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Embraer targets the US

There is widespread disappointment with the recovery of the US economy, but the American economic stimulus is rendering more fruits then the fiscal consolidation packages undertaken by European governments. This is reflected in the difference in new business opportunities currently presenting themselves on either side of the Atlantic.

During the economic free-fall of the developed world, the European and the American market shared a comparable decline in the Gross Domestic Product (GDP). However, the GDP in the US is showing a more robust increase than many European countries, with the exception of Germany. The developed economies are not as synchronized as they were during the peak of the recession in 2007-2008.

Analysing the data since 2007, the US and Germany economies are ahead, recovering with a gain in the real gross domestic product of 1.0% and 2.0%, respectively. The UK, French, Italian and Spanish economies either reduced or practically remained the same size from 6 years ago.

In line with the relatively strong position of the American economy, Embraer, the sole aircraft maker from a developing country, recently opened a production facility in Melbourne, Florida. The company is also planning to inaugurate a $26m engineering and technology centre in the same location.

The company started the production of executive and regional aircraft in Brazil in 1996 after identifying a gap in the production of a sized aircraft for efficient operation in the 37 to 120 seats market. Prior to this date, Bombardier was the sole aircraft manufacturer in this market segment selling the Canadair Regional Jet (CRJ) 500. Twelve years after entering the market,  Embraer became a market leader with 70% of the market share in 2011.

There is a great deal of uncertainty surrounding the ongoing recovery of developed economies, however, there is no substitute for common sense. If the recovery of the US economy is more robust than its European counter parts, more business opportunities will arise in America, hence, Embraer’s strategy of targeting growth opportunities in the US regional jets market.

For more information on Embraer check out the MarketLine business Case Study – Embraer: Battle in the regional jet market. You may also check out our Buy Reports section for thousands of other company, industry & country analysis reports.

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