Taking flight

PwC alumnus Gary Spulak, president of Embraer Aircraft Holding, Inc. recounts how the company soared from a small Brazilian manufacturer to a global aerospace leader.

Gary Spulak
Throughout our history, we’ve followed our customers’ lead, which means our story is really the story of the aviation industry.

Gary Spulak’s introduction to Embraer came more than 30 years ago. He was a management consultant at Price Waterhouse when he first stepped foot through the doors of Embraer, a company that was just making its foray into the United States at the time. The company had about 40 employees in the US when Spulak and the PwC team helped it establish a local presence, advising on accounting, tax, operations, customer support and other key areas of the business.

Today, Spulak is president of Embraer Aircraft Holding, the wholly owned US subsidiary of an organization that has become a global leader in aerospace engineering and manufacturing. Embraer employs more than 18,000 people in Brazil, China, France, Portugal, Singapore and the United States, where its operations have grown to more than 1,200 employees. The world’s largest manufacturer of commercial jets with up to 120 seats, Embraer designs, develops, manufactures and sells aircraft and systems for the commercial aviation, executive aviation, and defense and security segments. Today, Embraer aircraft operate in more than 90 countries and serve more than 50 armed forces worldwide.

From Embraer’s US headquarters in Fort Lauderdale, Florida, Spulak spoke with Keyword about how innovation, attention to the customer and smart leadership have helped shape Embraer.

Embraer has grown dramatically since you first began working with the company, and so has the market for your products. From your perspective, how has the company changed over the past 30 years?

I think it helps to take a look at what’s happened in the marketplace and how we’ve evolved along with it. Before deregulation of the airline industry in the late 1970s, the government actually paid carriers to support routes to smaller communities, even though there weren’t enough passengers to fill the aircraft. After deregulation, this support was eliminated but the need for service to customers in smaller communities didn’t go away. Someone had to step in to support those needs. So, a lot of smaller, commuter airlines sprang up to fill the gaps with airplanes that were sized correctly.

And, those were not jets. The commuter airlines were flying turboprops [in which a turbine engine drives a propeller] or piston engine planes. They were small, and some of them were even unpressurized, but they filled the need. Embraer established operations in the US specifically to sell factory direct to these airlines. The aircraft we sold at the time was named Bandeirante, which means pioneer in Portuguese, and these small airlines were pioneers indeed.

As the market for these smaller passenger planes continued to grow, how did Embraer respond?

Over time, our customer requirements changed. They needed more aircraft, more seats and more range as the concept of smaller, regional passenger planes took off. We listened to customers, who said they needed an aircraft that was rugged and could operate more than 2,000 hours per year. They also needed aircraft that could be serviced away from the company’s maintenance base and that offered low operating costs and high reliability. So in the early ‘80s, we developed the Brasilia, which is a 30-passenger pressurized turboprop that featured a high-tech “glass cockpit”— a significant technology game-changer at that time.

In the 1990s, with the advent of small engines that made it economical to serve regional points with a jet, we developed an airplane based on the Brasilia called the ERJ 145, a 50-seat regional jet powered by two turbofan engines. That ushered in the transition from turboprops to jets. Then we saw the entire industry change with the turn of the century. Our next development addressed the needs of all three airline models—low-cost carriers, legacy airlines and regional airlines—with what we call the E-Jets family, clean-sheet-designed airplanes from 70 to 120 seats. Airlines found our E-Jets to be a great way to transition from smaller regional jets to larger aircraft to better serve their markets. They are also ideal for opening new markets and for replacing larger, older aircraft for higher profitability.

So, as our customers have grown from small commuter airlines to strong national carriers, we’ve worked with them at each stage to anticipate their needs. We’ve recently announced plans to develop the next-generation E-Jet, which will help maintain our leadership position in the 70- to 120-seat market.

You were integral to establishing Embraer’s presence in the US. Why was this important to the company?

The North American market is very important to Embraer for many reasons, the most important being a presence close to our customers.

This proximity allows us to build those important oneon- one relationships. It’s also helped optimize our supply chain, since approximately 70% of the value of our aircraft comes from North American manufacturers, including the engines and avionics systems.

We now have customer support operations in Florida, Arizona, Connecticut, Minnesota and Tennessee. Additionally, our Executive Jets headquarters is now based in Melbourne, Florida, bringing that operation closer to our customers. This aeronautical complex consists of Embraer’s first production facility outside of Brazil, where we assemble the Phenom family of jets, as well as our global customer center and an engineering and technology center.

Recently, the Sierra Nevada-Embraer team was awarded the US Air Force contract for light air support, which is a strategic part of the US withdrawal strategy for Afghanistan. This means building our Super Tucano light attack aircraft in Jacksonville, Florida. The contract will support more than 1,400 jobs across 100 companies throughout the US.

As the company has grown and changed, what role has innovation played at Embraer?

One thing that hasn’t changed over the past few decades is the company culture. The things that defined the company in the beginning—our values— are still the same. One of those core values is “Boldness and innovation are our hallmarks.”

We are in the business of producing breakthrough, game-changing products. We talked about our commercial jets but innovation has dramatically shaped our other business lines as well. For example, Embraer Executive Jets offers features normally available in high-end business jets to all levels of business aviation. Our Phenom, Legacy and Lineage executive jets are at the top of their categories and known for outstanding performance and low operational cost with simple maintenance. This has put us in a leadership position in the business aviation industry and has resulted in more than a dozen design and innovation awards from the aviation press.

Now, we’re doing the same in the military space with our KC-390 military transport aircraft. It will be our heaviest aircraft, with aerial refueling capabilities and the capacity to transport 23 tons of cargo, including armored vehicles.

You described Embraer’s approach as “following your customers’ lead.” What are your strategies for making that a reality?

One of the things we are particularly proud of is the way we’ve been able to include our customers in our development process to make them true partners.

— Gary Spulak

One of the things we are particularly proud of is the way we’ve been able to include our customers in our development process to make them true partners, so what results in the end is exactly what they need and what they expected. Our suppliers are also completely integrated as well. One way we do this is by holding critical-listening sessions during the design, development and review process. We spend an enormous amount of time during this phase of the product development cycle, where we plan where our customers and the markets will be 8 to 10 years down the road.

In your 30-plus years at Embraer, you’ve helped steer the company to bigger markets without losing sight of its specialized expertise. As someone who’s helped shape an aspect of the aerospace industry, what goes through your mind when you’re a passenger, looking down from 30,000 feet in the air?

Flying to me is still just as magical as it was when I took my first flight when I was 10 years old. What I think about now is how fortunate I’ve been to be part of an industry that is such an important component of the global transportation system and to work with a company that has been a leader and innovator in so many aspects of this sector.

So much has changed since my days as part of the PwC team working with Embraer, and I’m very proud to have been a part of that team. I met some incredible people at the firm who I still know to this day, and I never once doubted that I was working toward something that would be important to me for the rest of my life. Working for PwC gave me this opportunity, and for that I will be forever grateful.