* Wins $403 mln contract to monitor Brazil borders
* Company sees defense as source of steady growth
SAO PAULO Nov 26 Embraer SA, the
world's largest producer of regional aircraft, is considering
entering the shipbuilding business as it seeks to tap a boom in
military spending in Brazil expected for the coming years, a
spokesman said on Monday.
The company, based in São José dos Campos, Brazil, later in
the day will announce a contract with the Brazilian army to help
implement a border surveillance system, said the spokesman,
confirming an earlier report in the O Estado de S. Paulo
The contract, worth 839 million reais ($403 million), will
be signed between the army and Embraer defense system units
Savis Tecnologia e Sistemas and OrbiSat. The entire program
could cost more than 12 billion reais.
"The company is still modeling the shipbuilding program,"
the spokesman said. "We do not have a timetable yet for the
announcement of a partner in that program or a timetable for
The plan, which represents "a business opportunity," still
requires discussion and approval within the company's board, the
"If we manufacture planes, why not ships?" Estado quoted
Luiz Carlos Aguiar, who heads Embraer's defense and security
unit, as saying in an interview.
The news comes as slow global demand for air travel makes it
difficult for the company to sell regional and executive jets,
which account for about two-thirds of its revenue. Defense has
provided Embraer a lifeline in recent months as Brazil builds up
its armed forces to protect the nation's sizable energy, water,
forestry and food resources.
At present, Brazil spends about 1.6 percent of its gross
domestic product on defense; other countries, including Russia
and the United States, spend more than 4 percent, according to
the Stockholm International Peace Research Institute.
Embraer wants to tap a program to renew Brazil's Navy patrol
vessel fleet that could cost $844 million. So far, seven of the
27 vessels in the program have been ordered.
The company expects security and defense to generate a
quarter of total revenue by 2020, up from an estimated 14
percent last year and less than 5 percent in 2006.