Melbourne, Florida is a small town accustomed to witnessing big events. Its airport is the gateway to the Space Coast. Its runway is where visitors touch down on their way to NASA’s Kennedy Space Center on Cape Canaveral. When the space shuttle Atlantis took off this July over one million people gathered on the ground to watch.
But this was the space shuttle’s final journey. Many of the same technicians who helped prepare the rocket for launch were also getting ready to enter the job market for the first time in years.
Enter stage south the Brazilian aerospace company Embraer.
Embraer’s first offshore plant
The groundbreaking ceremony this February may not have been accompanied by network TV crews and commentators, but when Embraer opened a $50 million manufacturing facility in Melbourne, Florida it was a Big Deal. And not just for the people of Space Coast.
Embraer is an exemplar of what the BRIC – Brazil/Russia/India/China - economies aspire to. It’s a former state company – founded by airforce generals in the days when Brazil was a military dictatorship – which has gone private and become the world’s third largest aircraft manufacturer (after the US’s Boeing and the European Union’s Airbus) and the world’s leading producer of regional commercial jets (as passengers of American, JetBlue or United know well).
With its Florida plant, however, Embraer is staking its claim to a market that is dominated by American manufacturers: the business jet. And they are going to be using American labor to do so.
The state of Florida worked hard to get Embraer to set up shop in Melbourne. Florida Today credits former Governor Charlie Crist and his visit in 2007 to Embraer’s Sao Paolo headquarters.
He pitched his state as having “the land, the weather and the workforce the company would need”.
A reported $11 million worth of state, county and local tax incentives didn’t hurt either.
Embraer, for its part, wanted to be closer to one of its main markets for business jets. This is its first off shore plant.
As the company’s CEO, Frederico Fleury Curado, told Aviation Week, he estimates that “the cost of assembling in Florida will be on par with building them in Brazil — and possibly lower.”
To date Embraer has 64 employees in Melbourne of whom 18 used to work at NASA. Another 136 will be hired by the end of 2012.
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The seasoned former NASA engineers working the line are, not surprisingly, happy to have jobs. What is less expected perhaps is their admiration for Embraer’s technology and the commitment to precision.
Daniel Jingle, a quality engineer who worked on the space shuttle program for 31 years, says that his job transition was “very smooth and effortless because Embraer is run the same way NASA is with controls and procedures for everything.”
This is the kind of language once reserved for ‘los Americanos’, the American companies who in the last century came to Latin American and transformed the oil, fruit, meat and mining industries across the continent. Of course it’s also a nice perk to have training courses in Brazil.
Former NASA engineers talk about working at Embraer
The new kid on the block
When Embraer launched its Executive Jets division in the mid 1990s, however, it was going against the grain. Big plane companies didn’t build little ones. Ernest Edwards who is the division president recalled reactions at the time in a recent interview with Aviation Week. “Embraer, who are they?…Brazil, what do they know about building corporate jets?”
The timing didn’t help either.
“When they started, all the US manufacturers for corporate planes like Cessna and Beechcraft had two years of backlog. But about the time when Embraer was close to delivery of their first plane the economy fell down,” explains Allen Howell, CEO of Corporate Flight Management, a Tennessee-based company that operates and sells executive jets.
Being the new kid on the block, however, meant that they could start with what engineers call “clean sheet design” and think out of the box. Embraer also had the inbuilt advantage of its own “big plane” heritage. “They took the knowledge of making durable, rugged airplanes,” explains Howell, “that were in service to fly 200 to 300 hours a month and have applied that industrial development to an executive jet that may fly a fifth of that.”
A silver lining in the recession
It may be that the recession ended up playing to Embraer’s trump card: value for money. Think about it in automobile terms. When money is tight customers who usually buy a BMW or a Mercedes may well go for a Lexus. The “entry level’ Embraer appeals to the cost conscious.
“Our basic position,” says Texas based aircraft dealer W Barry Smith of Business Air International, “is that if you are looking for the value proposition of what you get for the money, Embraer may be the best buy out there in terms of the size of the airplane you get and the performance you get.”
The upshot? Embraer is now a close third to Cessna and Beechcraft in the American market. And its Phenom 100 was the most delivered jet in the executive market in 2010.
The first American- made Phenom 100 is due to be delivered to the client in December this year. As Ernest Edwards puts it: “They’re wondering how this all happened. It all happened in the open.”