AEROSPACE INDUSTRY
Hail to the Chief
The stakes, especially for large government-driven projects, are mammoth. Underlying their direct financial impact are political consequences as well. And given their headline-grabbing nature, pride and prestige get added to the stew. Take the current contest between Sikorsky Aircraft and Lockheed Martin over who will supply the U.S. government with the next-generation of Marine One, the helicopters that shuttle the president. At stake is more than bragging rights between the two: An order for 23 of the helicopters will run as high as $2 billion. And the victor will have its foot in the door when the Air Force seeks a builder for 150 search-and-rescue helicopters. Both firms are pulling out all stops in pressing their case to Congress and the Pentagon.
Maryland-based Lockheed Martin's August 2004 receipt of an $879-million contract from the U.S. Army also highlights how industry activity now plays out on the ground. Lockheed, the Defense Department's largest contractor, will develop and test a new airborne battlefield surveillance, reconnaissance and targeting system as part of a 20-year, $7-billion modernization program. But it was Brazilian jet maker Embraer, on whose ERJ-145 aircraft the new technology will be installed, that soon broke ground on a 71,000-sq.-ft. (6,596-sq.-m.) assembly plant at Cecil Commerce Center, a shuttered Naval Air Station-turned-industrial park in Jacksonville, Fla. The Jacksonville Airport Authority will construct and own the $6.5-million building, which is expected to be the scene of 200 high-skilled jobs after it opens in October 2005. Embraer will build major sections of the ERJ-145, including the wings, in Brazil and Chile, shipping them to the Florida site for final assembly. The company also has operations in Palm Beach Gardens and in Miami.
Lockheed's reliance on a foreign partner did not appear to hinder its chances for the contract. Losing out on the bid, in fact, was Northrop Grumman Corp., who partnered with Virginia-based General Dynamics Corp.'s Gulfstream on its proposal. For 35-year-old Embraer, whose U.S. operations are based in Ft. Lauderdale, the project is a first-ever Pentagon contract. But its activity in regional jets for civilian use is just as healthy.
"Regional jets will soon be 50 percent of the total traffic," Mauricio Novis Botelho, president and CEO of Embraer, told the Business of the Americas conference in Atlanta in June 2004. "This is a huge change." He said the 70- to 100-seat size was a "gap in the market" caused in part by "artificial market restriction, imposed by the so-called 'spoke clause' between pilots of the major airlines and their owners." But the purchase of 100 of Embraer's 100-seaters by growing airline JetBlue showed where the market is headed ... toward what Botelho likes to call "small-big jets." Meanwhile, on other fronts, Botelho's company and his native Brazil try to make inroads on what he sees as unfair trade practices vis-à-vis developing and already developed nations.
In a post-speech interview with Site Selection, Botelho said his company's site selection process "has several different aspects, and depends on the sort of facility you're looking for. When we were choosing our maintenance, repair and overhaul facility site, we were looking for a facility in an area that would be somewhat like the center of gravity for the operation of the fleet in the U.S. Then we addressed our attention to Tennessee, and finally we were there in Nashville. For manufacturing aircraft, it doesn't make much difference. It is necessary to have a harbor to receive parts, and an airport ... and you must have a runway, because we do not send our goods FOB!"
Three years ago, the company constructed its fifth Brazilian facility.
"The criteria had to do with air traffic," he said of the latest complex. "[We needed] an area where we wanted to transfer all our testing flights. For us, it was important to be outside any interference with commercial or military traffic. And because we were going to build our own 3.5-mile [5.6-km.], 300-ft.-wide [91-m.] runway, we were looking for the sort of terrain that would reduce the earth moving. But the other parameters were still in place: educational systems, availability of manpower and physical conditions to accommodate qualified people. At the very end, we chose the area, still in the state of Sao Paulo, where the other four factories are. And it is 200 miles [322 km.] from the main facility."
And for Brazil and other aerospace investment recipients, such repeat investment does not go unnoticed.
"Our contribution to the tax base," said Botelho, "is very relevant."
Maryland-based Lockheed Martin's August 2004 receipt of an $879-million contract from the U.S. Army also highlights how industry activity now plays out on the ground. Lockheed, the Defense Department's largest contractor, will develop and test a new airborne battlefield surveillance, reconnaissance and targeting system as part of a 20-year, $7-billion modernization program. But it was Brazilian jet maker Embraer, on whose ERJ-145 aircraft the new technology will be installed, that soon broke ground on a 71,000-sq.-ft. (6,596-sq.-m.) assembly plant at Cecil Commerce Center, a shuttered Naval Air Station-turned-industrial park in Jacksonville, Fla. The Jacksonville Airport Authority will construct and own the $6.5-million building, which is expected to be the scene of 200 high-skilled jobs after it opens in October 2005. Embraer will build major sections of the ERJ-145, including the wings, in Brazil and Chile, shipping them to the Florida site for final assembly. The company also has operations in Palm Beach Gardens and in Miami.
Lockheed's reliance on a foreign partner did not appear to hinder its chances for the contract. Losing out on the bid, in fact, was Northrop Grumman Corp., who partnered with Virginia-based General Dynamics Corp.'s Gulfstream on its proposal. For 35-year-old Embraer, whose U.S. operations are based in Ft. Lauderdale, the project is a first-ever Pentagon contract. But its activity in regional jets for civilian use is just as healthy.
"Regional jets will soon be 50 percent of the total traffic," Mauricio Novis Botelho, president and CEO of Embraer, told the Business of the Americas conference in Atlanta in June 2004. "This is a huge change." He said the 70- to 100-seat size was a "gap in the market" caused in part by "artificial market restriction, imposed by the so-called 'spoke clause' between pilots of the major airlines and their owners." But the purchase of 100 of Embraer's 100-seaters by growing airline JetBlue showed where the market is headed ... toward what Botelho likes to call "small-big jets." Meanwhile, on other fronts, Botelho's company and his native Brazil try to make inroads on what he sees as unfair trade practices vis-à-vis developing and already developed nations.
In a post-speech interview with Site Selection, Botelho said his company's site selection process "has several different aspects, and depends on the sort of facility you're looking for. When we were choosing our maintenance, repair and overhaul facility site, we were looking for a facility in an area that would be somewhat like the center of gravity for the operation of the fleet in the U.S. Then we addressed our attention to Tennessee, and finally we were there in Nashville. For manufacturing aircraft, it doesn't make much difference. It is necessary to have a harbor to receive parts, and an airport ... and you must have a runway, because we do not send our goods FOB!"
Three years ago, the company constructed its fifth Brazilian facility.
"The criteria had to do with air traffic," he said of the latest complex. "[We needed] an area where we wanted to transfer all our testing flights. For us, it was important to be outside any interference with commercial or military traffic. And because we were going to build our own 3.5-mile [5.6-km.], 300-ft.-wide [91-m.] runway, we were looking for the sort of terrain that would reduce the earth moving. But the other parameters were still in place: educational systems, availability of manpower and physical conditions to accommodate qualified people. At the very end, we chose the area, still in the state of Sao Paulo, where the other four factories are. And it is 200 miles [322 km.] from the main facility."
And for Brazil and other aerospace investment recipients, such repeat investment does not go unnoticed.
"Our contribution to the tax base," said Botelho, "is very relevant."
