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Embraer

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Some of the Major Blue Chip Clients I\'ve managed to get on board at my time as a Global Sector Manager whiles working for CBS Media-Euro Asia Industry.

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Embraer

  1. 1. T LAY OUT D RAF FLYING HIGH Brazil-based Embraer is one of the worlds leading aerospace conglomerates, with a diverse product portfolio comprising commercial, defence and executive jet aircraft. Sarah Pursey speaks to Managing Director, Mr Ricardo Pesce, about the growth of Embraers global operations, and the new aircraft that are further reinforcing the companys reputation for quality and technical innovation. Written by Marius Goubert. ‡2 EUROASIA INDUSTRY EUROASIA INDUSTRY 3
  2. 2. OUT In 1969, following the Brazilian Ministry LAY of Aeronautics’ development of a prototype T aircraft dubbed the Bandeirante EMB-110, RAF Embraer was founded as a public limited D company. Under the IPD-6504 programme, which was headed by French engineer Max Holste, the Bandeirante (Portuguese for ‘pio- neer’) was a twinturbo-prop light transporta- tion aircraft combining extreme reliability with minimal operating costs. “The govern- ment realised that the product was so good,” Mr Pesce tells us, “that they decided to establish a company specifically tasked with producing the aircraft in large quantities and so Embraer came into being.” Embraer spreads its wings Initially tasked with producing 80 models of the Bandeirante EMB-110 for the Brazilian air force, Embraer sought to further expand its product range and undertook work to independently develop a new model air- craft which become known as the EMB- 120 Brasilia. Similar to the Bandeirante, the Brasilia was a twinturbo-prop airliner and entered into commercial production in 1985. “This was a pressurised airplane capable of transporting 30 passengers compared with the Bandeirante’s capacity of 90,” continues Mr Pesce. “Both of these airplanes became crucial factors behind the development of Embraer, and were launched onto the market at exactly the right time to capi- talise upon the 1978 deregulation of the USA’s aviation industry. Many new airliners came into being around this time and we were well placed to supply them with high quality products.” It was following this deregulation of the aviation industry that the company began to expand its operations overseas. With demand for its aircraft steadily growing within the US market – which soon came to account for the majority of Embraer’s EMB-120 sales – the company established its first overseas oper- ation in Florida in 1979. Four years later, a second overseas facility was established in France to cater to the European market. Indeed, the success of the EMB-120 would ‡4 EUROASIA INDUSTRY EUROASIA INDUSTRY 5
  3. 3. lay the foundations for Embraer’s first family of aircraft: the ERJ series, as Mr Pesce goes on to explain: “It was during our development of the ERJ series that the company was privatised. This occurred on the 4th of December 1994, and the privatisation ceremony was held at the Brazilian stock exchange in San Paolo. Three major groups became the shareholders: one investment bank and two Brazilian pension funds. Their combined investment power was more than US$100 billion, and two years after pri- vatisation, the ERJ family was launched into the global market.” Comprising a total of three models: the ERJ 135, 140 and 145, the ERJ was specif- ically designed to cater to the requirements of regional airlines. Equipped with Rolls- Royce AE3007 engines and providing pas- senger capacities that range from 37 to 50, the ERJ family became particularly popular with regional airlines operating in Europe and the US. “We have delivered 1,100 ERJs to date in three different models for com- mercialisation,” states Mr Pesce. “We have also produced on derivative for the execu- tive aviation market which is called the Legacy 600.” While the Legacy 600 repre- sented the first in a line of six executive air- craft that would come into operation over the proceeding years, Embraer unveiled its second series of commercial aircraft, the E-Jet, in 1999. The E-Jet family “To date, we have received over 900 orders for this family of aircraft and made 600 deliv- eries in 60 countries,” he informs. “The E- OUT jets are a little bit different from the ERJ LAY family, which concentrated on supplying D RAF T fewer customers with larger orders. E-Jet sales have been much more diverse in terms of their global sales. We are supplying these models across all five continents, and our market has become far broader as a result. The series ranges from 70 to 122 in terms of passenger capacity, and comes in four dif- ferent models: the E170, E175, E190, E195. It was developed with input from the airlines and passengers, which enabled us to opti- mise the design to cater to the require- ‡6 EUROASIA INDUSTRY EUROASIA INDUSTRY 7
