Jewelry, Precious Metal

SIC 3911
JEWELRY, PRECIOUS METAL

This category encompasses those establishments primarily engaged in manufacturing jewelry and other articles worn on or carried about the person, made of precious metals such as platinum, gold, and silver (including base metals clad or rolled with precious metals), with or without stones. In addition to personal jewelry, products of this industry include cigarette cases and lighters, vanity cases and compacts; trimmings for umbrellas and canes; and jewel settings and mountings. Establishments primarily engaged in manufacturing costume jewelry from non-precious metals and other materials are classified in SIC 3961: Costume Jewelry and Costume Novelties, Except Precious Metal.

NAICS Code(s)

339911 (Jewelry (Including Precious Metal) Manufacturing)

In the late 1990s, the U.S. Department of Commerce identified 2,293 manufacturers of precious metal in the United States. The industry employed approximately 40,000 people in 2000, compared to 32,963 in 1998.

The value of shipments grew from $5.26 billion in 1998 to $6.52 billion in 1999, fueled by the booming U.S. economy. The demand for jewelry is largely affected by the amount of disposable income people have. Therefore, the increasing number of affluent individuals, working women, double-income households, and fashion-conscious men in the latter part of 1999 kept jewelry sales strong at the close of the century. Jewelry shipments reached a record $6.8 billion in 2000. The weakening economy of the early 2000s, however, led some analysts to forecast an industry slowdown.

The precious metal jewelry industry encompasses retailers, wholesalers, manufacturers, and suppliers, including lapidaries, refiners, stone dealers, findings manufacturers (manufacturers of the small parts used in making jewelry, such as clasps and other items), and subcontractors who provide services such as polishing and electroplating. Manufacturing firms in the precious metal jewelry industry tend to be small establishments and are concentrated in the New York City area. The industry's major expenses are the costs of raw materials and highly skilled workers.

Two major issues of concern to the precious metal jewelry industry are the 10 percent luxury tax imposed on jewelry sales exceeding $10,000 and environmental regulations related to manufacturing processes. Regulations concerning the removal of toxic levels of metals used in electroplating have added financial burdens to many manufacturers and subcontractors. Beginning in May 1993, products that were made with ozone-depleting chemicals were required to carry identifying labels.

Despite the falling value of the U.S. dollar abroad, the United States maintained an unfavorable trade balance in 1992. Italy, one of the United States' major competitors, supplied 40 percent of all precious metal jewelry imports in 1992. Thailand, Israel, and Hong Kong were also key suppliers. Thailand and Israel both benefited from the Generalized System of Preferences (GSP), a program that permits developing countries to export some products to the United States duty-free.

The main markets for U.S. exports of precious metal jewelry were Switzerland, Japan, and Thailand. In the late 1990s the United States was Japan's fourth largest overseas supplier of jewelry, with 15.3 percent of its import market, following Hong Kong (23.1 percent), Italy (18.8 percent), and Thailand (17.1 percent), and leading France (8.6 percent). Exports to Mexico were expected to increase after ratification of the North American Free Trade Agreement, which enables American goods to enter Mexico duty-free. Most Mexican goods already enter the United States duty-free under the GSP; tariffs between Canada and the United States were already being eliminated under the U.S.-Canada Free Trade Agreement. Some industry experts also hoped that the establishment of product standards for the European Community would benefit the United States. The year-to-date total for jewelry imports in September 1999 was $5.9 billion while total jewelry exports were $1.7 billion.

On October 13, 1999, in a speech to the Democratic Leadership Council, President Bill Clinton outlined his agenda for the new round of World Trade Organization negotiations. This included Immediate Tariff Cuts, which would phase out tariffs in eight areas including the jewelry industry. Dropping these tariffs would create new opportunities for growth.

Technology, in the form of various computerized systems, is beginning to affect the jewelry industry. Some manufacturing firms use CAD/CAM (computer-aided design and manufacturing) to design and automate some steps in mold and model making. Use of such systems should increase in the future as they become more affordable to smaller companies. Some jewelers use computers to design and create customized pieces according to their customers' wishes. With the aid of computers, customers visualize different combination of styles, cuts, shanks, and stones to create their own pieces.