While Embraer has been an enormous success story for the Brazilian economy, the rest of its aerospace industry has lagged behind. Compared with the aerospace sectors in Canada or many European countries, Brazil lacks a supply chain of sizeable small and medium-size enterprises. Embraer has tended to use local firms only for simple, build-to-print manufacturing, turning to international risk-sharing partners when it comes to major sub-systems development.
Although the growth of Embraer also Eurocopter subsidiary Helibras has prompted a number of global suppliers to set up shop in the country, including General Electric, Turbomeca and Latecoere, there have been few home-grown start-ups. This is partly down to Embraer's heritage as a government-sponsored, vertically-integrated enterprise, and partly the company's need to take several technological leaps over the years. Rather than nurturing local suppliers, Embraer required experienced and well-capitalised suppliers to embark on ambitious programmes such as its E-Jets and business aircraft.
"Although Embraer helped benchmark the risk-sharing approach - with global companies providing complete systems - it has meant that the local supply chain is very weak," says Walter Bartels, the director of Brazilian aerospace association AIAB. "Outside a few companies, aerospace is not a very big activity in the economy."
This could be about to change, however, thanks to an initiative by Embraer and the Brazilian air force to find local suppliers for the KC-390 military transport and tanker being developed for the air force. Around 80 companies attended a workshop last year in Embraer's home town of Sao Jose dos Campos. The government wants the "nationalisation index" of the aircraft to be 80% of its value - if the engines are excluded.
Although overseas suppliers currently dominate the list of major systems suppliers to the KC-390, two Brazilian companies have been selected. AEL Systemas, a subsidiary of Israeli defence firm Elbit, is responsible for, among other items, the self-protection system and head-up display, while Embraer-owned Eleb will provide the landing gears. Some of their subcontract work may in turn feed down to smaller suppliers.
One of the most successful start-ups in the Brazilian aerospace sector has been Akaer, a Sao Jose dos Campos-based engineering design company founded in 1992. Although most of its work has been for Embraer, on programmes including the Legacy 450 and 500 business jets, the firm has also been involved with Brazil's space activities and won contracts from Airbus and Boeing suppliers on the A380, A400M and 747-8. It is part of a Brazilian consortium working on Saab's Gripen NG fighter.
Brazilian aerospace employment numbers, which stood at 22,600 in 2010, according to AIAB, are growing again as Embraer's new programmes come on stream. As in other countries, the total dipped following a peak of 27,100 in 2008, but still indicates a substantial growth over the decade, from 15,000 in 2001. Aerospace turnover shows an even more marked upswing, according to the AIAB, from $2.5 billion in 2003 to just under $7.6 billion in 2008, dipping to $6.7 billion in 2010.
Brazil's aerospace SMEs will be hoping to push that figure up considerably in the decade to come.