  4. 4. FT LAYO U T DR A ments of our clients and their customer base. Indeed, this became a key reason behind the commercial success of the E- Jet range. They were developed based on the requirements of the market, and have a very good range as they can fly up to 2500 nautical miles, which is ideal for regional operations.” In view of the success of the ERJ and E- Jet series, Embraer not only managed to lay secure foundations for further international expansion, but continued to diversify its product portfolio. “In 2000 we opened two offices in Asia, one in Beijing and one in Singapore, which focused on sales, mar- keting and customer support. We are able to supply our clients with spare parts and pro- vide training services as we operate simula- tors in both Singapore and in China. In terms of our product range, we launched the KC930 in 2009, which has a 19 ton cargo capacity and utilises a twin turbofan. We have received orders for 20 units of this plane from the Brazilian air force, and are discussing the possibility of entering into partnerships with several other countries who are very interested in this programme – such as Argentina, Africa and Colombia. Indeed we are anticipating that the KC930 will become a very big success in the future.” While Embraer’s range of defence aircraft also comprises the Legacy 800 and three derivatives of the EMB-120 series (which are predominately used for surveillance pur- poses), Mr Pesce cites the company’s defence model, the Super Tucano, as another particularly successfully model in its expanding military portfolio. “The Super Tucano is an advanced turboprop trainer air- craft and named after the Toucan bird found in the Amazon. We have recently secured a contract to supply this aircraft to the Indonesian government and, with regard to all the customers who purchase our air- craft, we are also able to offer a comprehen- sive range of after sales services. These include inviting them to invest in their own inventory of spare parts which we store and then supply on request. Indeed, in terms of the development of our client base, we are now supplying two major oper- ‡8 EUROASIA INDUSTRY EUROASIA INDUSTRY 9
  5. 5. T LAY OUT D RAF ators in Brazil – including Jet blue, a new regional airline, whose flight is exclusively comprised of E190 and E195 aircraft. American Eagle, Continental, Republic and British Airways represent further operators who have acquired aircraft from our E-Jet range.” Committed to quality In terms of its production facilities, the com- pany operates three separate manufacturing units located in Brazil – two of which spe- cialise in the production of military aircraft while the other focuses on the final assembly of its commercial and executive airliners. “In terms of commercial aviation, the E-Jet family is in full production and, while the final assembly is done at our headquarters in Brazil, parts of the aircraft are produced abroad in countries such as Korea,” informs Mr Pesce. “They are then shipped to France and then onto Brazil for final assembly. However, as we converted our ERJ145 production line to manufacture the Legacy 600, we are now producing the ERJ145 in China through a joint venture with AVIC (Aviation Industry Corporation of China). Along with military and commercial aircraft, we also manufacture the Ipanema crop dusting aircraft and are very proud of the fact that this plane enabled us to be the first company in the world to success- fully use ethanol: a biofuel produced from sugar cane.” Indeed, its ability to innovate and incor- porate pioneering technologies into its aircraft design has become a defining characteristic of Embraer, and an attribute that, according to Mr Pesce, was substan- tially enhanced following the company’s 1994 privatisation. “The merger between the technological base (which had been developed when we were a state company) and the entrepreneurial aspect that came when we were privatised was a prefect marriage,” he informs “Furthermore, one of Embraer’s major strength has always been the technical proficiency of its personnel. The government’s decision to found Brazil’s Aeronautic Engineering School in 1950 meant that we were fortunate enough to ‡10 EUROASIA INDUSTRY EUROASIA INDUSTRY 11
  6. 6. FT LAYO U T DR A gain access to a local source of high-quality aeronautical engineers. Indeed, many of the company’s senior management – myself included – are graduates of this institution. On the environmental side, we were the first aerospace company in the world to be awarded the ISO 14001, and one of very few companies to be listed on the Dow Jones sustainability index. Currently we are doing a project along- side Azul Airlines to test jatropha biofuel, and overall, we dedicate a very large chunk of our budget to research and develop- ment activates. The financial cost is high as aviation is a very cash and labour inten- sive business, but it is imperative that we continue to innovate and develop new products. “However, one major problem is the fact that we are facing a shortage of skilled per- sonnel,” he continues. “The numbers of engi- neers who are graduating are insufficient to meet market demand, so we are trying to source skilled workers from other parts of the world in order to support our R&D activities. Currently we have around 300 engineers fully dedicated to R&D in Brazil while our total workforce now comprises 17,000 employees worldwide. Our future ambitions are diverse however. We are launching two more executive jets, the Legacy 450 and 500, which will be released around 2014. They are very advanced execu- tive jets and utilise ‘fly by wire’ technology which decreases the workload of the flight crew. We are also finalising a new factory in Melbourne, Florida, to produce two models of the Phenom: the 107 and the 300. In 2012, we will also begin producing aircraft composites in Alverca, Portugal, where we are in the process of establishing two plants that will manufacture restructuring and composite materials.” Underpinning all of Embraer’s global expansions so far has been the company’s ability to adapt to the demands of highly competitive marketplace. Now, as it seeks to strengthen its worldwide presence, this pioneering spirit looks set to continue building strength as Embraer forges a clear path ahead. o12 EUROASIA INDUSTRY EUROASIA INDUSTRY 13

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