Wednesday, February 06, 2013

A Tale of Two Aircraft Manufacturers'

HAL and Embraer are two companies set up by governments in India and Brazil respectively, more than four decades ago.  Both sought to break an oligopoly dominated by a handful of aircraft manufacturers in the developed world.

While Embraer has been a spectacular global success, HAL continues to be a staid, stagnant company. Embraer has produced more than 5,000 aircraft that operate in 92 countries on five continents, and it is the market leader for commercial jets with up to 120 seats. HAL, on the other hand, has manufactured (mostly under license), over 3658 Aircraft/Helicopters, 4178 Engines, Upgraded 272 Aircraft and overhauled over 9643 Aircraft and 29775 Engines.

Both companies had very similar origins. Embraer was started out as a government controlled company in 1969 - nearly thirty years after HAL was established in Mysore. And yet, within a span of a few decades, Embraer has become a world leader in the manufacture for executive jets while HAL has nothing significant to show for itself - except, of course, 'upgrading & overhauling' equipment for the domestic market and licensed-production of aircraft from other countries.

What explains this difference?

In a book titled, "The World Aircraft Industries", the authors note that most of HALs efforts, in conformity with other Newly Industrialised Countries (NICs), aimed at license-production of aircraft'. Brazil took a slightly different tack - it first established a a specialised institute for aeronautical engineering research and education in the 1940s. Then, more than two decades later, in 1969, after the basic technical infrastructure was well in place, the government set up Embraer to design and manufacture aeroplanes. Also, from the very beginning, Embraer traversed two paths in parallel — one, manufacturing planes to its own design and, two, manufacturing aircraft under licence.

According to Prof. RT Krishnan of IIMB, "Key elements of Embraer's success have been a clear focus on its core competence, ability to understand user needs in its niche market, quick absorption of technological capabilities, a platform or family approach to product development, cost competitiveness, and, above all, a global risk management model in what is clearly a global business."

In sharp contrast, India seems to have created R&D institutions in silos that remain only distantly connected with the manufacturing industry. Thanks to these silo's, in 2002, when the government of India wanted to buy a new set of executive jets for its VIP's, it turned to the best company in the business - Embraer.


Embraer, Brazil -

HAL India -

Krishnan, Rishikesha K (2003): Where core competence soars, The Hindu Business Line, 1Oct2003, url -

IISc - Dept. of Aerospace Engineering -

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