How Israel Became the World’s Largest Polished Exporter

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Transcript of How Israel Became the World’s Largest Polished Exporter

  1. 1. By Ehud Arye Laniado! www.ehudlaniado.com! How Israel Became the Worlds Largest Polished Exporter
  2. 2. DOC ID Presentation by Ehud Laniado on How Israel Became the Worlds Largest Polished Exporter 1 Large families have always populated the diamond industry, and for centuries, Hasidic families most of all. They formed the backbone of Amsterdams diamond industry, and then Antwerps. A link to the full article can be found on the last slide of the presentation July 2015 The views expressed here are solely those of the author in his private capacity. None of the information made available here shall constitute in any manner an offer or invitation or promotion to buy or to sell diamonds. No one should act upon any opinion or information in this website (including with respect to diamonds values) without consulting a professional qualified adviser.
  3. 3. DOC ID How Israel Became the Worlds Largest Polished Exporter 2July 2015 Early in the 20th century, some of Europes Jewish diamond traders and polishers emigrated to form budding diamond industries in new destinations.
  4. 4. DOC ID How Israel Became the Worlds Largest Polished Exporter 3July 2015 One of these destinations was Israel, where a new nation was forming with a growing economy ready to take part in the global arena.
  5. 5. DOC ID How Israel Became the Worlds Largest Polished Exporter 4July 2015 Diamonds Come to Tel Aviv
  6. 6. DOC ID How Israel Became the Worlds Largest Polished Exporter 5July 2015 Diamond traders in Amsterdam and Antwerp began fleeing to Israel in the 1930s, as anti-Semitism rose in Europe. ! They established a small, unofficial diamond-trading zone in Tel Aviv.
  7. 7. DOC ID How Israel Became the Worlds Largest Polished Exporter 6July 2015 By 1937, after the British Mandate government cancelled the tax on diamond imports, the industry started to take off. ! Local traders banded to form Israels first diamond exchange, the Palestine Diamond Club.
  8. 8. DOC ID How Israel Became the Worlds Largest Polished Exporter 7July 2015 The countrys first manufacturing started with smaller goods in the city of Petah Tikva during that year. ! Very quickly, two more manufacturing centers started to develop in the coastal city of Netanya and in Tel Aviv.
  9. 9. DOC ID How Israel Became the Worlds Largest Polished Exporter 8July 2015 It was not until World War Two broke out that the local industry had a chance to grow significantly. ! In the late 1940s, diamond traders and polishers that survived the war immigrated to Israel.
  10. 10. DOC ID How Israel Became the Worlds Largest Polished Exporter 9July 2015 A Diamond Exchange Is Born
  11. 11. DOC ID How Israel Became the Worlds Largest Polished Exporter 10July 2015 In the mid-1960s, after many discussions and failed attempts to establish a diamond exchange building in Tel Aviv, the mayor of Ramat Gan allocated a large lot for the first diamond exchange building, Shimshon.
  12. 12. DOC ID How Israel Became the Worlds Largest Polished Exporter 11July 2015 It was a revolutionary concept. ! The decision to unify everything they needed in one building led to the birth of the Israel Diamond Exchange (IDE).
  13. 13. DOC ID How Israel Became the Worlds Largest Polished Exporter 12July 2015 Rapidly, manufacturing facilities were erected around it, transforming the area into a thriving diamond trading and manufacturing epicenter.
  14. 14. DOC ID How Israel Became the Worlds Largest Polished Exporter 13July 2015 Polished Diamond By the 1970s, Israel had a central role in the global diamond trade. ! The city soon replaced Belgium as the worlds largest polished diamond exporter.
  15. 15. DOC ID How Israel Became the Worlds Largest Polished Exporter 14July 2015 Israel Develops Expertise
  16. 16. DOC ID How Israel Became the Worlds Largest Polished Exporter 15July 2015 Israel developed a name for high-quality polishing and a great deal of specialization in various areas. ! In Netanya, for example, local polishers became known for their high-quality work and ability to utilize the rough diamond to improve yield. ! ! !
  17. 17. DOC ID How Israel Became the Worlds Largest Polished Exporter 16July 2015 The second most popular diamond shape, the Princess, was developed in Israel in 1979 as an evolution of several other square shape diamonds.
