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On the wings of Embraer

FAPESP program will support projects to develop aerospace sector

FAPESP’s Senior Board has approved the implementation of PICTA, the Portuguese acronym for the program of Partnership for Innovation in Aerospace Science and Technology, to support projects developed by universities and research institutes in conjunction with companies from the aerospace sector. According to Carlos Henrique de Brito Cruz, the president of FAPESP’s Senior Board, the new program will be able to count on resources in the order of R$ 18 million a year.

The program will work along the same lines as PITE, the Program for Technological Partnership: the projects will be presented by universities or institutes, assessed by FAPESP, and, if the proposal is approved, it will undertake with the researcher to fund 50% of the research.  The other 50% will be funded by the company interested in the development of the project.

PICTA’s creation influenced, and heavily, in Embraer’s decision to set up in the State of São Paulo, in the municipality of Gavião Peixoto, a new aircraft factory and an airstrip for tests, with a total investment of R$ 340 million and the creation of 3,000 jobs. “We will  try to study projects jointly with the Mechanical Engineering and Aeronautics course at São Carlos, and with other research institutes that are useful for Embraer”, explains Satoshi Yokota, Embraer’s industrial vice-president.

Embraer’s factory and the airstrip for tests start to be built in October 2001, and the company will probably be one of PICTA’s main customers. But the expectation is that the region will come to be an aerospace center, putting together national and international suppliers of aeronautical products, processes and services. TAM, for example, has already purchased the land of the CBTA, the Brazilian Tractor Company, now extinct, where it intends to install an aircraft maintenance center. According to Yokota, Embraer is negotiating with BNDES, the National Bank for Social and Economic Development and Minc, the Ministry of Industry and Commerce, with the intention of attracting some of its suppliers to Brazil. “We are interested in having them nearby”, says Embraer’s vice-president.

Aerospace center
The state government is betting that this new development center will take shape. It is investing R$ 27 million in the purchase of 14.5 square kilometers in the city, which will be ceded to Embraer for a period of 35 years, renewable for another 35; in the basic infrastructure of the site, such as the electricity and water supply; and the treatment of effluents; and on paving the accesses by road. “We foresee a new frontier for São Paulo, both from the geographical point of view, as a technological frontier that has so far linked the Paraíba Valley, Campinas, and the state capital is now expanding to the Araraquara region, and from the strictly technological point of view, which has made it possible to reach this understanding with FAPESP for the financing of researchers who put forward projects in the aerospace area”, says the Secretary for Science, Technology and Economic Development, José Anibal.  He says that the region has a strong tradition for research, around the University of São Paulo (USP) and the Federal University of São Carlos (Ufscar), and assures that the state technical schools of the Paula Souza group, as well as the Taquaritinga Technological College, will be developing courses in Aeronautical Engineering, with a specialization in Space Engineering.

Military aircraft
Being close to the universities and the research institutes added up points in Embraer’s decision to set up a factory in the region. But another fact that counted was that Gavião Peixoto makes it possible to build an airstrip for tests far from urban areas and routes with intense traffic of commercial aircraft, besides permitting the necessary secrecy, since the new factory will be producing military jets like the AL-X, known as the Super Toucan (Supertucanos), and the AM-X, high performance fighters, planes which call for ample availability of airspace for maneuvers.  At the moment, the military aircraft produced by the company in São José dos Campos are tested at Moses Lake airbase, in the state of Washington, in the United States.

The flat topography at Gavião Peixoto will permit the construction of a runway for flight testing of 3 kilometers in length, with another 2 kilometers as a safety zone for maneuvers.  “The region is located on the far side of the Mantiqueira Ridge, and the meteorological conditions are suitable for tests throughout the whole of the year”, Yokota points out.

As a result of the demand from the market, Embraer may also manufacture in Gavião Peixoto commercial aircraft of the family of jets ERJ 145/135/140 and ERJ 170/190.

