March 8, 2013
Reporter- Jacksonville Business Journal
Brazilian plane maker Embraer stuck with plans to assemble military aircraft at Jacksonville International Airport for more than a year. In doing so, the company outlasted one lawsuit between a competitor and the government, two U.S. Department of Defense application processes and three expired options to lease a JIA hangar.
The Department of Defense on Feb. 27 awarded, for a second time, a $427 million contract to Embraer and Sierra Nevada Corp. of Sparks, Nev., its general contractor, to supply 20 Super Tucano light air support planes. The aircraft will help the U.S. to withdraw from Afghanistan by providing the Afghan army with the weapons and technology it needs to fight Taliban insurgents.
Who is Embraer and why was the company so determined to build planes in Jacksonville? According to one company executive, local business advantages drove its decision-making.
Embraer is the world’s third largest commercial aircraft manufacturer, according to the company’s website. The multinational firm produces three product lines: commercial aircraft up to 120 seats, private executive jets, and defense and security aircraft. Commercial airlines American Airlines and US Airways are among its customers. Anyone who has flown regularly on corporate jets six seats and larger has likely been on a plane built by Embraer.
The company wants to grow its defense and security division — projected at 19 percent of revenue this year, up from 13 percent last year. The Super Tucano award gives the company its first toehold in the prestigious U.S. defense industry.
Embraer has operated in the U.S. for 30 years of its 40-year history, and employs more than 1,200 in this country. Its U.S. headquarters is in Fort Lauderdale and Embraer has recently expanded in Florida.
In 2011 the company moved the headquarters of its executive jets division to Florida from Brazil and opened its first U.S. aircraft assembly facility and a global customer center for executive jets in Melbourne. The company plans to open an engineering and technology center in Melbourne as well.
Bob Stangarone, Embraer vice president of corporate communications for North America, said a U.S. presence has long been important to the company.
“Half the market for executive jets is in North America,” he said. “It brings our business closer to our customers and gives us a cleaner supply-chain.”
The company in 1979 picked Fort Lauderdale as its U.S. base because of Florida’s business-friendly environment and because it was easy to attract employees to the state’s beaches, sunny weather and high quality of life, Stangarone said.
NASA layoffs created another opportunity. Embraer responded by opening operations in Melbourne.
“We’ve hired quite a few people who were laid off,” Stangarone said. “The skill set needed to build aircraft is similar to that needed for aerospace.”
Labor considerations similarly brought Embraer to Jacksonville.
“The city has a great labor pool, not only for its aviation and tech workers, but also for its defense talent,” Stangarone said.
Also important, Embraer wanted a location near a port, so major assembly components such as tail sections and wings could be brought in.
Though Jacksonville has long been known as a place for aircraft maintenance and refurbishment, Embraer’s will be the first new aircraft assembly plant in Jacksonville, according to Michael Stewart, director of external affairs for the Jacksonville Aviation Authority.
That sends a message to other companies that Jacksonville might be a good place to build planes, JAA CEO and Executive Director Steve Grossman said. It was an advantage the city could offer to lease Embraer a hangar formerly used by Piedmont.
“The Air Force needed the planes delivered on a relatively short time schedule,” Grossman said. “Embraer didn’t have time to build a building.”
Embraer’s initial contract for 20 planes will create at least 50 jobs, Stangarone said. And there’s the possibility of future orders up to a maximum contract value of $950 million.
Grossman said just getting Embraer through the door has been a big win for the city.
“If you watch Embraer, wherever they go, they grow,” Grossman said. “And we hope their numbers here will grow. We hope they bring different business lines to Jacksonville.”