LAYOFFS IN FRENCH POLYNESIA PEARL INDUSTRY CAUSED BY OVERPRODUCTION, INDUSTRY

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LEADER SAYS

PAPE'ETE, December 19 (Oceania flash/SPC)---French Polynesia's largest black pearl company owner, Robert Wan, says his decision to temporarily lay off some 400 employees for the next six months was mainly caused by an excessive production of black pearls in the French territory.

In an interview with the daily newspaper La Dépêche de Tahiti on Wednesday, Wan, who is regarded as one of the first local businessmen to have invested large amounts in the industry over twenty years ago, says the current crisis was mainly caused by excess production and a drop in quality, causing, in turn, a drop in prices.

"There are too many pearls of Tahiti these days, too many produced. So I am making the sacrifice. Hopefully this will set an example and show a way which, I hope, others will follow for the sake of the pearl industry. I am reducing my production."

This translated into the lay-off of 400 employees of his Perles de Tahiti company, at least for the next six months, especially in the pearl farms of the Tuamotu and Gambier archipelagos.

But during this period, they would continue to receive a tenth of their current salaries, Wan assured.

"I have pledged to them that everyone will be re-employed by July 1st, 2002."

Since last year, international buyers of Tahiti black pearls had not shown the interest they used to at auctions held in Pape'ete.

"This over production means, really, 40 percent more, since 1996. This is way too much. In the meantime, the quality of the pearls on the market is going down," Wan said.

"Black pearl is not something you sell in any retail store, and yet this is what's happening. And you don't find Rolex watches or Vuitton bags for sale in those places. And yet now you can find black pearls. This is disastrous for Tahiti's black pearl image."

Wan recalls that prices have dropped by 70 percent since 1994 and by 20 percent in just the past three months.

"Some pearl producers, moreover, are now selling way below their production costs. For my production, I have decided to refuse this strategy. That's why I am keeping very large stocks."

Another decision linked to the lay-offs in personnel was also to stop grafting (the operation that involves implanting the kernel of a future pearl into the oyster) for stock that would have been harvested in September 2002.

"This makes sense to me. To carry on with the current production would mean a further drop in prices. I really wish my position will serve as an example."

Wan recommends a tighter quality control on pearl production, especially for the export market, and stringent measures to prevent what he terms "anarchic retail."

"Maybe this way, customer confidence will come back."

He also predicts increasing competition from Pacific island countries, such as the neighboring Cook Islands, but also Fiji (which produced its first batch of black pearls this year), Micronesia, the Marshall Islands, and the Solomon Islands.

"Competition will increase and become more and more aggressive," he said.

Until recently Wan was producing some five tons of black pearls per year.

In March, French Polynesia's President Gaston Flosse personally took over the responsibility of the pearl industry portfolio and introduced drastic quality control measures, which included a tight control (including seizure and destruction) of lower grade pearls.

According to statistics, pearl farming and related industries currently employ some 7,000 people locally, in over a thousand pearl farms throughout French Polynesia's far-flung archipelagos.

The fastest growth in turnover occurred between 1998 and 1999, a euphoric time when the growth rate of the industry reached an unequalled +23 percent.

But business then slowed down in the year 2000 (only +14.4 percent growth rate, a total turnover of 21.4 billion French Pacific Francs -CFP, over US$ 160 million).

On the global scale, Tahiti currently produces about a quarter of the world's black pearls.

Last year, the territory's two producer syndicates (Poe Rava Nui and Tahiti Pearls Producers) organized three auctions and sold overall 460,000 pearls.

A total of 5.8 million black pearls were exported last year.

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