A year-long study measuring the impact of New York’s diamond and jewelry industries upon the city and state economies has shown that diamonds are New York State’s number one export product and jewelry ranks in the number three spot. In 2009, the two sectors packed an economic punch worth $24.2 billion, and provided $4.2 billion worth of added value to New York City through wages, profits and indirect business taxes.

The study found that, while 47th Street remains a vibrant hub for business, there are challenges that threaten its future vitality. But it also states that the New York’s diamond and jewelry sectors, and the Diamond District in particular, are well positioned to increase their already substantial economic impact, particularly as players in the city’s tourism industry. By making capital improvements with government assistance to upgrade the look of the district, by expanding marketing and promotional activities, and by strengthening relationships with design schools and other design-oriented industries, it will be possible to ensure not only the Diamond District’s continued existence, but also its success for the future.

This impact study was prepared by the Pratt Center for Community Development on behalf of the 47th Street Business Improvement District, in collaboration with the Empire State Development Corporation. It was first in-depth analysis of the New York Diamond District to have been undertaken in 20 years.

The study convincingly showed the economic potency of the diamond and jewelry industries. “The economic impact of this sector is tremendous, particularly considering that the majority of the production and sales transacted in this sector occur on one block in midtown Manhattan,” it stated.

In 2009, the report stated, New York’s diamond and jewelry sectors produced an estimated $5 billion in total annual output and directly employed 19,500 people, with total employee compensation of $1.5 billion. But in addition to direct employment, the industry created an estimated 5,900 jobs in other supplier industries in New York City. In all, there were a total of 25,400 direct and indirect jobs associated with New York City’s diamond and jewelry production activities. An additional 7,200 jobs were generated by the consumption demand of the direct and indirect diamond and jewelry workers, making the sectors responsible for approximately 32,600 local jobs.

New York City jewelry companies had substantially greater sales per employee than jewelry companies throughout the United States. In jewelry manufacturing, New York City companies had $393,100 in sales per employee—80 percent greater than the rest of the United States. On the wholesale side, New York City businesses had $1.263 million in sales per employee—twice that of jewelry wholesalers in the rest of the country.

The study noted that the overwhelming majority of New York City’s diamond and jewelry businesses and employment are located in Manhattan. Some 91 percent of New York City’s diamond and jewelry businesses are located in Manhattan, with 86 percent of payroll employment and 89 percent of total wages paid. Most of this is located within the Diamond District, the study reported.

The sector is also a decent employer, with New York City’s diamond and jewelry businesses paying more on average than other sectors. In 2009, annual wages in jewelry manufacturing for New York City averaged $54,662. This was 25 percent greater than the $43,763 median annual earning for city residents working full-time, year around as reported by the American Community Survey. Jewelry wholesale jobs had even higher wages, averaging $57,202.

The study noted that since 2000, the number of diamond and jewelry companies in both the manufacturing and wholesale sectors combined has declined by 7 percent, with the bulk of the decline occurring during the decade’s two recession periods, in 2001 and 2002 and 2007 through 2009. Wholesaling held up better than manufacturing, it said, with the number of local jewelry firms holding steady, while manufacturing companies fell by 28 percent. The number of jewelry retail stores has grown by 2.5 percent during the decade.

The study noted that 47th Street is known internationally as a center of the world diamond trade, but said that many of the industry members it polled said there was a mismatch between the luxurious feeling of purchasing jewelry and the backdrop against which these sales occur.

“Improving the physical environment of the Diamond District is a priority to the business owners,” it stated. “Given this interest the district should develop a branding strategy that includes implementing physical changes, which would create a holistic feel of ‘New York City’s Diamond District.’”

“Our conversations with industry leaders revealed that owners throughout the supply chain including manufacturers and wholesalers believe tourism is integral to sales,” the study’s authors wrote. ”While the manufacturers and wholesalers are the crux of the economic engine for this industry, they rely on retail customers for product demand.” Considering its location in the heart of midtown Manhattan and adjacent to the Rockefeller Center, the Diamond should have alarger presence in the city’s tourism marketing efforts, the study suggested

The study also looked at the training of future workers in New York’s diamond and jewelry sectors. For New York City’s diamond and jewelry industry to remain strong and vibrant, it will need an influx of new workers, it stated. And, while it noted that the companies polled had not expressed concern about finding qualified employees, it stated that some business owners are encouraging their children to seek out other professions, leaving the future management of the sector in question.

The industry should consider expanding its network to include area schools and training programs as a source for new workers, the study said. Exploring new labor pools may be initially uncomfortable for the industry, but it provides an opportunity to supplement its workforce that may not be as strong in the near future.

The study made six specific recommendations:

1. To upgrade the physical appearance of the Diamond District and to create for it a distinctive identity.
2. To more actively promote the Diamond District as a tourist destination, including the incorporation of the Diamond District into the advertising materials used in the transit systems and renaming the Rockefeller Center subway stop as the Rockefeller Center/Diamond District station.
3. To explore additional market niches for new business models, including developing secondary markets to resell finished jewelry.
4. To collaborate with area universities and training programs, in order to provide new employees with the skills and knowledge necessary to work in the diamond and jewelry sectors.
5. To better manage the activities of street advertisers or “hawkers,” who are considered by many 47th Street residents to be a bother and distraction.
6. To expand the capacity of 47th Street Business Improvement District, which currently has only two members of staff, including an executive director and assistant.

“The District is a great illustration of how an industry can continue to thrive in New York’s relatively high-cost environment by capitalizing on the city’s competitive advantages,” the study stated.