A conversation with Ernie Edwards, President, Embraer Executive Jets
June and July 2013 saw Brazil in ferment. The joy of winning the right to host the Football World Cup in 2014 and the next Olympic Games in 2016 had given way to a fervour of mass street demonstrations, with the protestors’ grievances ranging from tax increases to poor public services. “We want more than Samba dancing and football,” one protestor said, expressing the impatience of many who wanted to see Brazil’s modernisation programmes move forward more swiftly. Few though, doubt the potential of this vibrant and resource-rich country. Brazil can point to many excellent examples of enterprise and initiative in its industrial and financial sectors, but one of the most outstanding performances is that provided by the airframe manufacturer Embraer, now recognised as one of the top four aircraft manufacturers globally, with only Boeing and Airbus ahead of it, and Bombardier more or less alongside.
Over the course of the last decade, Embraer has gone from a local Brazilian company to a global aircraft manufacturer. While the company’s real leap forward in the executive jet space, arguably, dates from 2005, the year the company declared its intention to be a major player in the business aviation market, Embraer’s history stretches back to 19 August 1969, when it was founded as Empresa Brasileira de Aeronautica, a joint government and private initiative. Its first aircraft was the turboprop transport plane, the Bandeirante. The Brazilian government of the day made no secret of its determination to assist in the development of a strong local aircraft manufacturer. Embraer, as the new company came to be known, benefited from licence production contracts backed by the government. Chief among these was the contract to produce the EMB 326 Xavante, an advanced trainer and ground attack jet, designed by the Italian company Aermacchimanufacture, and assembled under licence in Brazil by Embraer.
Then, in 1974, building on the success of the Bandeirante, Embraer moved into the regional jet space, starting design work on its first transport category airliner, the EMB-120 Brasilia. This was a very shrewdly positioned turboprop aircraft with its sights set firmly on the regional market colonised and in part created by the ageing DC-3. The Brasilia offered a 50% increase in speed over the DC-3 and seating for 30 passengers. It won sales from regional airlines around the world but particularly in the US, with the first aircraft entering service with Atlantic Southeast Airlines in October 1985. This laid the foundation for Embraer’s continuing success in the US, as well as in the worldwide regional jet market. This early success was reinforced in 2002 with the arrival of the Embraer E-Jet family, comprising the 170 and 190 regional jets.
Embraer’s entry into the executive jet market came in 2000 when it announced the Legacy business jet at the Farnborough Air Show. The Legacy was based on Embraer’s 37-seat ERJ-135 regional aircraft, first introduced in September 1997, itself a shortened version of the 50-seat Embraer ERJ-145. With an executive jet interior and the updated Mark 1 cockpit of the EMB-145, the Legacy was firmly targeted as a “super mid-size”, aimed at the upper end of the small to mid-sized business jet market. Sales went reasonably well given that Embraer had to make its way against established competitors like Gulfstream and Bombardier, with a much higher brand awareness in the all-important US market.
Then at EBACE in 2006 Embraer revealed its “heavy iron” offering in the business market, demonstrating the Lineage 1000, an executive jet remodelling of its ERJ-190. With a business jet interior and additional fuel tanks in the mid-luggage compartment the Lineage 1000 gave potential buyers a 4,400 nautical mile range and a larger cabin alternative, with more square footage of cabin than any other aircraft in its price range (US$53 million with the cockpit and cabin fully outfitted by Embraer).
As well as competing in the super-midsize and large cabin space, by the early 2000s Embraer was well positioned to challenge the likes of Cessna and Hawker Beechcraft in the light jet market. It had gained vast experience in the light aircraft sector through building Piper Aircraft kits in Brazil for the Latin American market, producing almost 2,500 light planes between the inception of the Piper project in 1974 and 2000. While this project was confined to kit assembly of turboprop light aircraft, it enabled Embraer to build up the engineering and assembly skills that the company was to put to good use later with the creation of the Phenom 100, a four-passenger, entry level jet that had its first delivery in December 2008, with the 100th Phenom 100 sale coming in 2010. The first delivery of the eight-passenger Phenom 300 in December 2009 added a light jet option to Embraer’s portfolio.
