One of the many new initiatives that Jewelers of America (JA) is working on is providing a health insurance option for the trade association’s 3,200 members. This is part of new president & CEO David Bonaparte’s initiative to offer member benefits with broader appeal to increase the group’s numbers. As the trade association’s new leader, David will also work on recruiting more suppliers and manufacturers while continuing Matt Runci’s work on responsible sourcing and business practices.
Offering JA members health insurance is a benefit that has been in the works for over a year. The association is already offering its members workmen’s compensation. When JA leaders began talks about offering its members health insurance, the thinking was: “it would be good to add this [health insurance] to the mix,” says David.
Also, like many Americans and US companies, as individuals and business owners, retail jewelers are seeing their personal and workplace medical insurance premiums increasing. Such costs are cutting into personal and business finances, reducing profitability and competitiveness while increasing uncertainty about future hikes. In the first two months in his new role, and the three months David worked with Matt in the fourth quarter of last year, many retailers responded positively to the proposed new member benefit.
“It’s a benefit members are excited about,” says David. “It’s much like an employer offering a health insurance benefit to employees, only it’s through an industry trade association to its members. When you have large numbers of insured individuals, you pool risk and reduce costs. That’s part of the appeal of this member benefit.”
If all goes well, health care is the latest member benefit JA’s new leader can offer existing and prospective members, but there’s plenty of old business to do on what David calls “the domestic front.” Topping the list is ongoing efforts to pass sales tax fairness and protect LIFO (Last In, First Out).
Last June, JA COO Robert Headley and chief members of JAPAC (Jewelers of America Political Action Committee) met with 26 members of Congress as part of a one-day trip to Capitol Hill. Through lobbying firm Haake & Associates and advocacy tools like the JA Legislative Action Center, JA has been active in getting jewelers’ issues in front of key lawmakers.
This includes efforts to pass e-fairness legislation. The Marketplace Fairness Act of 2013 was recently introduced in both the House and Senate. Although the bills have bipartisan support from both Houses, the bills have yet to get overwhelming backing.
“We’re seeing a huge amount of momentum on this issue,” says David. “With the growth of the Internet and the need for fairness in the marketplace, e-fairness legislation has never had a better chance of being passed and signed into law.”
As the Obama Administration and lawmakers look for ways of finding revenue, repealing LIFO is an attractive option. When JAPAC made its first trip to Capitol Hill in June 2011, talk of repealing LIFO then was not part of deficit reduction plans, but at that time it was placed on the negotiating table by the Obama Administration with $60 to $80 billion in possible revenue over a 10 year period.
Jewelers want LIFO to stay in place given the replacement costs associated with ever-increasing and constantly-fluctuating prices of commodities, namely gold and diamonds. In addition to maximizing after-tax cash flow, products with slower turn rates such as fine jewelry are susceptible to inflationary pressures and shifting commodity prices. In short, a product purchased in the past would be more expensive to replace in the current marketplace.
“So far we’re hearing there will be no repeal of LIFO,” says David. “We keep hearing it might be in one of the next bills, but haven’t seen it yet. Perhaps it will be part of a budget proposal for 2014.”
According to David, JA also worked hard to ensure that the estate tax did not return to pre-2002 levels. With Baby Boom-age store owners part of the generational 10,000-per-day retirement numbers, this is another important domestic issue for the trade association. If Congress had been unable to address the issue at the end of last year, the effective rate and exemption level would have reverted to 55% and $1 million for individuals ($2 million for couples).
JA prompted members to take action on the issue in early December, as the deadline loomed. In the end, Congress made permanent the existing exclusion amount of $5 million for individuals and $10 million for couples (indexed for inflation) as part of the American Taxpayer Relief Act (Fiscal Cliff Deal or H.R. 8). The deal increased the top tax rate from 35% to 40% on estates that exceed those thresholds.
“Retail jewelry is a generational business for many store owners,” says David. “If the estate tax had dropped back to the over $1 million rate, current generations of jewelers would be less inclined to hand down their business to their children. This is another issue we worked on to ensure continued smooth succession planning in our industry.”
As JA’s new president & CEO, David will split his time almost evenly between these domestic matters and the “international issues” of responsible sourcing and business practices, which ultimately become “domestic issues” for JA and its members.
In his previous executive role with the JCK Shows, issues such as conflict diamonds and responsible gold sourcing were more “arm’s length” for David. But as he discovered in October when David began his three month transition work with Matt, as the new leader of the trade association he needed to fully embrace what would become roughly half of his workload.
Research has shown that consumers are concerned about conflict diamonds and the integrity of the diamond supply chain with the verification procedures outlined in the Kimberly Process (KP). JA continues to stay close to the process by participating in the biannual meetings through the World Diamond Council (WDC) and their observer status. But with KP celebrating its tenth birthday this year, David is currently working with the Jewelers Vigilance Committee (JVC) and other industry groups to broaden the definition of what is “conflict.”
“In the beginning, conflict was defined as oppressive anti-government groups forcing people to mine diamonds to benefit the armed rebel forces,” says David. “Although this type of conflict is still defined in KP, other types of conflict need to be included in KP. In some areas of the world governments are the oppressing party.”
David and other members of the JVC and the Diamond Manufacturers & Importers of America (DMIA) are working to expand that definition while continuing work on efforts outside of the KP like the Diamond Source Warranty Protocol, a diamond supply chain verification effort that began last year.
This has become more critical as conflict diamonds are an important self-policing issue as an industry and socially responsible purchasing for today’s consumers. Additionally, public policies – like regulations on gold and other conflict minerals within the Dodd-Frank Wall Street Reform and Consumer Protection Act – show that governments will turn to restrictive regulation if the industry fails to address these challenges.
“As we saw with Dodd-Frank, which targets gold and other minerals that fund conflict in the Democratic Republic of the Congo and nine surrounding countries, governments will enforce new laws that impact our industry if we do not act,” says David.
Both domestic and international work for David is very complex, involving many individuals and businesses as well as other industry and affiliated associations. That’s where being involved in the industry’s leading trade shows for a number of years, and a 90-day transition period with Matt, have been tremendously helpful for David.
“I know the industry issues but am immersing deeper into them each week, serve the same constituents – retail jewelers and suppliers - and had the chance to work side by side with Matt for three months before assuming my new position,” says David. “When 2013 began, I hit the ground running and have kept that pace ever since.”
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