rough diamonds, which yields good results and allows the company to move forward, to a positive target, although the manufacturer does not so far fully cover its costs. Much attention is paid to marketing strategy and dealing with customers. Although Kristall's products are mainly aimed at wholesale buyers and the company promotes them, including on its own online platform, its marketing department recently launched an online retail store offering certified diamonds for customers who, among other things, can themselves try and create jewelry pieces of their own design using the website’s services.
As Maxim Shkadov emphasized, all the efforts of Kristall are now aimed to prevent disruptions in the supply of rough diamonds to the company’s production facilities, preserve the enterprise, its personnel and operate in the market environment that exists today.
Vladimir Malakhov, Rough&Polished, Smolensk – Moscow
All images by courtesy of Kristall Press Service
