WFDB President Ernest Blom addresses joint session at Presidents’ Meeting TLV

WFDB President Ernest Blom addressed joint session at Presidents’ Meeting TLV on June 16, 2015. During the address, he thanked Israel Diamond Exchange and the Israel Diamond Manufacturers Association and their respective presidents – Shmuel Schnitzer and Kobi Korn – for offering to host the event. He spoke about bank credit, overgrading etc.

“Let us always bear in mind that we have nothing for which we need to apologize – on the contrary – we can hold our heads up high and prove that we are always aware of possible tricky areas and are more than willing to work with all members of the diamond business, governments, NGOs and others to ensure they are dealt with in the best possible manner. We deal with a product that, among other fine attributes, symbolizes commitment and love. As the actress Nicole Ritchie said: Diamonds and true friends are alike–bright, beautiful, valuable, and always in style.”

He stated that conditions in the diamond industry are not easy and added that these meetings play huge role in allowing us to further understand and internalize the issues facing the industry.

“But I also believe that it is our duty as the representatives of the vast majority of the diamond trade right across the world that we present a united and strong front, particularly regarding the producers and the banks,” Blom said. He added “These are, of course, our major concerns – falling profitability as rough prices remain at a level that does not allow manufacturers to run a sustainable business, and increasing difficulties in securing credit without which many businesses may not be able to exist.”

He pointed out that the diamond producers have a responsibility to take the concerns extremely seriously and act upon them. This is not a one-way street; as much as we clearly need the producers, they also need diamond companies which can buy their goods at a price that enables them to make aprofit and continue to exist. We need each other.

Further, Blom said “And I must also point out that some of our members are responsible in that they are paying ever-higher prices for goods. This leads to a continuous price spiral upwards for goods. We have to act responsibly and pay prices that we can afford and, just as importantly, prices that allow us to manufacture at a profit. Any other course of action is irresponsible and unsustainable.”

He also talked about the importance of the smaller and medium-size firms – which compose, after all, the vast bulk of the industry – are able to continue operating. These are the companies that are on hand to buy up diamonds that large firms do not need or cannot use. The smaller firms have developed very specific niche markets. They are nimble and agile and see opportunities for doing business and are therefore willing to snap up items and bring added value to them. They play a hugely important role in the overall health of the diamond business globally.

“The other major challenge that we face, as I mentioned previously, is that of securing credit from the banks – the very oxygen that is needed for many companies to continue operating. As with our relations with the producers, the banking community also needs a wide range of clients. They cannot put all their eggs in one basket by just providing lending to the largest firms. This may appear to them to be a "safe" strategy but let us remember that even the largest firms can crash and the financial fallout can be enormous. A diversified approach is critical” Blom said.

“Of course, we not are an industry on the scale of the oil business or other huge global trades with trillions of dollars of business, but we play a critical role in providing employment for millions of people across the globe – particularly in under-developed countries. We play a central role in the global jewellery trade which also supports millions of families. This is a factor that needs to be pressed home repeatedly because it is in the interest of the banks to show consumers and the wider public that they are willing to see the larger picture. Clearly, they must be certain that they are lending their money to firms which will act responsibly and buy goods at a price that enables them to be profitably manufactured. But they must also know that their financing does not simply enable their diamond clients to continue operating but that those customers are part of a huge global chain that provides a livelihood for families from the smallest and most remote parts of Africa to the developed world where economic conditions are also not that easy at present,” Blom said.

The banks also need to be repeatedly assured that we are working to ensure that diamond firms understand that there is no alternative but to adapt to change and the new conditions demanded by the financial community. This will take some time to achieve fully; it won't happen overnight, but in the meantime it is not possible to choke off credit. We must have a partnership built on trust that both sides completely understand the position of the other.

“This leads me to another important topic, and that is the WFDB's collaboration with the Financial Action Task Force, or FATF. We are working together with this extremely important body. The FATF creates standards relating to the fight against money laundering, the financing of terrorism and other threats to the global financial system. Its recommendations are seen as the international standard in these areas. The World Federation has conducted talks with the FATF, and that will continue in the future. Although we have had disagreements with the organization in the past, these have been resolved to an extent, and we are actively cementing that relationship,” added Blom.

He said “We cannot lose consumers through the actions of a few irresponsible or criminal elements. They must not be allowed to affect the operations of the more than 99 per cent of our members who work diligently and honestly in order to remain part of an industry we all love dearly. It is the responsibility of all the bourses to work thoroughly to weed out all those who through their illegal actions can cause harm to the entire global diamond trade.”

He called upon IDMA and CIBJO to join them in creating a united front to fight against the difficulties facing us and to be pro-active in explaining their position clearly to the global media. He said “We have nothing to hide – on the contrary, we have a great deal about which we can be proud. Let us go forward together.”