SAFRAN Turbomeca expects Brazilian government to review local production regulations in order to increase competitiveness

Júlio Ottoboni
DefesaNet Special


French company SAFRAN Turbomeca, one of the leaders on the helicopter engine-market, hopes to resume conversations with the Brazilian Ministry of Defense, since new economic measures taken by the Brazilian government didn’t hit the department as hard as it was previously expected, and may, hopefully, provide conditions for the defense sector to recover. Along with this renewed effort, however, rises the challenge of bureaucratic procedures that might prevent the manufacturing of SAFRAN engines in Brazilian territory.
“Here in Brazil there is this indigenous components policy that is only possible in terms of manufacturing. The workforce expenses rend the production line not-competitive. Workforce costs in Mexico, for instance, are 30% less than here”, says SAFRAN’s representative in Brazil, François Haas, in an exclusive interview for DefesaNet.
Turbomeca has a specialized workshop for repair and maintenance services for helicopter, oil drilling and industrial engines in Xerém, Rio de Janeiro Estate, since 1980. The company has contracts with HELIBRAS, the Brazilian Armed Forces and many other Latin American customers, and the current scenario in Brazil seems delicate. This scenario will probably repeat itself in 2016. This year is already considered one of the worst the company ever had while operating here.

“We provide services from Mexico to Argentina, and we also receive engines from the factories in the US, Europe and Asia to keep the facilities in Xerém running. Our headquarters have been sending part of the orders to us”, says Haas.

This effort is what’s been keeping a team of 200 highly qualified employees among technicians, engineers, logistics experts and administrative personnel at the Xerem facilities. The Brazilian market alone wouldn’t be able to maintain Turbomeca’s activities, even though the company has its brand os 55% of the helicopter engines operating in the country.

The Xerém unit is capable of providing full maintenance for 250 engine units per year, and currently has a demand for 150 units. Engines operated in Brazil respond for 50% of the orders, 30% are from other Latin American costumers, and 20% from other nations – pear parts are imported from the company headquarters in France.

The offset type nationalization policy currently adopted by the Brazilian government is unable to realize that repair and overhauling services performed in Brazil, even very specific ones, can be counted as national participation. Complete maintenance of a turbine happens every 5 along the equipment’s 30-year life cycle.

The Brazilian Development Bank (BNDES) only considers as national product an turbine entirely manufactured in the country – even though all repair and overhaul services throughout the life cycle of the turbine are provided in Brazil and involve Brazilian workforce.

At the moment, the facilities at Xerém only remain active because we bring engines from abroad and this is not consider national production. We must discuss this perspective about the business model we have here. We have evolved a lot in in this aspect regarding our military deals, but the Brazilian market is unable to support itself, we must export as we do in Europe. BNDES has calculation rules for national production quotas that must be adapted to the current market reality. This is essential for our future”, explains Haas.

Again, Mexico comes up as a relevant example, since the country competes heavily with Brazil for foreign investments. The Mexican government doesn’t demand any quotas of locally manufactured components. Instead, it demands the companies provide industrial capabilities and jobs for the local workforce, thus keeping the production lines possible. This system makes the Mexican market much more atractive and competitive.

Versão em português

“The export rules need to be improved, mas we already have faster lanes at the Brazilian Custom-House. The process is delayed by bureaucracy established in the past and which must be reviewed and adjusted to more the more efficient end global industrial procedures we have now. Other nations move forward with their regulations in order to become more flexible and attractive for companies. The same thing must happen in Brazil”, admits the SAFRAN executive.
Back in 2012, Turbomeca opened two more units at the Xerém complex for assembling of the Makila 2 turbines, used on the H225M helicopter (reassigned EC-725) for the H-XBR military program. The facilities also assemble the auxiliary power unit (APU) SAPHIR 20, with permission of French company Microturbo.

The 10 million euros invested in have turned this Brazilian unit into an important spot at Turbomeca’s world structure map when it comes to providing support to helicopter operators, both civilian and military, who use the Makila 2 turbine


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