Recently, The London Telegraph reported De Beers would suspend production in its mines until further notice. De Beers, which is accountable for 20% of the world’s diamonds attributes the mine closures to the economic downturn. No surprise there. But the last time DE Beers stopped production in its mines was in the 1930’s. So this is a most significant bit of news.
Over dinner one night, I pointed this out to friends. They were quick to assure me that the mine closures were nothing and just a way of regulating the diamond market. I argued that it was much more, considering that holiday diamond sales in the United States were off by 25%. I argued that not only did this reflect poorly on the holiday season but with the economy in its present disastrous state, surely engagement and wedding ring sales would also be down substantially. This in turn translated into the loss of sales in the catering business, and the hall rental, flower and ancillary retail industries as well. It meant a downturn in hotel and resort books, as honeymoons would be diminished.
Instead of hiring employees or at least maintaining current staffs, employers may be laying off people. It would roll out from there to the uniform suppliers for those working in the hotel and catering industries, the linen suppliers, the wholesale food suppliers, and of course the background checking industry where most employers conduct their preemployment screening programs. Other aspects of business also suffer the loss as discretionary spending suffers.
I am reminded of the investment company who in its comemrcial teases you with the notion of how the rice yield in India impacts the fishing industry in Japan. Well, in the global economy everythign appears to be interelated. It is an unavoidable fact. We are all dependent on each other and on the industries we represent.
