What Boeing wants in Embraer also makes merging with it extremely difficult - Jon Ostrower
As Boeing digs into understanding what makes Embraer tick, they're finding that its structure (by design) makes it inherently difficult to pull apart.
May 11, 2018 by Jon Ostrower
What happens when the thing Boeing wants most from Embraer is also the thing that makes it extremely difficult to merge with?
Reuters reported yesterday that Boeing and Embraer's talks
have hit a rocky patch:
The companies have won the support of Brazil's government for such a deal, but the maneuver has created other headaches, according to the sources, who spoke to Reuters anonymously due to the sensitivity of talks.
Negotiators are picking through the details of long-term service contracts between the companies and working on how to distribute Embraer's thousands of engineers, many of whom have migrated between military and civilian projects during their careers.
I wrote last month after a visit to Brazil that Embraer's attractiveness to Boeing lay in how it's structured, delivering advanced technology in an affordable, stable, recurring system:
At a strategic level, Embraer has a young and deeply experienced engineering workforce. (The E2's program director is just 42 and a mentee of its strategy chief) Its supply chain is a laundry-list of the same global players as its rivals, but its structure significantly more integrated.
The company hasn't swung from inactivity to over-extension. And while the company has distinct business units, its core iterates on homegrown technology and advances from one project to the next. Embraer has certified 12 new airplanes in 14 years, including its KC-390.
It's the type of architecture that keeps cost down, knowledge shared and an organization stable; ideal for the process-driven mature environment of commercial aerospace.
As Boeing digs into understanding what makes Embraer tick, they're finding that its...