Country profile - Brazil

Embraer leads the way on an aerial route to economic expansion

Brazil has emerged from the economic problems of recent years stronger and better able to face the challenges of providing for its domestic market while serving its growing global customer base.

For such a naturally rich country, Brazil has had more than its share of problems, from colonialism and rule by the military to near-anarchy. The election in 2003 of its first left-wing president for more than 40 years holds promise for a population that has endured oscillations brought on, ironically, by efforts aimed at stabilisation.

As an indicator of its present buoyancy, foreign direct investment (FDI) has been on the rise in recent years, gradually expanding throughout the 1990s to a record $32 billion in 2000, ranking Brazil fourth in terms of FDI and second highest among developing countries to China.

An important part of this FDI went into the massive privatisation programme implemented by the government which ended many long-time state monopolies and moved important sectors into private hands. Aerospace was among these, notably the government-controlled airports that became subject to long-term operating contracts.

Brazil considers aviation and aerospace a vital sector. Due to its vast size, air transport is a critical link, especially between the sparsely inhabited areas and major economic centres. Of 3,200 airports, only 500 have paved runways.

A gradual liberalisation has prompted growth in the sector as domestic air travel becomes less expensive. In turn, this has led to an increase in employment opportunities. Consultants point to demand in engineering, driven by the need for improved product design in areas such as aircraft production.

The Aerospace Industries Association of Brazil (AIAB) has forecast that employment in Brazil's aerospace industry could grow to 24,000 by 2005, from the current 15,000. Over the same period, says the AIAB, the industry's revenues of about $3.1 billion a year could more than double.

AIAB president Walter Bartels says the competitiveness of the Brazilian aerospace sector and its broad application of high technology has earned it customers around the world and recognition from the Organisation for Economic Co-operation and Development.

However, while there are about 500 companies in the Brazilian aviation industry, many of them joint ventures with global brands, statistics indicate that foreign companies supply as much as 95% of the market.

Embraer, Brazil's largest aircraft manufacturer, is a major buyer of equipment and parts for its own production line. Embraer attributes its success to a careful focus on specific market segments with high growth potential. It has a workforce of 13,000 and indirectly contributes to more than 3,000 other jobs.

Its subsidiaries include Neiva, which manufactures the EMB-120 Brasilia, in addition to light jets and components and subsets for the ERJ-145 family. It is also a partner in ELEB - Embraer Liebherr Equipamentos do Brasil - established in 1999 as a joint venture between Embraer and Swiss-based Liebherr International to continue the engineering and manufacturing business of EDE, a division of Embraer since 1984.

Brazil's domestic space programme, active since the early 1970s, centres on gravity research, meteorology, telecommunications and environmental research. The country's launch site at Alcantara is considered near-ideal because it is virtually on the equator, which enables the launch of heavier payloads with less fuel.

Source: Flight International