Boeing Looks Beyond F-X2 in Commitment to Brazilian Market

Judging the depth of Boeing's developing interest in Brazil has been difficult to gauge. There has been much talk by executives at the highest levels of the company, yet few actions so far that seem strong enough to survive, for example, an unfavourable decision for the F/A-18E/F Super Hornet in Brazil's ever-ongoing F-X2 fighter competition.

But Boeing's message for the Brazilian market is as consistent as it is clear: the company is in Brazil for the long-term, even if the Super Hornet loses the F-X2 competition. Nowhere was that message reinforced more than at the Latin American Aerospace and Defense (LAAD) exhibition in early April.

"We've gotten that question since the 15 months that I've been here: 'Isn't this really about F-X?'," says Donna Hrinak, president of Boeing Brazil. "We tried to send the message [during a 9 April press conference] that we're here for the long-haul."

Indeed, Boeing announced at the press conference that Brazil will host the company's sixth foreign research and technology centre, following similar facilities opened in Australia, China, Europe, India and Russia.

Such a facility has many purposes, ranging from developing new intellectual property that can be licensed or sold elsewhere, to supporting a new wave of Brazilian suppliers with keys to Boeing's unique manufacturing methods.

But it is still a small commitment by Boeing's standards. The centre in São José dos Campos will open by 2014 with a group of 10 to 12 researchers, adding to the seven Boeing workers already based in Brazil. In the press conference, Boeing officials said more researchers could be added later if the centre is "wildly successful", but other Boeing officials were more optimistic.

"Who's to say that in 10 years we don't have 5, 6 [or] 700 engineers here," says Jeff Kohler, a Boeing vice-president of international business development.

Kohler describes Brazil's appeal to Boeing as far beyond the potential contract to supply at least 36 fighters to the air force. It is instead rooted in the nation's status as one of the BRIC countries, and one of only two - including India - where Boeing is allowed by the US government to sell both military and commercial products on a relatively unrestricted basis.

"Brazil is a political leader, an economic leader, whether it's research and development... this seems like the right place to be for the company," Kohler says. "I think if you take that 15- to 20-year look, getting on the ground early - which sometimes the Boeing company doesn't do - I think this time we made the decision to get in there and let's do it right this time. Let's become a long-term partner."

Boeing's ambition in Brazil has been embraced by Embraer, Brazil's largest and most significant aerospace company by a large margin. Hrinak, a former US ambassador in Brasilia, remembers setting up a meeting at the US embassy in 2003 between Embraer and a Boeing team working on a management benchmarking study.

"This has been a relationship a long time in the making," Hrinak says.

The close ties extend to the very highest levels of both companies, including regular meetings between Boeing chief executive Jim McNerney and Embraer CEO Frederico Curado.

With Embraer officially neutral in the F-X2 competition, the relationship has been slow to develop profits for either company.

In the commercial sphere Boeing and Embraer have signed agreements to jointly study biofuels and runway safety improvements, and on the defence side the Brazilian firm recently selected Boeing to integrate weapons on the A-29 Super Tucano - if the US Air Force Light Air Support contract survives a protest by Beechcraft.

But more tangible results of the partnership are still likely to come to fruition. Boeing is finishing a marketing study on the KC-390, but has set its sights on taking the lead for the airlifter's global logistics system. Embraer has not yet revealed its plans for how it will sustain a potentially global fleet.

A still unclear aspect of the relationship is possible co-operation in the commercial aircraft market. Thus far, Embraer has avoided encroaching on Boeing's narrowbody market segments.

"You'll see more updates down the road," Kohler says.

[via]