All of this needs to be set against that decision, back in 2005 when the Embraer Board decided to set its sights on being a lot more than a regional jet specialist with an interest in business aviation. The Board threw down the gauntlet, as it were, to the rest of the business aviation market, vowing to make Embraer one of the top players in this most competitive of markets within 10 years. The odds against it were steep. Players like Gulfstream, Bombardier, Cessna and Hawker Beechcraft had established reputations and considerable brand awareness in the US market. To be sure, by 2005, as we have seen, Embraer had the Legacy and was making sales on the back of the sheer excellence of the aircraft. But from a sales perspective, having a great product is just the starting point. To secure a sale you have to get in front of a prospective buyer and you have to have a professional sales team dedicated to turning a tough potential sale into a signed deal. What Embraer needed was someone who could take their US operation to a wholly new level and give its sales force the kind of dynamic edge that would allow it to win market share from the high profile competition.
I know how to rivet, drill, make engineering drawings, read drawings, bend metal and paint airplanes
It found that someone in Ernie Edwards. Ernie joined the company in 2005 from the Phoenix Arizona-based Swift Aviation where he served as president. Swift was the launch customer for the Legacy 600 in the US, having placed an order for 25 aircraft in November 2000 and Ernie’s relationship with Embraer had developed over that period. Before Swift, Ernie had built up a tremendous record in senior sales management with Gulfstream and Cessna, giving him a deep understanding of the business aviation market. Moreover he understood the product from the pilot’s perspective, being a longstanding holder of an FAA Airline Transport Pilot licence and having multiple ratings on a variety of different jet aircraft.
A Welshman by birth, Ernie started his career as an aircraft apprentice with Hawker Siddeley Aviation in Chester, in the UK, which, as he told one interviewer, gave him a solid mechanical engineering background. “I know how to rivet, drill, make engineering drawings, read drawings, bend metal and paint airplanes,” he told the interviewer. His “big break” came when he decided to apply for a job as a trainer for TWA, who had won a contract to maintain Saudi Arabian Airlines and needed to build up its engineering team. While in Saudi Arabia he met a Saudi prince to whom he refers as his “second father”. The prince offered the young Ernie a job selling Cessna Citations in the USA, a position that simultaneously opened the door to an understanding of what is involved in selling multi-million dollar executive jets and to America. That experience has stayed with Ernie ever since, and has had a tremendous shaping influence on his management strategy. You could call it management-by-listening, with an ear to what’s being said and an eye for the main strategy. Listen to people at all levels, senior staff, junior staff, customers, suppliers. Listen and facilitate, open doors, enable good things to happen. However, listening also entails acting decisively when occasion demands. You are not just listening, you are listening for a purpose, to make the company stronger and to find the most effective ways of achieving your goals, he says.
Under his leadership, Embraer reshaped its sales division into two separate units in the US in order to give the division a tighter focus through the long drawn out – and still ongoing – recovery from the 2008 crash. The one team, consisting of eight sales staff, handles everything from the mid-sized Legacy 500 on down (the Legacy 500 is a maximum 12-passenger aircraft and is due to enter service in the second half of 2014). The other team, comprising five members, handles everything from the Legacy 600 to the Lineage 1000. Both teams report in to a regional sales vice president who reports to the national vice president. “One of the major reasons for doing the split was that we lost momentum for the larger cabin sales in North America at the beginning of the recession. The sales teams were doing very well in the mid to light jet market where sales lead times are noticeably shorter, but the real challenge is in keeping the sales team focused on the deals that take longer to mature, but have the bigger impact on revenue. The big aircraft are at the top of the pyramid, with fewer customers and bigger ticket prices so a dedicated large cabin team seemed to us to be the way to go – and this is certainly proving true in practice,” he comments.
Embraer is now seeing a slow but steady increase in sales across the board. “Our sales, year-to-date are up on last year’s sales as at end of May 2013, and that is very encouraging. I have said before that I want to see three months of month-on-month improvement before I start feeling that things are really picking up. But if we have another month or two such as we have just had, I will be very pleased. It is too early as yet to say whether this reflects any real underlying improvement in the global economy or whether it is a factor of the reshaping of our sales force – possibly a bit of both,” he says. Progress in Latin America has been good, though Europe continues to be a slow market. However, Russia and the Middle East continue to be a “honey spot” while some African countries are also looking promising for Legacy and Lineage 1000 sales.
All in all, the Board would be justified in concluding that the target the company set for itself back in 2005, to become one of the big players in the business aviation market, has in fact already been achieved. We’re only just past the mid-way point in 2013 and already Embraer is universally regarded as a top player.