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Boeing puts national aerospace sector at risk, says analyst.

From its office in Brazil, the American company is offering salaries higher than those of its Brazilian counterparts.

KC-390, a tactical/logistical transport and in-flight refueling aircraft developed by Embraer, at the Brasília Air Base (Photo: Marcelo Camargo/Agência Brasil)

Sputnik Agency Brazilian aerospace associations have filed a lawsuit against the American company Boeing for predatory hiring practices involving Brazilian engineers, in the 3rd Federal Court of São José dos Campos.

From its office in Brazil, Boeing is offering salaries higher than those of its Brazilian counterparts, and has already hired 200 senior aerospace engineers from national companies in the sector, especially Embraer.

"There is very strong questioning from some entities, since we see a significant ethical breach on the part of Boeing in literally harassing these Brazilian engineers," economist and coordinator of the administration course at the Mauá Institute of Technology, Ricardo Balistiero, told Sputnik Brasil.

The behavior of the American company is even more questionable when we consider that it had access to sensitive Embraer information during the negotiation process for the formation of a joint venture between 2018 and 2020.

"Boeing had access to an extremely high volume of information about Embraer," Dr. Oswaldo B. Loureda, founder of Acrux Aerospace and professor of aerospace engineering at the Federal University of Maranhão (UFMA), told Sputnik Brasil. "A volume of information that, under normal circumstances, would never be given to a competitor."

According to him, the Embraer was disadvantaged in the negotiation process with Boeing, since it "practically restructured the company," invested capital and time to finalize the deal. A few days before closing the agreement and paying the agreed-upon US$4,2 billion (approximately R$21 billion) to Embraer, Boeing withdrew from the negotiating table. 

After obtaining privileged information about Embraer and unilaterally withdrawing from a practically finalized agreement, Boeing established itself in São José dos Campos to hire Brazilian engineers, taking advantage of operating in dollars.

"Boeing's interest lies in having access to a highly qualified workforce, in a market condition that is very favorable to it, which is making payments in dollars at a time when the dollar is very strong against the real," explained Balistiero. "So, even paying salaries below what Boeing engineers receive at its headquarters, it manages to attract Brazilian engineers."

Loureda agrees, and notes that Brazilian labor "will bring considerable savings to Boeing's payroll."

"In this sense, researchers and aerospace professionals in Brazil have very good training. As good as, or even better than, that of the Americans, and [...] they are relatively inexpensive for a company like Boeing," said Loureda.

One of the objectives of the joint venture between Boeing and Embraer was precisely to guarantee access to Brazilian labor, in a context where the North American side is having increasing difficulty hiring aerospace engineers.

"Apparently, young Americans have shown less and less interest in engineering and are opting for management and financial markets. This is a trend and a concern for Americans," reported Loureda.

This year, Boeing also closed its office in Russia, creating even greater difficulties in recruiting professionals.

Legal action

The lawsuit, spearheaded by entities such as the Brazilian Association of Defense and Security Materials Industries (ABINDE) and supported by Embraer itself, requests that a hiring cap be established for the American company and a fine of R$ 5 million for each professional hired that exceeds the limit.

The lawyers further argue that this workforce was primarily trained by public institutions, such as the Technological Institute of Aeronautics (ITA), UFMG, UFSM, among others, funded by resources from Brazilian society. In this sense, the lawsuit requests that Boeing compensate Embraer and ITA for the total amount invested in engineering training programs for the sector.

"I would say that questioning is perfectly possible, but I think it's very difficult to stop the process," lamented Balistiero. "I think the associations are denouncing this predatory hiring, this veritable harassment that aeronautical engineers have been subjected to, especially those at Embraer. But I think it's very unlikely that it will be possible to reverse this."

According to him, there are internal recruitment problems, since "the Brazilian market is currently sluggish."

"This shows that the aerospace sector in Brazil needs more support, it needs more strategic government management," Loureda said. "The sector is currently neglected in Brazil, it receives little care, and the government lacks a strategic vision."

The expert notes that the aerospace sector is "highly dependent on research, development and innovation," requiring coordination of interests between government, academia, industry and society.

Balistiero believes that the next government will be able to reverse the process of "harassment of foreign companies here in Brazil" and remove the debate about the denationalization of strategic companies from the table. 

"This has a good side, which is to prevent the denationalization of companies [...] the bad side is that it may scare away foreign capital that wants to enter the sector to modernize it," Balistiero considered.

Loureda points out that the exchange between national and foreign companies is positive for the country, as long as it is aligned with "serious and consistent policies to foster the Brazilian aerospace industrial base."

"Denationalizing a company like Embraer doesn't seem like a good deal to me, even considering that it's a private company," Balistiero said. "After all, it's not common to sell the world's third-largest aircraft manufacturer to a foreign country."

This week, the Brazilian Association of Defense and Security Materials Industries (ABINDE) and the Brazilian Aerospace Industries Association (AIAB) initiated a public civil action against Boeing, accusing the American company of threatening national sovereignty by promoting the massive hiring of Brazilian aeronautical engineers. The case is being heard in the 3rd Federal Court of São José dos Campos, in the state of São Paulo.

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