Color Market Reports
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AGTA lab's closure leaves void for colored stones
By Michelle Graff
September 28, 2009
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| On July 29, the American Gem Trade Association officially closed its Gemological Testing Center, which spent 11 years specializing in colored gemstones, such as tanzanite. |
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New York--The American Gem Trade Association Gemological Testing Center (AGTA GTC) took many industry members off guard when it swiftly shuttered its doors this summer after 11 years in business.
As recently as February, AGTA Chief Executive Officer Doug Hucker told National Jeweler that the New York-based colored-gemstone laboratory had budgeted for the downturn and wasn't anticipating layoffs. But after a steady 2008, business fell more than 50 percent in the first half of 2009, a steep decline that made it impossible for the lab to continue paying staff salaries and rent in high-priced Manhattan, Hucker says.
The operation shut down on July 29.
"A number of things happened, but to sum it up, I don't think any of us anticipated how complete and extended the downturn in business was going to be," he says.
Also factoring into the decision to close the lab was the departure of Lore Kiefert, the lab's director, who told National Jeweler she gave AGTA notice in mid July that she would be leaving at the end of August to become chief gemologist at the Gubelin Gem Lab Ltd. in Switzerland.
The lab closed for good a few weeks later, and Hucker confirmed that AGTA made the decision "shortly before" the news was announced.
"It was certainly a component of it," Hucker says, when asked what role Kiefert's departure played in the lab's closure. "The ability to go out in the marketplace and replace someone of Dr. Kiefert's stature is not easy. When your business is down and you lose a key employee, all of that kind of plays a part in your decision-making. It certainly wasn't the primary factor."
Kiefert says she is set to start at Gubelin in October.
Already, the Lucerne, Switzerland-based lab is positioning itself to snap up business left behind by the AGTA lab, which was recognized as a significant contributor in the world of colored-gemstone testing and research.
The day after news of the AGTA lab's closure broke, Gubelin announced it was launching a free, weekly shuttle service between New York and Switzerland.
As of early August, Gubelin Managing Director Daniel Nyfeler said the lab was also planning to offer limited-time discounts to former AGTA clients.
"We have decided to offer a significant discount on our tariffs for all gems that are sent to Gubelin together with the existing AGTA report," says Nyfeler, who notes that colored gemstones comprise the largest part of Gubelin's business.
At the American Gemological Laboratory (AGL), a 30-year-old laboratory known for its expertise in colored gemstones, AGL President Chris Smith is familiar with swift closures. His lab was shuttered on short notice earlier this year when former owner Collectors Universe decided it was exiting the gem-grading business, halting operations at both AGL and its other lab, the Gem Certification and Assurance Lab (GCAL).
"I suppose it shouldn't have surprised me," Smith says of AGTA GTC's closing, "but I was surprised [by the suddenness of it]. It's definitely a sign of the economic situation."
Smith, who now owns AGL himself, says he doesn't think the closure will deal a huge blow to colored-gemstone research since the lab's main researcher, Kiefert, will continue her work at Gubelin.
In fact, Kiefert says one of the things that lured her to Gubelin was the chance to do more research, something she did not have as much time for at AGTA GTC.
Smith also adds that while the loss of AGTA GTC provides an opportunity for colored-gemstone labs, the extra business won't last long if the service is poor.
"If you're not providing high-quality service, then these new customers are not going to be clients that remain with you," he says.
At the Gemological Institute of America (GIA), Senior Vice President of Laboratory Research Tom Moses sees the potential for a 10 percent increase in the lab's colored-gemstone grading business over the next several years.
"It's a void that's now in the industry," Moses says. "That need doesn't go away."
At the GIA, staffers have been ramping up their colored-gemstone segment for the past four or five years, with the introduction of country-of-origin and batch-testing services.
Moses says requests for colored-gemstone grading reports, whether to document treatments or ensure country of origin--especially important now in light of the U.S. ban on Burmese rubies--are on the rise.
"There are a lot of reasons this business is going to increase," he says. "The AGTA closing is just part of the reason."
But Hucker cautions rival labs not to clear out extra space for AGTA GTC's former clients just yet. While a number of competitors might benefit from the closure, they shouldn't expect that extra business to arrive anytime soon.
"One of the primary reasons we closed our laboratory was that there wasn't business to be had," he says.
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