Old World Ways Fade in Jewelry District

For decades Los Angeles’ downtown jewelry district has been as closed as an oyster shell clamped around a pearl. Security is so strict at some shops that workers are issued metal-free clothing and the shoes of departing visitors are X-rayed.

Million-dollar deals are still sealed on a handshake by Old World entrepreneurs who shun written contracts and fax machines. And employees are culled from the trusted ranks of family or by word-of-mouth alone.

The closeness is fiercely guarded by the intimate networks of Armenian, Persian, Latino and Chinese immigrants who have pulsed into the district on the waves of civil wars and political upheaval. And old ways have served them well enough: Tens of millions of dollars are believed to change hands daily in the industry’s heart near Pershing Square--making it the nation’s second-largest precious jewelry hub.

But the district’s very closeness now threatens its prospects. Skilled workers are in short supply as the sons and daughters of immigrant jewelers pass up the trade for other vocations. New technologies--including digital design and Internet sales--are giving savvy competitors an edge, as is cheap foreign labor.

Now, grudgingly--remarkably, some say--the district is taking heed, undergoing changes that could pry open its cloistered culture and herald a modern era for an ancient trade.

Nowhere is that transformation as striking as in the manufacturers’ embrace of new workers--straight off the welfare rolls. Last month, a city-funded program began screening and training the first of up to 350 welfare recipients for entry-level work as solderers, polishers and stone setters, with on-site training in wax carving, casting and more.

The fledgling experiment has already become a template for other American jewelry districts and marks the first time the city of Los Angeles has created a welfare-to-work program targeting a specific industry.

Most of all, it is a sign of how much reshaping the insular industry is undergoing, signaling a shift in thinking that could boost its national and global importance.

In the past year alone, manufacturers have begun flirting with new technologies, organizing foreign trade missions and reaching out to public officials with a new level of confidence. Trade associations are blooming, and ethnic organizations that have kept to themselves are coming together to combat well-oiled theft rings, lobby for government help and monitor the district’s business ethics.

“This industry has changed [and] needs to continue to change,” James Marquart, president of the Rhode Island-based Manufacturing Jewelers & Suppliers of America, told jewelers at a recent technology expo.

As necessary as change is, however, it will be difficult to master in a place that for so long has defied progress, or relished the lack of it.

The industry’s fixation on privacy is unmatched, as is its ethnic makeup: Though some other local industries are dominated by one or two immigrant groups, the jewelry industry is a wild stew of foreign-born entrepreneurs.

What they share is an Old World business culture. Leon Chant Haytayan, who emigrated from Beirut in 1972 and now owns Haytayan Jewelers Inc. in Los Angeles, has never sought a bank loan, relying instead on informal lending networks fueled by trust and family ties. Fear of crime--Haytayan has been followed by thieves and cheated by workers--has also compelled jewelers to keep a low profile.

Vibrant Center Was Built on Old Ways

And hiring has followed the same guarded pathways. Haytayan’s chief designer began shaping gold on a Beirut jeweler’s bench at age 10. The Mexican-born polishers who perfect his creations came to him through referrals, their honesty guaranteed by word alone.

The odd mix of cultures and rusty habits has nevertheless created one of the country’s most vibrant jewelry centers, bustling with as many as 3,000 manufacturers, wholesalers and retailers.

Israeli diamond dealers, Indian color stone merchants, Iranian wholesalers, Armenian manufacturers, Mexican designers and Asian importers have turned the historic buildings near 6th and Hill streets into Towers of Babel. Others subcontract finely honed skills such as casting, stamping or electroplating.

The roots of the Southern California industry date to the early part of the century, but much of the growth has come in the past three decades, fueled by upheavals around the globe.

Mexican craftsmen were joined in the 1970s by Armenian jewelers fleeing civil war in Lebanon. Others followed from Iran, joined by Russians when the Soviet Union fractured. Ethnic Chinese manufacturers and wholesalers from Vietnam and Cambodia also came, as did Israeli diamond dealers.

Many, like high-end platinum designer Christian Tse, were born into the trade. A Cambodian emigre of Chinese descent, Tse learned the craft from his parents, grandfather and great-grandfather, who plied 24-karat gold into intricate wedding and ceremonial pieces.

Others, like Haytayan, entered the intimate world through a network of peers, wanderers like him in the Armenian diaspora. After six years in the clothing business on Hollywood Boulevard, Haytayan took up the trade of his clients.

