Kay, Jared parent company buys polishing plant
November 15, 2013
Akron, Ohio--Signet Jewelers Ltd. has purchased a diamond polishing facility in Gaborone, Botswana, a not-unexpected move for a company that has been talking about increasing its direct sourcing of rough for some time.
Signet, parent company of Akron-based Sterling Jewelers Inc., which operates Kay Jewelers and Jared the Galleria of Jewelry, bought a factory in Botswana’s capital city from H&A Cutting Works (Botswana) (Proprietary) Ltd., a subsidiary of Exelco International Ltd.
Antwerp-based Exelco Group is a De Beers sightholder and its core business is hearts-and-arrows-cut diamonds. According to the sightholder directory, the company opened H&A in 2008.
Signet, which is the largest jeweler in the United States and attributes more than 75 percent of its U.S. sales to diamonds and diamond jewelry, joins retailers such as Tiffany & Co. in moving further up the diamond pipeline as supplies of rough are forecasted to decline in the coming years. Tiffany opened its Laurelton Diamonds cutting and polishing facility in Canada in 2003.
“By owning this state-of-the-art facility, Signet can ensure more consistent, cost-effective access to diamonds in the sizes and cuts it needs with less vulnerability to the fluctuations of the overall diamond market,” Signet Vice President of Corporate Affairs David Bouffard said in an email interview with National Jeweler.
This is not the first time Signet has attempted to secure a direct supply of rough.
A few years ago, the company subcontracted a diamond polishing facility in Vishakhapatnam, India but closed it in 2008, with Bouffard citing the volatile and challenging rough market. 2008 also was a tough year economically as it was the beginning of the global financial crisis.
“In that economic environment, when we were shortening and narrowing our focus across all areas of our business, we decided that discontinuing those operations was the appropriate action to take,” Bouffard said.
When asked what made the company certain this attempt would not fail like the last, he cited different geography and changing times.
Botswana is the world’s No. 1 diamond producer in value terms and is becoming more involved in trading and manufacturing, not just mining, especially with De Beers moving its sales operations there. Bouffard called it “the new heart of the diamond world.”
Still challenges remain to operating in the nation, chief among them electricity, cost and labor issues.
Bouffard said the H&A Cutting Works facility is state-of-the-art and that the retailer has 230 people on the ground in Botswana, supported by experienced expatriate trainers. In addition, the facility is the only one to have a local Batswana production manager, which Signet sees as an advantage.
While Signet is not releasing figures on the yearly capacity of the polishing factory, it will, in the long run, account for only a small portion of the company’s overall diamond sourcing, Bouffard said.
The vast majority of stones procured by Signet is, and will remain, loose polished or is already set in finished jewelry.