When East Providence jewelry manufacturer Monet announced last week that it would fire 200 workers and move its manufacturing overseas, it was doing what its competitors had already done, officials said. Last week, Monet, part of the New York-based The Monet Group Inc., said that it would now make its manufacturing purchasing orders to jewelry makers in Asia, instead of sending those orders to East Providence. The company had been gradually shifting its manufacturing base offshore, and the layoffs at the East Providence site made the shift complete: The final 20 percent of Monet’s manufacturing has been transferred to Japan, Sri Lanka, Korea, China, and other foreign nations, said Chief Operating Officer Michael Sharp.
The plant will not close completely. The company will keep 300 administrative, sales, clerical, and support services people employed there. But the manufacturing, the plating and polishing, the highly skilled manual work that Monet had prided itself upon, will be gone. Competitors that import Asian-made goods can sell their products far more cheaply, Sharp said, making it impossible for Monet to hang on to its final 20 percent.
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Depending on the product, Monet can save from 10 to 60 percent on the cost of its products by having them made overseas, Sharp said.
”It’s been a very tough decision,” he said. “We were hoping we could keep it here forever; unfortunately, we can’t do that anymore.”
Monet executives decided several weeks ago that it could no longer compete with its East Providence site, a plant Sharp said has the company’s highest skilled and highest paid employees. When benefits are factored in, the typical worker earns from $12 to $15 an hour. Sharp said he believes the workers will be snatched up quickly by competitors and other manufacturers. The company is giving three-fifths of its workers furloughs; the rest will phase out the manufacturing operation through the end of March. It is also working with the state Department of Labor and Training to help find work for the displaced employees.
But cost was not the only consideration, Sharp said. In the past, Monet resisted buying goods made offshore because it asserted their quality could not measure up to that of U.S. made products. But recently, executives have concluded that the Asian vendors who had invested heavily in the last five years to improve their manufacturing processes had finally caught up to their American counterparts, and that the difference in quality was no longer great.
”They can now make product almost as good as we can make it,” Sharp said. “The reality is, there may be differences, but it is not significant, and that’s really a painful reality to deal with.”
But it’s a reality other jewelry makers have been accepting for the past few years.
“The advantage that our competition has had for five years now, we’re just getting to the point where we can argue that we’re on a level playing field,” he said.
Current trends in jewelry fashion contributed as well. Jewelry made from beads and pearls, the kind of jewelry that takes more hands-on work and less skilled labor to produce, is popular now. Given that trend, it makes sense to produce those goods where the labor costs are low, he said.
”The things that this factory is the best in the world at are simply not the jewelry that is popular right now,” Sharp said. “It’s a lot of pearls, stones, beads – very manual labor that is not competitive from a cost standpoint.”
Sharp added that he believes that only specialty jewelry manufacturing will survive in the United States. Instead of producing the entire product on site, companies will specialize in one aspect of the process, such as plating.
John Harvey, a spokesman for the Providence-based national industry group Manufacturing Jewelers and Suppliers of America Inc., said MJSA does not encourage companies to move jobs offshore. He said companies that try to manufacture offshore often find that the quality of workmanship is not as high, and that the political climate can interfere with their business.
Still, he admitted that he would rather see a company move jobs than go out of business. And he added that foreign manufacturers enjoy advantages that U.S. makers do not have. While jewelry coming into the United States is hit with only a 6 or 6.5 percent tariff, the tariff wall in other nations can be as high as 70 percent. Many foreign nations use a variety of “non-tariff” trade barriers to protect their industries, Harvey said, such as holding up goods at the boarder so that a supplier cannot fill his order on time.
At the World Trade Organization meeting in Seattle last year, MJSA President James F. Marquart campaigned for a trade agreement that would govern the jewelry and other key industries. The Accelerated Trade Liberalization pact the organization is now considering would reduce the jewelry tariffs of all member nations to 5 percent, Harvey said. While the agreement enjoys support from the United States and other WTO members, the European Union has yet to endorse the idea, he said. The WTO will consider the pact when it holds its next meeting, though a date for the meeting has not been set yet, he said.
U.S. citizens must support measures such as the trade pact if they want the exodus of jobs to cease, Harvey said.
”If we can eliminate the non-tariff trade barriers, we’re going to see more American manufacturers stay in the U.S.,” he said. “Everybody gets angry at the American jewelry manufacturer when they move jobs out, but we have to support initiatives like ATL.”
