Roundsourcing Podcast: How Embraer, the world’s third largest airplane maker, sources from the USA (Brazil)
In November, 2016, the Roundsourcer traveled to Brazil on a trade mission, which included a stop in Sao Paulo and a visit to Embraer, the world’s third largest maker of commercial jets with 120 seats or less. Embraer is also the fifth largest manufacturer of executive jets in the world and the largest defense and security solutions company in Brazil. In its 45 years in the aerospace industry, the company has operated in the design, development, manufacture, sale and after-sale stages of aircraft for the commercial and executive aviation markets, and has offered integrated solutions and systems for the defense and security industry.
Brazil has the world’s ninth largest economy and the fifth largest by purchasing power parity. Although currently enduring its longest-lasting recession since the 1930s and experiencing political turmoil, the economy is still the largest in Latin America. It is highly protectionist - a mercantile country - promoting government regulations with the purpose of restraining imports and encouraging exports.
As a result, tariffs and taxes in Brazil range as high as 50% or more, and yet, Embraer has 56% of the value of its jets coming out of the United States of America. Only 18% of the actual content value of Embraer jets is Brazilian, 11 – 12% is European, and the rest is from Asia and other parts of the world. So, what does this indicate about the supply chain? - It indicates that it is highly global, even within a highly protectionist country like Brazil.
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Joseph J. Dehner Joe Dehner concentrates his practice on multinational business and securities disputes. He counsels a wide variety of companies, domestic and foreign, on issues confronting global business, including transnational investment, mergers and acquisitions, joint ventures, customs and trade issues, international business structures, distribution and agency agreements and the resolution of international disputes.