NEW HEIGHTS; THE ASCENT OF BRAZIL'S PLANE MAKER EMBRAER IS GOOD FOR SOUTH FLORIDA.

Brazilian manufacturer Embraer, the world's third-largest commercial jet maker after Airbus and Boeing, garners accolades in aviation circles and inspires pride among Brazilians. After morphing in a decade from a money-losing government venture to...


The story of how Embraer reached such heights begins with World War II, when Brazil's air force recognized the role of air power and planes for victory. The military regime started a research institute in aeronautics, then formed a university specialized in aviation, and by 1969 recruited many of the top graduates to start manufacturing at state-owned Embraer.

The company got accolades for engineering and producing small propeller planes that flew with low noise levels, at higher altitudes and faster speeds. But the venture was a financial mess.

By the early 1990s, as demand for turboprops slipped and Brazil shifted to civilian rule, the government stopped pumping money into the company. A Brazilian investment group bought the business in 1994, with $300 million in losses and $400 million in debt.

Private owners turned the company around by adding new managers, cash and financial controls. Their breakthrough came by making designs for smaller jets cheaper, lighter and less expensive to operate as airlines sought new options for short routes, analysts said.

"It was an unusual combination of intelligence and luck. Usually, you hit one and not the other," said Richard Aboulafia, a vice president at consultancy Teal Group of Washington, D.C.

Today, a tour of Embraer's factory in Brazil reveals a world-class operation. Amid the sounds of metal sheets rumbling and hammers clanging, uniformed employees use protective gear: earplugs, eyeglasses and for those working in odd positions, kneepads and ergonomic chairs. The sprawling production area is squeaky clean. And each worker must count tools at the end of each shift to make sure there are no items left out of place, executives said at the plant.

Headaches remain. With the U.S. dollar weak and Brazilian currency strong, revenues in dollars from sales overseas don't stretch as far. To keep costs down, Curado said he's making "a huge effort" in productivity: revising production processes, equipment and perfecting "lean" manufacturing techniques.

"It's a day-to-day battle. This is not a war, and it's over," the 46-year-old engineer said.

Analysts are optimistic that Embraer can prevail with its business jet line and do an encore later, perhaps in partnership with Airbus and Boeing on large jets.

"Since 1960, they're the only new entrant to succeed in the jet market - in the world," said analyst Aboulafia. "I wouldn't bet against these guys."

INFORMATIONAL BOX:

Company: Empresa Brasileira de Aeronautica or Brazilian Aeronautics Co., known as Embraer.

Business: Airplane making and marketing, mostly for export. World's third-largest commercial jet maker.

Headquarters: São José dos Campos, Brazil.

Offices overseas: United States, Portugal, France, China, Singapore.

Financials: Profits of $390 million on sales of $3.8 billion last year. Backlog topping $17 billion in October.

History: Founded by Brazil's government in 1969. Sold in 1994 to private investors. Stock traded on the New York Stock Exchange since 2000.

Employees: Nearly 24,000 , including 280 in Fort Lauderdale.

Doreen Hemlock can be reached at dhemlock@sun-sentinel.com or 305-810-5009.

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