Logo: University of Southern California

Jewelry District

April 27, 2005 —

Los Angeles’ historic jewelry district will have a better chance of surviving new regulatory, technological and global market forces if manufacturers and business owners can create an environmentally and industrially sound “green diamond” district, according to a new USC environmental engineering study.

Los Angeles's jewelry district is the second largest assemblage of jewelers in the world, but manufacturers and business owners face costly regulatory and environmental upgrades if they are to stay in business. 

In a unique pilot study, the first of its kind in the country, a team of USC graduate students from a variety of disciplines undertook an interdisciplinary analysis of the city’s historic jewelry district, its present situation and prospects for future sustainability. The jewelry district, long considered an integral part of Los Angeles’s economic base, has gone virtually unregulated for decades.  

“Even though the jewelry industry has a long history in Los Angeles, it faces an uncertain future due to changing regulatory, technological and international market contexts,” said Najmedin Meshkati, professor of civil and environmental engineering professor in the Viterbi School of Engineering, who served as advisor. “Today’s realities call for a new jewelry district prototype — one that not only permits jewelry-related firms to stay together geographically, but incorporates emerging principles of eco-industrial development and sustainability.”

Los Angeles’s jewelry district is the second largest assemblage of jewelers in the world, supporting more than 5,000 wholesale and retail jewelers in 30 or more multi-story buildings, according to the Los Angeles Chamber of Commerce. The district extends from Fifth Street to Eighth Street on Broadway, Olive and Hill streets and accounts for revenues of about $2.5 billion a year. The industry thrives on wholesale prices for precious gems, watches and all types of fine jewelry.

In recent years, however, stricter environmental and regulatory codes have forced some jewelry manufacturers and suppliers to leave the area, creating a “pending crisis” for the city, said Sandy Bleifer, a developer with Downtown Enterprises, who worked with the students.  “The high cost of manufacturing and the rise in real estate prices have taken their toll on the Jewelry District,” she said.  “It forced us to examine the environmental issues indepth because the industry is such an important part of L.A.’s economy.”

The ‘Green Diamond’ District 
In "Sustainability of the Los Angeles Jewelry District: An Interdisciplinary Analysis of Technical, Social, Economic, Safety, Health and Environmental Issues," the USC graduate students addressed environmental policies governing the district, such as pollution standards, building codes and safety issues.  They proposed a new paradigm for revitalizing the area — building a “green diamond” district.
The USC team, including advisor Najmedin Meshkati, left foreground, and Sandy Bleifer, in hat, center, kneeling down, a developer interested in the 'green diamond' district idea. 

“Green diamond is a concept that refers to ‘green building,’” Bleifer said.  “Green building” is a voluntary, consensus-based national standard for developing high-performance, sustainable buildings.

“This is a concept that we hope to coin as we move forward with the City of Los Angeles in getting grants to actually build a model ‘green building’ that incorporates all of the new manufacturing equipment codes and environmental standards that are required today,” Bleifer said.  “A green diamond is a very rare precious stone, so it’s a way of communicating our unique, environmentally friendly approach to this problem.”

Meshkati said his course, “Methods for Assessment and Protection of Environmental Quality (CE 564),” was designed to bring a multidisciplinary team with differing points of view together to address and solve key environmental issues. 

“The course did that, and taught us some key aspects of sustainable city development,” said Juliette Finzi, a marine biology graduate student.

The course is part of the graduate curriculum in the Viterbi School Department of Civil and Environmental Engineering and part of a multidisciplinary certificate program on urban sustainability offered by the USC Center for Sustainable Cities. 

Multi-Disciplinary Team
Students in engineering, physical sciences, anthropology, economics and urban planning toured jewelry manufacturing companies of various sizes, interviewed workers and owners, met with equipment manufacturers and suppliers, as well as owners and city regulatory officials, during the semester.

They identified “a wide range of processes involved in the industry,” said Jay Hasbrouck, a doctoral student in anthropology, who studied the cultural and ethnic makeup of the jewelry businesses. These are processes that will change as the industry is forced into compliance with modern fire, safety and health codes.

“As you might imagine, compliance means they will have to make significant alterations in both historical jewelry manufacturing methods and in the buildings they use,” Meshkati added. 

In the final report, the students stressed the importance of keeping L.A.’s jewelry district geographically connected. 

“Firms involved in jewelry, from manufacturing to retail sales and the industry's suppliers, are intimately linked through ethnic networks and mutual trust, which, in this case, seem to operate best in close proximity,” Hasbrouck said. “The importance of these networks for the industry was a surprise to many of us in the class.”

The USC team joins a City Hall meeting to offer new ideas for creating an eco-industrial-friendly jewelry district.
Costs of Retrofitting
The team also warned of the rising costs of retrofitting buildings and upgrading manufacturing processes.  Those costs may force some jewelry manufacturers and sellers to leave the area, but that will not be an option for most. Instead, rising costs will put many out of business.

Recognizing the problem, the City of Los Angeles developed a Jewelry District Task Force aimed at bringing all parties together to address solutions to the rising costs of retrofitting buildings and upgrading manufacturing processes in order to comply with new regulations.

The USC report was distributed to the task force, which will work to keep the jewelry industry afloat in Los Angeles.

Among its findings, the report predicts that manufacturing operations are apt to become consolidated in 15-to-20 buildings that have been retrofitted to comply with new regulatory standards. The costs of moving into these buildings will be passed on to tenants, triggering some turnover, before the market adjusts.

The study also predicts that regulations related to environmental pollutants and worker health and safety may become more stringent over time in response to greater scientific knowledge about human health risks.  Stricter regulations are likely to trigger more concerns about liability and loss among owners, local government and insurers.

Bleifer said the harsh realities facing business owners haven’t discouraged them yet.

“They seem to agree that innovation and quality design will distinguish L.A.’s local industry and allow the city to keep a market share, despite economic fluctuations and imports,” she said.  “The ‘green diamond’ idea appeals to them.”

A copy of the report is available at www.usc.edu/dept/geography/ESPE/.

--Diane Ainsworth