“My right arm is 1 1/2 inch longer because of carrying a bag and peddling gold all over America,” said Haytayan, who now pulls in $15 million in yearly revenue as a manufacturer, wholesaler and importer of yellow and white diamond-adorned gold jewelry.

Nationally, the industry has faced mounting pressures as imports made with cheap foreign labor have squeezed domestic artisans. But even as other top jewelry centers have lost jobs, the Los Angeles industry has steadily grown, fueled by the influx of immigrants.

Built on predominantly small family-run operations, the district has remained competitive in part by relying on relatives to staff tiny shops and bolstering manufacturing efforts with a mix of imported products that are wholesaled at rock bottom prices. Some manufacturers, those familiar with the industry say, have taken advantage of illegal immigrant workers, violating minimum wage laws.

And the tendency of some to deal in cash has kept the industry below the radar of economists and civic leaders.

Still, research by one downtown company creating specialized industry software has identified more than 3,000 businesses, most with fewer than 10 employees. And the district has spilled its boundaries, spreading to Glendale, Burbank, Van Nuys and elsewhere.

State and federal statistics underrepresent the industry, as many companies don’t fit into given categories and others operate in a cash-based informal economy. But those figures also show growth: Jewelry and precious metal manufacturers in Los Angeles County employed 3,404 people last year, up from 1,891 in 1985 and just 907 people in 1975. And wholesale employment grew to 5,400 last year, up from 3,235 in 1985, according to the state Employment Development Department.

In contrast, jewelry manufacturing jobs in New York City declined from 13,000 in 1978 to 8,400 in 1998. And Rhode Island--a hub for gold chain, findings (which hold gems in place), and costume jewelry--lost 45% of its jewelry jobs since 1988, dropping to 12,500 last year. Both states still boast larger firms and higher employment than here.

Although New York has lost its hold on the market for cutting rough diamonds to overseas operations, it is still the nation’s hub for diamond dealers and top-line, custom designed gold, platinum and other precious wares. The East Coast also hosts most of the nation’s big corporate jewelry manufacturers.

With the exception of high-end designers such as Tse, Los Angeles has made its name on mid-market precious jewelry, much of it gold creations cast or stamped at smaller shops. Much of that product is sold to the Midwest and East Coast headquarters of major retailers such as Zale and J.C. Penney.

Children of Jewelers Choosing Other Fields

Cut diamonds imported from Israel, Belgium and India are set into many of those creations, as are Colombian emeralds and imported sapphires, rubies and high-priced colored diamonds. Imported gold jewelry from Italy, Turkey, Korea, Thailand and elsewhere also makes its way to the hands of district’s wholesalers and retailers.

The immigrants who fed Los Angeles’ trend-defying growth, however, are no longer arriving in waves, and many of their U.S.-born children, armed with college degrees, are opting out of the industry. Rising jewelry sales and sinking overall unemployment have contributed to an unprecedented labor shortage.

Nationwide, there are about 15,000 openings for bench jewelers--the skilled workers who can design and ply metal, set and polish precious stones and repair finished jewelry, according to the MJSA, which developed the welfare-to-work program. In the Los Angeles region, an estimated 890 bench jeweler jobs are unfilled, as well as 1,000 entry-level jobs for solderers and polishers, a survey by the jewelers group showed.

“We need outsiders because there is a generation gap,” Haytayan said. “There is an old generation that’s fading out.”

Enter the welfare-to-work initiative, funded with a $1.9-million city grant. The skills workers will develop can also gain them entry to the job-starved metals and plastics industries, said city welfare-to-work director Janet Ervin.

The Chicana Service Action Center downtown recently began screening potential candidates, testing for literacy and dexterity and conducting criminal background checks on behalf of jittery employers unused to hiring strangers.

Employers, who get an $8,500 federal tax credit per hire, will pledge to take on workers who receive 80 hours of training in soldering and polishing, as well as on-site training. At the end of an internship, wages will jump from $6.50 an hour to the city’s living wage of $8.64. Haytayan’s veteran crew of polishers, who learned on the job, earn about $10.50 an hour, and experienced bench jewelers, designers and gem selectors can earn up to $50,000 a year, according to the jewelers association.

The task of pushing the program to manufacturers falls to the industry group’s Estela Posternak, an Argentine-born Jew of Russian ancestry whose father manufactures gold jewelry in Mexico.

Posternak epitomizes the industry’s multiculturalism, switching from English to Spanish to Hebrew as she marches her slight frame through the district to pitch the program.

