Brazilian manufacturer plants roots in Florida

 - June 4, 2008, 5:35 AM

Embraer became the second non-U.S. aircraft manufacturer to announce that it will build a business jet final assembly plant in the U.S. when it revealed plans to finish Phenom 100 and 300 construction at a new facility at Melbourne International Airport on Florida’s space coast. Honda–whose Honda Aircraft subsidiary is a new entrant to the aircraft manufacturing arena– was the first to make the move to the U.S. Honda’s plans mirror foreign auto manufacturers’ tendency to build plants in their major markets, and it appears that aerospace manufacturers are gravitating toward the same opportunities.

Embraer plans to ship Phenom components built at its factories in Brazil for final assembly in Melbourne, but the company will continue to build Phenoms at the Gavião Peixoto plant in Brazil, too. Engines and other vendor and supplier components will be shipped directly to the Melbourne plant if it is more efficient to do so than shipping to Brazil. Completions will be done at both facilities, as well. Buyers will eventually be able to choose whether to take delivery in Brazil, which involves a 1,200-nm flight back to the U.S., or from the new Melbourne plant. The Melbourne facility will include a customer design center where buyers can preview the two models, choose interior furnishings and paint schemes and take delivery.

Embraer’s move is driven by the need to be closer to customers, said Frederico Curado, president and CEO. Embraer has had a corporate presence in the U.S. for nearly 30 years and its U.S. headquarters are in Fort Lauderdale, Fla. “It was a fundamental strategy to get [customers’] loyalty and business,” he said. “This is the most important market to us. To understand the customer, you have to live with them, read their newspapers and understand their jokes.”

Embraer plans to invest $50 million at Melbourne, which will feature a 150,000-sq-ft facility that will open in 2010 and employ more than 200 people by 2011. The Melbourne plant should be able to produce eight Phenoms per month by 2012. Combined capacity of the Brazilian and U.S. factories will be 22 Phenoms per month. “The production rate and mix depends on how we interact with customers,” said Curado.

He added that soon after Embraer announced the news, customers began calling to see if they could reschedule their delivery to take place at Melbourne. There will be a price differential between Phenom 100s and 300s delivered in Brazil or the U.S., he explained, but this will reflect the expense of ferrying a Phenom to the U.S. from Brazil.

Embraer has been working on the plan to build a U.S. facility for more than a year and performed a rigorous multi-state, multi-city site-selection process, according to Embraer Aircraft Holding president Gary Spulak. He would not reveal what other locations were in contention. “Melbourne matches well,” he said, “both as an industrial and customer site.” Embraer will break ground at Melbourne by year-end.

The Phenom 100 and 300 order backlog covers 750 jets. “Our mission by 2015 is to be a major player in the executive jet market,” said Curado. “It we’re too shy in terms of our investment, that might hinder our ability to grow.”