Besides the suitable meteorological and geographical conditions, the region around Gavião Peixoto offers Embraer an additional advantage: the new factory will be set up in an area close to towns with a population of between 100,000 and 150,000 inhabitants, where the company will be able to recruit employees. According to its vice-president, the rule of the company is to hire, at the most, between 3% and 5% of the population of the municipalities in the region where the company is established “so that there should not be a relation of vital dependence between the company and the town”.

Contracts expansion
The Gavião Peixoto factory will be the company’s fourth production unit in the State of São Paulo. Embraer has two factories in São José dos Campos and one in Botucatu. The decision to spread out is a result of the expansion of the company’s business in the international market and of the limitations at the assembly plants. Embraer has been growing at an average of 50% a year over the last five years, and now ranks as fourth among the biggest manufacturers of commercial aircraft. The company’s sales last year came to US$ 1.8 billion, compared with the US$ 300 million booked in 1995.

Overseas sales are growing to companies of the size of British Airways, Alitalia and American Eagle. The company has just signed a US$ 3 billion contract with Continental Express, and might resume contracts with the federal government, which has authorized the FAB, the Brazilian Air Force, to invest US$ 3.35 billion over the next eight years, to re-equip its fleet.

One of the priorities in the FAB’s recovery program is the purchase of 76 of the AL-X produced by Embraer, worth US$ 420 million; they will replace the old Xavantes used in Sivam, the Surveillance System of the Amazon Basin. Embraer will be responsible for the modernization of 53 AM-X jets, whose restoration is budgeted at US$ 285 million, and of 47 American F-5 jets, which make up the FAB’s fleet. Everything indicates that the Gavião Peixoto factory will be working at full capacity from 2001 onwards.

Gavião Peixoto rewrites its history
When the AL-X and AM-X jets cross the skies over Gavião Peixoto, perhaps Ms. Neiva will be convinced that things have changed in this town of 36 streets and 4,500 inhabitants. For 30 years, from the doorway of the little bar that she inherited from her husband, she has been watching the morning comings and goings of the buses that carry the laborers to work in the sugar cane plantations and orange groves in the region. She spends the rest of the day serving a clientele made up basically of old age pensioners, women and children still under the age for working in the fields, which buys less than what is strictly necessary. Ms. Neiva spends the year waiting for spring, when the minnow fishing season begins in the Jacaré-Açu river. It is when she makes a little of money, selling bait to the fishermen. “It’s the fishermen that save my bacon: they never buy on credit and they are good spenders”, she explains. Skeptical, Ms. Neiva says without much conviction: “If the factory really does come, I think I’m going to be able to rest a little”.

Embraer’s aircraft factory may not change much in the life of Ms. Neiva, nor in the life of Milton Apoloni, from Pará, nor of Quitéria Costa, from Alagoas; they are part of the contingent of 1,600 farm workers responsible for cultivating the 18,000 hectares occupied by the sugar cane and orange crops that cover almost 75% of the total area of the municipality. After all, they are unqualified workers and unemployable in a high technology enterprise.

But there are those who bet on getting a job among the 3000 announced by the company.  Sandra Fernandes says that she and her husband, partners in a truck they use to carry oranges, had been thinking about leaving town.  But when he heard talk of the factory, he decided to stay and see if he can get a job as a driver.”

Property speculation
For the time being, the only effect that the factory has had on the life of the town is property speculation.  It is commented that a plot of land that used to cost R$ 10,000 has shot up to R$ 90,000.  Pensioner Vavi Sampaio says in confidence that the mayor was in need of a good house to put up personnel from Embraer and got a shock. “The owner was asking for R$ 15,000 in rent.”

