War Profiteer of the Month: Embraer

Embraer, the Empresa Brasileira de Aeronáutica S.A., is a Brazilian aerospace conglomerate. The company produces commercial, military, and corporate aircraft, as well as providing related aerospace services. Embraer is one of the three main exporters in Brazil. Among all aircraft manufacturers, it currently has the third largest yearly delivery of commercial aircraft (behind Boeing and Airbus) and the fourth largest workforce (behind Boeing, Airbus and Bombardier). The company's headquarters, main production facilities, and engineering/design offices are in São José dos Campos, São Paulo. Embraer also has a production plant and flight testing facility in Gavião Peixoto, São Paulo state. This facility includes a 16,400 foot runway, the third-longest in the world. Embraer has maintenance and commercial sites in the USA and commercial offices in France, Singapore and China.

History

Seeking a domestic aircraft manufacturer, the Brazilian government made several investments in this area during the 1940s and '50s, but it was not until 1969 that Empresa Brasileira de Aeronáutica (Embraer) was created as a government-owned corporation.

The company's first product was a turboprop transport, the Embraer EMB 110 Bandeirante.

The Brazilian Government contributed to Embraer's early growth by providing license production contracts. The company increased its product line; it sold solely to the domestic market until 1975.

While military aircraft made up the majority of Embraer's products during the 1970s, by 1985 a regional airliner had debuted, the Embraer EMB 120 Brasilia. Aimed at the export market, this plane marked the first of Embraer's highly successful small airliners.

Born from a Brazilian government plan and having been state-run from the beginning, Embraer began a privatization process alongside many other state-controlled companies during the government of Fernando Henrique Cardoso. This privatization effort saw Embraer sold on December 7, 1994, and helped it avoid a looming bankruptcy. The company continued to win government contracts.

The Brazilian government retains interest through possession of golden shares, which allow it veto power.

As of 2008 ownership was: Bozano Group 11.10%, Previ (a Brazilian pension fund) 16.40%, Sistel 7.40%, Dassault Aviation 2.1%, EADS 2.1%, Thales 2.1%, Safran 1.1%, Government of Brazil 0.3%, the remainder being publicly traded.

In the mid-1990s the company pursued a product line more focused on small commercial planes than the military aircraft that had prior made up the majority of its manufacturing. Larger regional airliners with 70-110 seats and smaller business jets soon followed. Today the company makes for both defense and commerce.

Military transport

On 19 April, 2007, Embraer announced it was considering the production of a twin-jet military transport, the Embraer KC-390. Work actually began in May 2009 with funding from the Brazilian Air Force. Correios, the Brazilian postal service, has shown interest in buying this aircraft, in lieu of using commercial freight service for mail transport. Using many of the technologies developed for the Embraer 190, the C-390 would carry up to 23 tons of cargo, and was aimed at replacing Cold War-era cargo aircraft.

Government subsidy controversy

Brazil and Canada engaged in an international, adjudicated trade dispute over government subsidies to domestic plane-makers in the late 1990s and early 2000s. The World Trade Organization decided Brazil ran an illegal subsidy program, Proex, benefiting its national aviation industry from at least 1999-2000, and that Canada illegally subsidized its indigenous regional airliner industry, comprising Bombardier Aerospace.

Defence and Security Business

Embraer designs, develops, manufactures and supports a range of integrated solutions for the defence and security market. The Company’s products include training/light attack aircraft, aerial surveillance platforms, military transport aircraft, government transport aircraft and Command, Control, Communications, Computer, Intelligence, Surveillance and Reconnaissance systems (C4ISR systems). It offers a portfolio of customer services, ranging from maintenance and material solutions to complete Contractor Logistic Support programmes. As of 31 December, 2010, it had sold more than 1,150 defence aircraft, including government transport aircraft, to more than 25 armed forces and operators worldwide. It is also a supplier of defence aircraft to the Brazilian Air Force based on the total number of aircraft in its fleet. Its defence and security business accounted for 12.5% of its revenue during 2010.

The Company has developed three aircraft based on the ERJ 145 regional aircraft platform: the EMB 145 Airborne Early Warning and Control (AEW&C), the EMB 145 Multi Intel and the EMB 145 Maritime Patrol (MP). The EMB 145 AEW&C operates in the Brazilian, Mexican and Greek Air Forces. The EMB 145 Multi Intel, also known as the EMB 145 Remote Sensing/Airborne Ground Surveillance (RS/AGS) aircraft, is designed for the electronic and reconnaissance missions. It features sensors for image intelligence (IMINT), signal intelligence (SIGINT), and measurement and signature intelligence (MASINT), and is provides real-time imagery and signals intelligence over ground objectives. The EMB 145 MP aircraft is designed to address coastal and blue-water threats. The EMB 145 MP carries out maritime patrol by using maritime and ground surveillance radar and electro-optical sensors, as well as dedicated communications and surveillance equipment. The EMB 145 MP operates in the Mexican Air Force. It also develops and integrates C4ISR systems for defence customers that require accurate information on a real-time basis. Its C4ISR systems operate in all three of its EMB aircraft. The Super Tucano, designated as A-29 by the Brazilian Air Force, is a single-engine, multipurpose, military turboprop. It offers solutions for basic to advanced weapons training, such as in-flight virtual training.

Worldwide presence

Embraer, as already mentioned, has become one of the leading aviation manufactures, Embraer's products are found at airports all around the world. It has a particular strong presence in Latin America and has also secured some juicy deals in Africa, here some recent examples:

Burkina Faso, Angola and Mauritania

Embraer booked $180 million in orders for its Super Tucano light attack fighters for border monitoring and counter-insurgency missions in Burkina Faso, Angola and Mauritania.

Burkina Faso has already received three aircraft for border patrol missions, and the Angola Air Force has ordered six Super Tucanos.

The orders help bolster the Super Tucano programme after the United States Air Force unexpectedly canceled an order for 20 planes to support its fight against insurgents in Afghanistan.

With the orders from Africa, nine air forces have now ordered the Super Tucano in Latin America, Africa and Southeast Asia.

Embraer and AgustaWestland to join forces in Latin America

Embraer and AgustaWestland, a Finmeccanica company, announced in January 2013, that they have signed a memorandum of understanding aiming at establishing a joint-venture which could lead to the production of AgustaWestland helicopters in Brazil to be marketed for both commercial and military use in Brazil and Latin America.

“This is an important step for Embraer as we continue expanding our business”, said Frederico Fleury Curado, Embraer President and CEO. “We are certain that the combined skills and competences of Embraer and AgustaWestland will create great value for customers in the region.”

For more information:

http://www.embraer.com
http://en.wikipedia.org/wiki/Embraer