Silver increase seems to have greater impact
Despite gold prices having reached a 26-year high of $725 per ounce in May, Rhode Island jewelry and industrial manufacturers seem to be taking the hit in stride. Many have seen little or no effect on profits so far.
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One reason could be that few Rhode Island manufacturers deal with large quantities of gold.
About 1 percent of A.T. Wall Co.’s precious-metal tubing and stamped products, for example, are composed of gold, said Francis Rosato, general manager of the Warwick-based manufacturer, which employs about 60 people.
‘‘I don’t think it’s had much of an impact on us,’’ he said. ‘‘We deal more with silver.’’
Silver makes up 10 percent of the products A.T. Wall manufactures for the jewelry, military, aerospace and wireless communication industries.
The rest are composed of copper, aluminum, brass and stainless steel, Rosato said. The company is celebrating its 120th anniversary this year.
GSM Metals Inc. of East Providence also deals more with silver than with other metals, mainly because in addition to manufacturing sheet metal and wire for the jewelry industry, it also manufactures silver conduits for its electrical contacts, said Andrea Jacques, office manager for the company.
‘‘Silver has been up and over $10 per ounce,’’ she said. ‘‘It’s been on the rise. It was at $14 in May.’’
Jacques said that at first the company was ‘‘a little scared,’’ by the spike in gold and silver prices in May. In the past 10 years, the average price of silver has been fluctuating between $4 and $7 an ounce, whereas the cumulative average this year is about $11.
But GSM Metals’ longstanding customers have kept the company and its 30 employees afloat.
Armbrust International also has managed to keep business steady, despite precious-metal spikes, said Karen Kase, financial director for the Providence-based jewelry chain manufacturer.
In most cases, the increased cost of gold is transferred to the customer, Kase said.
The same is true at A.T. Wall and GSM Metals. ‘‘If the market goes up, our prices go up,’’ Rosato said. ‘‘In some ways, it’s favorable: It makes the company look like it has higher revenues. But costs are higher.’’
Costs go up for Armbrust International, as well, Kase said, because of its working capital requirements. When gold prices increase, so does the cost of the inventory the company is required to keep.
But she said it hasn’t hurt the 135-employee manufacturing company, because its business is actually growing.
‘‘It’s an interesting phenomenon,’’ she said. ‘‘The rise in market prices has raised the interest in precious metals as a status symbol.’’
Kase also attributed the rise in business to Armbrust International’s new-product development, including unique chains that no one else makes.
‘‘We provide a variety of services to them,’’ she said of the company’s customers, which include mostly distributors and some large retailers.
For example, when gold prices increase, Kase said the company works with its customers to design new products with less gold in their composition. That is especially helpful for those customers that might not be able to afford the hike in prices, she said.
‘‘Our designers work with their designers,’’ she said, to come up with the best solutions to such problems.
Rosato said gold can often be replaced with other metals, if prices become too steep, especially in industrial applications such as items for the aerospace and telecommunications industries.
In the jewelry business, customers sometimes just buy less gold, said Frank Iannucci, president of Eagle Tool Inc., a jewelry findings and metal stamping manufacturer in Providence that employs about 20 people. Findings are unfinished pieces, such as a chain for a bracelet or necklace. A metal stamping is a pendant or ornament punched out of metal.
Eagle Tool sells to jewelers ‘‘all over the state and world,’’ Iannucci said.
‘‘We noticed business has been dropping off,’’ he said of orders for gold-containing items. ‘‘Some people are switching to silver because it’s less expensive.’’
But Eagle Tool – like many manufacturers – deals more with other metals, such as steel, brass and silver.
‘‘Gold is the low end of our business,’’ Iannucci said. ‘‘It doesn’t hurt profits too much. We’ll raise or lower the price depending on the market.’’
