China, the People’s Republic of China, its 1.3 billion people and the fastest growing economy in the world announced its entry into the high stakes, high reward market of commercial airline manufacturing. The Commercial Aircraft Corp. of China rolled out its initial entry—a twin-engine C919 with a 168 passenger capacity. Its competitors will be the Airbus Industrie A320 and the Boeing Co. B-737, both of those planes have well established safety records, extensive support networks and major advantages in terms of customer bases.
While it may be galling, COMAC, the Chinese OEM’s trade name, would be well advised to learn from the experience of Embraer, SA, a Brazilian OEM, located in São José dos Campos. That company had some initial ill-advised steps, but has carefully grown to be the #3 airframe manufacturer in the world.
Its products are well regarded by their airline customers and the passengers who occupy the seats. Maintenance, technical, parts and engineering supports are critical for long term success and Embraer has established a reliable network to assist the purchasers of their aircraft. The certification authorities around the world have found that their data and designs can be relied upon. The manufacturing facilities in São José dos Campos and Melbourne, FL are considered state-of-the-art with a high level of QC performance. In 2013, Embraer reported US$ 329.1 million in net income.
What did Embraer do right?
- It is located near and has close technical ties with FATEC-SP. That educational institution was founded by the State of São José to provide technologists for businesses. The school’s alumni are among Embraer’s engineering, technology, manufacturing and general management base. FATEC also is a research university and its academic pursuits have been of value to its neighbor.
Aerospace manufacturing is a dynamic endeavor. Innovation, properly introduced, creates the “products” which win over customers.
- Recognized competence is a required prerequisite to acceptance of the home country’s certificate of airworthiness. It is tempting for a new entrant OEM, particularly a state-owned company, to accept a lower threshold of airworthiness proof by the regulator. Early in its history the Brazilian CAA, Department of Civil Aviation and the Civil Aviation Certification Division reported to the executive branch and might have been considered suspect in its judgment due to the appearance of that relationship.
Embraer took the unusual step of asking its government/owner to require that its certification standards, processes and regulators met international standards. The FAA had some influence over requiring a more exacting certification and the result was the creation of National Civil Aviation Agency (Agência Nacional de Aviação Civil). ANAC has so enhanced its technical competence that it is now the proud holder of a Bilateral Airworthiness Safety agreement. That is the governmental credential which convinces airlines around the world that your products are of high quality and safe.
- Embraer was created by the government of Brazil in 1969. Its primary purpose was to provide jobs and its management succeeded in hiring a bloated work force. The burden of these employees made its products hard to sell, even though they were well designed aircraft. Ozires Silva was brought in to privatize the company. His goal was to create good airplanes at fair prices, not to be a full employment agency. He reduced staff and made great airplanes. As the marketplace responded well to the EMB-120 and the first regional jets, Embraer had to hire staff to meet the demands. The marketplace needs to guide the company, not state goals. If the aircraft meet the airlines needs and are efficiently manufactured, the employment will increase.
- Aircraft are known to have problems. OEM support—technical, parts and AMOCs—assures that the airline/customers met their schedule obligations. Embraer provisioned a number of service centers around the globe so that needed parts could be delivered on a timely basis. The company also commissioned a network of repair stations so that airlines could send their equipment for maintenance. Selling planes is not the end of the Embraer business; keeping its products flying is its real business mission.
- Not as safety related, but perhaps one of the most important reasons why Embraer succeeded was its understanding of the needs of airline customers. It recognized that Boeing and Airbus were serving the major carriers well, but saw that the aircraft which the regional airlines were using were basically upgrades of GA equipment. Embraer designed and offered turbo props which were more passenger friendly and initiated the first regional jets. That gradual development of its product line established a strong financial base.
COMAC has grand aspirations to become a global player in the airframe manufacturing business. Clearly a nation of its size, strength and resources is likely to succeed, but a culture which historically prided itself on wisdom should be willing to learn from other sources–读书须用意，一字值千金[i]
[i] When reading, don’t let a single word escape your attention; one word may be worth a thousand pieces of gold. This proverb stresses the fact that study requires undivided attention. No single word should be passed over before we fully understand it. Only in this way can study be rewarded.