Mayor Alexandre Marucci Bastos is doing his sums before making plans to repair the municipality’s deficiencies, whose budget doesn’t exceed R$ 3 million. The average per capita earnings fluctuate between R$ 300 and R$ 400 in the six months of the sugar cane and orange harvests. The city has a state school, a medical post with six doctors, but no direct bus to São Paulo, nor even a cinema, hotel or boarding house.  For the visitor, the nearest lodging is near the town of Nova Europa, 12 kilometers from Gavião Peixoto. “First we are going to wait.  It is all in the hands of the state government.  When it is all signed and sealed, we’ll start to think about it”, says the mayor, cautiously.

For Gavião Peixoto, the aircraft factory may be the big opportunity to overcome its chronic dependence on agriculture, aggravated in the years that the prices paid to the farmers fall.  The city statistics show that there is a dangerous crossroads in the scenario.  Oranges, which occupy 40% of the area under cultivation, usually in small properties, account for 73.5% of the town’s income, while sugar cane, which covers 45% of the area, accounts for a much smaller share, something around 18% of net income. In terms of production, the scenario is worrying, since the cultivation of sugar cane depends on new investments in the soil, and even in bringing technology into the field. But this calls for capital that doesn’t exist, and points to a risk of rural unemployment. “The town has absorbed practically all the rural workforce by itself”, says the mayor, Alexandre Bastos.

Regional vocations
The prospects for the installation of Embraer’s new factory in the region are also stirring up the towns of São Carlos, Araraquara and Matão. These are cities where the replacement of the agricultural base by commercial and industrial activities has already made irreversible progress, and they are now getting ready to carry out differentiated roles after the rearrangement in the region. They are beckoning with strategic advantages to attract the suppliers that the aircraft factory will certainly attract.

“There has been a settling of vocations”, is the assessment of José Galizia Tundisi, the Secretary of Science and Technology and Economic Development in São Carlos, a town that has a budget of R$ 110 million and an image strongly linked to the two local universities: the University of São Paulo (USP) and the Federal University of São Carlos (UFSCar).

In Tundisi’s opinion, the universities will give the technical backing to Embraer’s activities in the area, whether by means of higher education courses, or by the real possibility of training and recycling the workforce. “Even though the town is not where Embraer is established, I believe that we have an important part to play”, Tundisi reckons.

São Carlos has, for example, the Center for the Characterization and Development of Materials, run by UFSCar and Unesp, the São Paulo State University, and Numa, the Nucleus of Advanced Manufacture, a complex that unites basic and applied research, maintained by Unicamp, the State University of Campinas, Unimep, the Methodist University of Piracicaba and USP. “There will also be a respectable budgetary package for investment in research, this venture’s differentiating factor”, he says, referring to PICTA, FAPESP’s Program for Innovation in Aerospace Science and Technology.

Strategic growth
In Araraquara, Embraer’s projects have served the plans for strategic growth, implemented in the town since the 90s.  A series of surveys carried out over the last 20 years by the Socio-Economic Division of the Planning and Environment Secretariat point to vigorous growth in the industrial estate, which has today more than 600 companies, with a municipal budget of R$ 97 million.

But caution prevails at the town hall’s Socio-Economic Division, in the face of the promise of a number of jobs, the setting up of companies to supply Embraer, and the possibility of its hotel and service network being used.  “Perhaps it may not redound in a large quantity of jobs”, says Maria Rita, the head of the division.

Technological park
In the town of Matão, the calculations are being based on the expansion of the town’s industrial vocation. “We have the largest technological park in the region”, says the mayor, Adauto Scardorelli. In his plans, besides looking for investments to make it possible for the local industries to qualify themselves to serve the new factory, other measures are under study.  An area of 25 acres is being set aside for the installation of the new suppliers.

The coffee, sugar cane and orange crops and the orange juice processing industries make an annual contribution of about R$ 25 million, over half the town’s total income of R$ 43.4 million. Other sectors reinforce the municipal budget, like cattle breeding, with its stock of over 15,000 head. “Embraer will be a milestone in the region’s technological development”, forecasts the mayor.