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  1. #1

    Default Interesting Article out of Australia this Morning

    Demand appears still to be pretty strong in the U.S. but sounds like the Australian producers are starting to feel some of the effects of the economic situation. Any comments?

    Industry is reeling as pearls lose their lustre

    12th January 2009, 8:00 WST

    WA?s lucrative pearling industry ? once worth $200 million a year ? has been brought to its knees with a slump in global demand leading to mass job losses in the State?s north.

    Broome producers say they are unable to sell millions of dollars worth of pearls as consumers shy away from luxury items in the financial crisis.

    Clipper Pearls, one of the few remaining WA-owned pearl producers, has laid off 50 of its 80-strong workforce since September. ?This would be easily the worst conditions we have ever faced,? co-owner Larry House said.

    ?It is certainly worse than the other recessions that have come and gone and much worse than the impact of the SARS outbreak as well.?

    Pearling has long thrived in the Kimberley, where clean water and active tides create ideal conditions for growing pearl oysters.

    The industry?s decline comes just five years after then-premier Geoff Gallop named the Broome pearl as WA?s sixth heritage icon, joining the likes of the Swan River, Kings Park and Fremantle Harbour.

    Broome producers and business groups were reluctant to put a figure on exports this year, though few believed it would be anything near the $125 million of recent years.

    Mr House, who has been in the pearling game since 1980, said orders had virtually evaporated overnight when the global financial crisis took hold in September.

    Since then, Clipper Pearls and other producers had struggled to sell stock, leading to an oversupply of pearls.

    Mr House, whose company turns over $15 million annually, said he expected smaller producers to collapse and doubted the end was in sight. Clipper?s 2008 crop was one of its best.

    ?It will drag on until at least the end of this year,? he said. ?I think it will gradually improve as people adjust to the new environment but it will take time.?

    Willie Creek Pearls managing director Rob Banfield said the slump was unprecedented in his 15 years in the industry and there was ?no question? some businesses would go under.

    He expected to start laying off staff soon but hoped the difficult times would be short-lived. ?Everyone is in the same boat,? Mr Banfield said. ?They can?t sell the stock.

    ?The best thing is the stock is not going on to the market at any price. The farmers are just holding back until the buyers are ready to buy again.?

    Bill Reed, who has produced pearls for 50 years and is a co-owner of exclusive jeweller Linneys, warned his competitors not to panic and said the downturn was merely a hiccup after 16 strong years.

    Mr Reed said the pearl market had been around for 5000 years and it would not disappear. ?I have seen it much worse than this,? he said. ?The rich people have still got money so I am not panicking.?

    Despite his optimism, Mr Reed said there was no doubt small-scale producers were feeling the heat.

    Broome Chamber of Commerce president Tony Proctor said the industry was in a perilous state and Broome residents were worried.

    It was a significant employer and its decline was proof Broome was in desperate need of another industry to help fill the void.

    Broome shire president Graeme Campbell was equally pessimistic, saying he expected hundreds more workers to be out of work soon. ?Pearling is in diabolical trouble,? he said.

    ?Ten years ago it was worth $180 million to $200 million a year and two years ago it was down to about $140 million. I don?t know what it is going to be worth this year ? not much.?

    Pearl Producers Association executive officer Brett McCallum said it was a tough environment for producers but they had to ride out the storm.

    He said there had already been a steady decline in pearling over the past six years. ?This has meant that instead of the prices being quite low, the sale volume is quite low as well,? Mr McCallum said.

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  2. #2
    purveyor of pearls Senior Pearl-Guide.com Pearl Expert pearlescence's Avatar
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    Not the most sensible of articles - the writer contradicts himself a few times and it seems that the industry was in decline before the present situation anyway....
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  3. #3

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    Yes, I see the conflict in the $ estimates over the past couple of years ($140M vs. $125M) but not sure of other contradictions in the article. There are a couple of quotes that may be of differing opinions but statements like "perilous state", "diabolical trouble", "pessimistic", "desparate need of another industry to help fill the void" sound like they are all leaning one way to me.
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    Administrator Senior Pearl-Guide.com Pearl Expert Kevin Canning's Avatar
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    say what you will, but anytime business slows so much that you have to lay off 50 of your 80 employees, that's effecting people in a serious way.
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  5. #5

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    No doubt about that.. Losing 63% of the work force would be tough.
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    Super Moderator Senior Pearl-Guide.com Pearl Expert jshepherd's Avatar
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    The auctions have been hurting too. The Shima Shokai auction only sold 17% of the pearls on offer.

  7. #7
    purveyor of pearls Senior Pearl-Guide.com Pearl Expert pearlescence's Avatar
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    Hi Jeremy
    Auctions are funny things. At that one was the low sale because of no bidding, low bidding or high reserves on lots?
    cheers
    Author:Pearls A Practical Guide published by Crowood Jan 2021
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  8. #8
    Super Moderator Senior Pearl-Guide.com Pearl Expert jshepherd's Avatar
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    Many of the lots were withdrawn to keep prices high.

  9. #9
    Natural Pearl Senior Pearl-Guide.com Pearl Expert dkan 168's Avatar
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    Quote Originally Posted by jshepherd View Post
    Many of the lots were withdrawn to keep prices high.
    Self preservation in action

    I have not come across any business sector not being affected by the recent economic downturn yet

    DK
    Treat every life situation like a dog: if you can't play with it, eat it, or hump it, p1$$ on it and walk away

  10. #10
    purveyor of pearls Senior Pearl-Guide.com Pearl Expert pearlescence's Avatar
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    Did it work, Jeremy?

    or did bidders keep their hands in their pockets?
    Author:Pearls A Practical Guide published by Crowood Jan 2021
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  11. #11

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    Supply/Price control.. I wonder how long they can hold out before allowing the current climate to impact price?
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  12. #12
    First-graft Pearl Senior Guide Member laurenb's Avatar
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    Quote Originally Posted by MWP View Post
    Supply/Price control.. I wonder how long they can hold out before allowing the current climate to impact price?
    I know they have to reconcile any change in prices with production and the bottom line, but is it possible that a compromise in price might be good for demand in the medium-long term? I'm not sure what percentage of middle-upper class consumers even knew they should be wanting SSP, though brick and mortar prices may have contributed to that compartmentalization.

    I looked around the Dallas Gold and Silver Exchange right before the holidays, and they had quite a few (unremarkable) Tahitian and South Seas strands out. Think the secondhand/resale market is grabbing part of the demand that does exist?
    Lauren's ETSY store is on hiatus!

  13. #13
    Natural Pearl Senior Pearl-Guide.com Pearl Expert Nerida's Avatar
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    Wonder if Mikeyy has any further information on this? I was with a South Sea wholesaler in Sydney recently and was chatting about the current situation - he was saying that Paspaley are still doing fine in Aus but that their auctions in HK didn't go to plan there..

  14. #14
    Super Moderator Senior Pearl-Guide.com Pearl Expert jshepherd's Avatar
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    I did not go to the auction, but there was a story about it in this month's Jewellery News Asia.

    The figures are all listed on the Professor blog too (http://www.pearl-professor.com/2009/...-problems.html). It goes into detail on the Shima Shokai, the Robert Wan and the Paspaley auction.

  15. #15

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    Quote Originally Posted by laurenb View Post
    Think the secondhand/resale market is grabbing part of the demand that does exist?
    I think online retailers are grabbing a tremendous share of the demand that remains out there and will continue to do so as more people decide to buy pearls online. This is certainly where the best value is found.
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