“The industry is opening little by little,” she said. “We’re realizing we can’t stay in a cocoon.”

Hiring a qualified outside applicant may seem straightforward to most employers, but it represents a monumental departure in an industry where word-of-mouth referrals and family hires have perpetuated ethnic enclaves.

The jewelers who piece together Tse’s handmade platinum and gold chain creations are all Cambodian-born artisans who came to him through a web of referrals. His signature bracelet takes 50 hours to assemble and retails for $15,000, mandating a level of trust and skill rare in other industries.

Security Worries Add to Insularity

Beyond the comfort of ethnic allegiances, however, is an overriding security concern.

Tse and his wife and business partner, Victoria, suffered three follow-home robbery attempts before moving their business to Pasadena. Nationwide, jewelers transporting goods lost between $75 million and $100 million to theft last year--with California leading the pack--according to the New York-based Jewelry Security Alliance. And throughout the downtown district, locked double metal doors and reinforced glass obscured by window blinds line the hallways.

The potential for internal theft is also constant, and manufacturers have responded with a costly set of measures that lend a prison-like ambience to the workplace. Haytayan employs a full-time security guard who has memorized the personal jewelry of each worker and checks them daily with a metal detector. Inventory is weighed and counted. And last year, Haytayan installed a 16-camera security system trained on each corner of his suite.

Larger companies take the precautions further still, X-raying the shoes of visitors and workers. And at Burbank-based OroAmerica, one of the country’s largest producers of 10-karat and 14-karat gold chain, workers are issued an initial budget for metal-free clothing.

“All my pants are button fly,” said manufacturing general manager Edmund Jabson, who has embraced the hiring program.

He is not alone. Every manufacturer Posternak has pitched is hungering for new workers from the program, she said. Key to enthusiasm: the promised criminal background checks and other screening.

Yet some--particularly diamond dealers--remain unconvinced, vowing to never open their businesses to outsiders. Others say the living wage requirements of the welfare-to-work program will scare away low-end manufacturers who have paid bottom-line salaries to an unskilled, undocumented work force.

But analysts insist that Los Angeles’ industry must emerge from the shadows and upgrade its wages and skills to survive.

UCLA associate dean of public policy Allen Scott compared the industry to one in Bangkok, Thailand, and found the district here stifled by its isolationism. Although the two industries shared many traits--hiring through family and referral, a thriving multiculturalism and complex web of deal-making and subcontracting--Bangkok’s industry thrived through political organization and government support, while the Los Angeles industry remains relatively hidden.

“I would argue that the only future over the long term for the industry is to go into high quality, high skill production, with a big emphasis on export markets,” he said. “‘It is one of the elements of the new economy of L.A., but it really is on the back burner.”

Signs indicate that change is under way.

New Alliances and Marketing Strategies

The trade association has attracted nearly 200 Los Angeles members in the past few years with its platform issues of worker training, trade tariff reduction and new technology. A recent expo sponsored by the group’s L.A. network featured four types of imaging technologies to help jewelers sell their goods online, as well as digital design and wax cutting technology.

Haytayan last year helped form the 200-member Armenian Jewelers Assn., which is working to join forces with the International Diamond Club and the Indian Color Stone Assn. to better enforce and uphold ethical business practices. Past problems have included misrepresentations of carat value of gems and gold.

And in an effort to bolster their credibility and visibility, jewelers are teaming up with the downtown Business Improvement District to finance the first comprehensive study of the district’s revenues and demographics.

Others, like the Tses, are reaching out to market high-end product in unconventional ways to clients such as Saks Fifth Avenue, the Bellagio Hotel and Fred Leighton. The Tses’ marketing approach: placing the wares on Hollywood stars that include Darryl Hannah, Courtney Cox and Lisa Kudrow.

“We’re young enough to understand the new generation,” said Tse, 30, who left Cambodia as a child and grew up in Michigan. “But in my background I understand the old ways.”

The embrace of the welfare-to-work program by the Tses and others could also bring an end to the closed ethnic pockets that now dominate the industry, signaling a new era of melding in the city’s melting pot.

“When the time comes I would love to hire non-Asians,” said Victoria Tse. “We want to hire people we can trust. That’s the main thing. It doesn’t matter what nationality, what color.”

Said Zohrab “Zed” Babian, 50, the Haytayan designer who learned his trade as a child four decades ago: “This is a beautiful business, a beautiful industry. It will never fade away . . . but it will get another face.”