  18. 18. DOC ID How Israel Became the Worlds Largest Polished Exporter 17July 2015 The three developers of the Princess shape Yigal Perlman, Betzalel Ambar, and Israel Itzkowitz sought to create a diamond that was both beautiful and economic.
  19. 19. DOC ID How Israel Became the Worlds Largest Polished Exporter 18July 2015 The result was a diamond with great brilliance and high yield that became popular across the world.
  20. 20. DOC ID How Israel Became the Worlds Largest Polished Exporter 19July 2015 A Spirit of Innovation
  21. 21. DOC ID How Israel Became the Worlds Largest Polished Exporter 20July 2015 One of the secrets of the success of the Israeli diamond center was the heavy investment in R&D. ! Nicknamed the Startup Nation, the Israeli high tech industry and its many engineers developed new technologies that improved polishing.
  22. 22. DOC ID How Israel Became the Worlds Largest Polished Exporter 21July 2015 Among these tools are robotics, identification and rough planning tools, and detection technologies. Over the years, these technologies have become a popular Israeli export to other diamond centers.
  23. 23. DOC ID How Israel Became the Worlds Largest Polished Exporter 22July 2015 One of Israels greatest abilities is in manufacturing large and high value diamonds. ! Such goods, which require very careful planning and exceptionally high-quality workmanship, are shipped to Israel from all over the world to be polished by the local master cutters.
  24. 24. DOC ID How Israel Became the Worlds Largest Polished Exporter 23July 2015 Polishers that started on their own could, with a little entrepreneurial spirit, organize a group of polishers, work on a bigger scale and slowly accumulate enough capital to buy rough on their own, becoming a manufacturer over time.
  25. 25. DOC ID How Israel Became the Worlds Largest Polished Exporter 24July 2015 Israels Industry Today
  26. 26. DOC ID How Israel Became the Worlds Largest Polished Exporter 25July 2015 Today, manufacturing facilities in Petah Tikva and Netanya are long gone. Many of the polishing facilities in the area around the exchange have closed as well, as manufacturing has shifted to lower labor cost countries such as India and China.
  27. 27. DOC ID How Israel Became the Worlds Largest Polished Exporter 26July 2015 Despite the decline in manufacturing in the country, Israeli diamond companies are among the largest in the world. Now major global players, Israelis own polishing facilities in countries such as Botswana, Thailand and more.
  28. 28. DOC ID How Israel Became the Worlds Largest Polished Exporter 27July 2015 The Israeli industry has been making efforts to preserve its global standing over the past few years. These include increased bank financing and continuing to develop a technology research facility. ! It recently opened a polishing plant aimed at retaining know how and cutting costs, allowing Israeli companies to polish their goods at this facility at a reduced outlay.
  29. 29. DOC ID How Israel Became the Worlds Largest Polished Exporter 28July 2015 The IDE is a bustling complex that some 330,000 visitors and foreign buyers visit annually. It has some 3,000 members and about 1,200 companies that directly employ more than 20,000 people. Among them are many contracted clients of the leading mining companies, including 12 De Beers Sightholders and Accredited Buyers. ! The Israeli diamond industry contributes about $800 million to Israels balance of payments every year.
  30. 30. DOC ID How Israel Became the Worlds Largest Polished Exporter 29July 2015 Net trade in 2014: ! Rough Imports: 9.8 million carats, $4.02 billion ! Rough Exports: 11.7 million carats, $3.06 billion ! Polished Imports: 2.4 million carats, $4.51 billion ! Polished Exports: 2.5 million carats, $6.26 billion
  31. 31. DOC ID How Israel Became the Worlds Largest Polished Exporter 30July 2015 Top net exporting destinations 2014: ! U.S. $2.37 billion ! Hong Kong $1.86 billion ! Belgium $532 million ! Switzerland $405 million ! UK $234 million ! Other $856 million ! Total Net Exports $6.26 billion
  32. 32. DOC ID How Israel Became the Worlds Largest Polished Exporter 31 The views expressed here are solely those of the author in his private capacity. None of the information made available here shall constitute in any manner an offer or invitation or promotion to buy or to sell diamonds. No one should act upon any opinion or information in this website (including with respect to diamonds values) without consulting a professional qualified adviser. July 2015 The full article is available online:http:// www.ehudlaniado.com/home/index.php/news/entry/how-israel- became-the-world-s-largest-polished-exporter