Revitalising New York’s 47th Street

A recent study of the diamond and jewellery industry on New York’s 47th Street focuses on the important role it plays in the city’s and country’s economy, and recommends a number of steps that are needed to ensure that the precinct continues to be a key industry hub in the years to come. Diamond World presents an overview, and reproduces some extracts from the study.

It has always been one of the iconic centres of the global diamond and jewellery industry, representing not only the nodal hub through which jewellery enters the US, but also a key focal point of the high end retail trade. Yet, 47th Street, the locality that houses New York City’s diamond and jewellery industries, has aged, and though it continues as a key economic centre, there are signs that it could face a decline if appropriate steps are not taken. Against this background, the Empire State Development Corporation commissioned a study of the industry, its impact and its future, and the report has recently been published by the 47th Street Business Improvement District (BID). It was prepared by the Pratt Center for Community Development.

The year-long study has shown that diamonds are New York State’s number one export product and jewellery ranks in the number three spot. In 2009, the two sectors had an estimated economic impact of US$ 24.2 billion, and provided US$ 4.2 billion worth of added value to New York City through wages, profits and indirect business taxes.

Moshe Mosbacher, then President of the Diamond Dealers Club, said soon after the report was released, that “(It has)….. confirmed empirically what we have long known instinctively, and that is that the diamond and jewellery industries play an absolutely critical role in the economic life of the city and the state, and that decisive action is required to secure their long-term future.”

The Diamond Dealers Club has played an important role in the establishment of the Diamond District on 47th Street, which largely developed following the decision by the DDC in the 1940s to move its headquarters here from lower Manhattan. Mosbacher also noted, “Today, with our close to 2,000 members, we still consider our Club to be the anchor of the diamond trade in New York City. As the report points out, the DDC is currently in the midst of a massive membership drive, which not only will serve to strengthen our organisation, but also the position of the American diamond sector and business community on 47th Street.”

One of the major transformations that is already underway is the development of the International Gem Tower, a 34-story commercial condominium designed specifically for the trade and currently under construction in the heart of the District. The project is being spearheaded by Gary Barnett and his team at Extell Development Company.

The year-long study has shown that diamonds are New York State’s number one export product and jewellery ranks in the number three spot. In 2009, the two sectors had an estimated economic impact of US$ 24.2 billion, and provided US$ 4.2 billion worth of added value to New York City through wages, profits and indirect business taxes. It also noted that 47th Street is known internationally as an important centre of the diamond trade, but said that many of the industry members it polled said there was a mismatch between the luxurious feeling of purchasing jewellery and the backdrop against which these sales occur. “Improving the physical environment of the Diamond District is a priority to the business owners,” it stated. “Given this interest the district should develop a branding strategy that includes implementing physical changes, which would create a holistic feel of ‘New York City’s Diamond District.’”

One of the major transformations that is already underway is the development of the International Gem Tower, a 34-story commercial condominium designed specifically for the trade and currently under construction in the heart of the District. The project is being spearheaded by Gary Barnett and his team at Extell Development Company. Barnett is a former diamond dealer who is now a real estate developer. Barnett believes that when completed in 2012, the International Gem Tower will usher New York’s Diamond District into the 21st Century, setting a new standard for the trade both locally and abroad.

Shmuel Schnitzer, honorary life president of the World Federation of Diamond Bourses and of the Israel Diamond Exchange, as well as founder and partner of S. Schnitzer Diamonds Ltd., which has just purchased space in the IGT, says, “We are sure that through the stateof- the-art centre that we are going to be part of, doing business in America will be much easier. The fact that so many “big” names in the industry will be located in the IGT will definitely create a centre that will attract buyers from all over America and from all over the world.” The study concludes by noting, “The District is a great illustration of how an industry can continue to thrive in New York’s relatively high-cost environment by capitalising on the city’s competitive advantages.”

New York City is the undisputed center of the diamond and jewelry industry for North America and much of the world. Consumers and wholesalers come from around the globe and throughout the United States to the dense cluster of manufacturers, wholesalers, and retailers concentrated here. While New York’s diamond and jewelry businesses are located in neighborhoods throughout the five boroughs, an extraordinarily significant portion of them are clustered together, occupying a single block on West 47th Street between Fifth and Sixth Avenues in midtown Manhattan. This report focuses on the economic activity and impact of this extraordinary block that is New York’s Diamond District. While the Diamond District is often thought of as home to one industry, it is important to recognize that diamonds and finished jewelry are actually two distinct industries. The diamond industry is made up of companies that manufacture rough diamonds as well as dealers and wholesalers who trade the diamonds.

The jewelry industry consists of firms that manufacture and sell finished pieces in both wholesale and retail markets. For the purposes of this report, however, we have combined the two because of the overlap of issues and increasingly interrelated nature of their business operations, and the tendency of government data to combine the two together. This is a critically important moment for New York City’s diamond and jewelry industry. The Diamond District is well positioned to increase its already substantial economic impact, particularly as a player in the city’s tourism industry. The industry can capitalize on this opportunity by strengthening its relationships with design schools and other design-oriented industries, by making capital improvements to create a more cohesive and attractive look to the district, and by expanding its marketing and promotional activities. With government assistance to ensure the District is accessible and appealing to tourists, these strategies can enhance one of New York City’s more iconic industries and ensure not only its continued existence but success for the future.

• The diamond and jewelry businesses in New York City generate an annual $24.183 billion in economic impact. This total includes the cost of materials and purchased services, labor compensation, rent, and business profit.
• The total added value which includes wages, profits and indirect business taxes to New York City’s economy is $4.2 billion.
• Diamonds are New York State’s number one export product, jewelry ranks number three and Gold, Non-Monetary ranks number four. The diamond and jewelry industry also plays a significant role in our country’s export portfolio.
• There are over 4,100 local companies employing approximately 22,300 people clustered together on 47th Street. The number of direct, indirect and induced employees exceeds 32,000.
• The diamond and jewelry industry continues to provide employment opportunities and good paying jobs for immigrant populations with little formal education.
• Almost 70% of industry workers are immigrants and just less than one half of the workers have the equivalent of a high school education or less.
• Positions in the diamond and jewelry industry are typically higher paying then other segments within manufacturing and retail.
• Approximately 90% of NYC’s diamond and jewelry businesses and employment are located in Manhattan, mostly in the Diamond District. Similarly, Manhattan businesses account for 86% of payroll employment and 89% of total wages paid.
• A host of other industries provide goods and services to businesses in the District. In total, the District generated $253,035,000 in spending from these support industries.
• While some jewelry production has moved overseas, the production and commerce that remains in the District provides high valueadded products which feed high-end local, national and international markets.
• New York City’s industry retains highend diamond & jewelry manufacturing and remains the international center for trading.
• New York City jewelry companies had substantially greater sales per employee than jewelry companies throughout the United States. In jewelry manufacturing, New York City companies had $393,100 in sales per employee - 80 per cent greater than the rest of the U.S. On the wholesale side, NYC businesses had $1.263 million in sales per employee - twice that of jewelry wholesalers in the rest of the U.S.

This report was prepared by the Pratt Center for Community Development and was the result of a year-long effort by the 47th Street Business Improvement District, in collaboration with the Empire State Development Corporation. This effort represents the first in-depth analysis of the Diamond District in twenty years. The study found that while today’s District remains a vibrant hub for businesses and a strong contributor to the New York economy, there are challenges that threaten its future vitality. Notably, many of the challenges facing the sector twenty years ago remain today. These include competition from abroad as well as localized challenges such as an aging workforce, a declining physical environment, and the high cost of doing business in the City.

1. Update the physical appearance of the Diamond District and create a distinctive identity

The 47th Street streetscape needs a cohesive presence, with unifying design elements, that calls attention to the block as a special district that sells high-end goods. Buildings’ exteriors and interiors, too, should reflect the products being sold within them. The Pratt Center recommends that the BID and its constituents develop a longterm plan for the Diamond District’s streetscape, aimed at attracting tourists and businesspeople alike.

2. Promote the Diamond District as a tourist destination

Government, district businesses, and the BID should collaborate to increase visibility of 47th Street as a destination for the millions of visitors who come to New York City each year. NYC & Co. the city tourism bureau could promote the Diamond District more prominently on its website. ILOVENY, the state tourism bureau, could promote the District on their websites and elsewhere, and partnerships with tour companies can ensure that 47th Street is a stop on their routes. NYC Media Group, the city’s four television stations and one radio station could work in partnership to market the Diamond District. Collaboration with the MTA could generate special Diamond District transit promotions as well as rename the nearby subway station Rockefeller Center/ Diamond District. Additionally, the District could strengthen its relationships with design schools and other design-oriented industries and expand its marketing and promotional activities.

3. Explore additional market niches for new business models

We recommend that the City continue to work with local business owners to develop strategies that retain and grow local manufacturing operations. It should also explore new products and business models. The BID or another local industry group can consider hosting a roundtable and invite those already working in new markets to explore opportunities to expand here in New York.

4. Collaborate with area universities and training programs

Educational and training programs in and around the New York are preparing students for positions in the industry, including production. By strengthening its relationship with area schools and training programs, the diamond and jewelry industry would be better positioned to promote the jobs it offers and to attract the next generation of workers. An additional approach would be for the 47th Street BID to assess the feasibility of establishing its own training program as a service for the local businesses. While this would require that the BID or new sister organization acquire significant new financial, management and technical capacity, it would address concerns the BID now has about the recruitment, screening and placement of the graduates of existing programs.

5. Seek out remediation strategies to manage street advertisers

Throughout the District, some businesses promote themselves by hiring street advertisers commonly referred to as “hawkers” —to hand out flyers and persuade potential customers to visit their offices. Hawkers create security concerns, conflict with the image and reputation that the majority of the businesses are trying to convey, and deter customers from shopping. The controversy surrounding hawkers presents a complex legal issue, given the constitutional protections afforded to commercial speech. The Pratt Center recommends that the BID continue to try and engage business owners that employ hawkers to explore alternative strategies to market their companies, and work with building owners to enforce no-hawking clauses in their leases.

6. Expand the Capacity of 47th Street BID

The business owners that participated in this study generally agreed that the 47th Street BID has accomplished a great deal and they are happy with the results. The BID now needs additional staff to help manage day-today tasks and execute longer-term planning projects. The Pratt Center recommends the BID look for new partners to provide additional sources of support and create a formalized internship program and appeal to graduate students interested in economic development, the jewelry industry, business administration, or marketing and promotions.