Soon after Frederico Curado became president and CEO of Embraer in 2007, the world spiraled into one of the worst economic downturns in decades. Few economists anticipated the crisis, but Curado recalls an uneasy sense that the economy’s halcyon days would not last much longer.
“It was a gut feeling,” he recalls. In business aviation, aircraft sales plunged by about half virtually overnight.
Curado and his management team moved quickly to evaluate the impact on Embraer, Brazil’s largest manufactured goods exporter, and shared their assessment with stakeholders. Then they reduced the company’s size by 20%, a move aimed at maintaining strong liquidity and a healthy debt-to-equity ratio while meeting commitments to customers and shareholders.
“Shrinking the company was one of the worst things we had to do,” Curado said. “Politicians and many other people tried to second-guess us. They asked, ‘Why are you doing this?’ But six months later the answer was very, very clear.”
The experience validated a lesson Curado had learned early in his 30-year career at Embraer: “When you perceive a problem, address it sooner rather than later,” he said. “I have learned both ways — having done it right and having done it wrong — that it is far better to get red-faced with stress early on than to get purple with anxieties later when the problem will have become exponentially more difficult.”
Embraer reported 2014 revenues
of more than US$6 billion.
Embraer emerged from the ordeal well positioned to grow. Today it is widely considered one of the most innovative and well-managed companies in the aerospace industry. Headquartered in São José dos Campos, a city in the state of São Paulo, Embraer serves business, commercial and military aviation customers worldwide. It generated fiscal 2014 revenues of more than US$6 billion.
A PEOPLE PERSON
Curado’s actions before and after the financial crisis reflect the qualities that define him: foresight, openness, resourcefulness, courage, pragmatism and a self-effacing style. Referring to the decision to abruptly shrink the company, Curado said, “In the end it was the right call, but it was a lonely one. Such decisions, as difficult as they are to make, are something that only a CEO can do. And of course he or she must live with the consequences, both good and bad.”
The son of an army officer and a mother who taught public school, Curado grew up in Rio de Janeiro with an interest in aviation and a passion for mechanical tinkering. Mathematics came easy. He attended the Brazilian Air Force-affiliated Aeronautics Institute of Technology — Brazil’s equivalent of the Massachusetts Institute of Technology — where he earned a degree in mechanical/aeronautical engineering. An International Executive MBA from the University of São Paulo followed.
Curado joined Embraer in 1984 and was put in charge of a sheet-metal shop two years later. He was 24 years old. Over the next 23 years, he worked his way up through executive jobs in manufacturing, procurement, contracts, sales and information technology.
Embraer was founded in 1969 and privatized in 1994. When Curado was appointed president and CEO eight years ago, the company faced major challenges. Emerging competitors in Asia, rapid technological changes, shorter product cycles and tightening credit markets were hitting all manufacturers. In addition, high oil prices were hammering airlines. Embraer also had been slow to embrace globalization, and its manufacturing and distribution centers remained concentrated in Brazil.
SENSING CLIENT NEEDS
One of Embraer’s strengths is its proven ability to identify niche markets and develop products to meet its customers’ demands — usually by assembling diverse focus groups to learn firsthand how the company can create superior customer experiences.
“Embraer has taken business risks, but they have been extremely thoughtful and diligent in how they assess markets and opportunities,” observed Byron Callan, a director at Washington DC-based Capital Alpha Partners, a strategic policy adviser to financial institutions. “Curado brings an engineer’s discipline to assessing what’s probable and possible. I think there always has been a recognition that Embraer easily could be trampled by Airbus and Boeing due to their much larger size, so they have picked their spots very carefully.”
A good example is Embraer’s six-passenger Phenom 300 light jet, which went into service in 2009. Just four years later, Embraer delivered more Phenom 300s than any of its competitors in the size category. Customers responded to the airplane’s high performance, handling and features typically available only on larger business jets, such as an externally serviced lavatory. Embraer also has successfully exploited niche markets in commercial regional aircraft — it is the world’s largest producer of passenger jets that seat 70 to 120 people — and military cargo and training jets.
AN ENDURING EXPERIENCE
Another differentiator is Embraer’s after-sales service and support. Consider the experience of the head of a US-based multinational food producer, who recently circumnavigated the globe on a three-week business trip in an Embraer long-range Legacy 650 jet.
The executive’s meeting schedule was extremely tight, leaving little time for mechanical issues. On the flight across the Pacific Ocean, chief pilot André Fodor emailed the Embraer Contact Center that the aircraft’s galley food preparation table wasn’t operating just as it should and that a refrigerator wasn’t cooling sufficiently.
“WHEN YOU PERCEIVE A PROBLEM, ADDRESS IT SOONER RATHER THAN LATER.”FREDERICO CURADO
“Our expectation was simply to notify the center so that we could have these items rectified when we returned to our base in Orlando, Florida,” said Fodor, who also advises companies and individuals on business jet purchases. “How surprised were we when Embraer already had made plans to resolve these minor issues upon our arrival in Singapore? Around the world (on this trip), Embraer proved itself time again.”
A FOCUS ON SERVICE
Such praise is music to Curado, who says that nothing about his job gives him greater pleasure than visiting customers and engaging employees on the factory floor. “I’m more like an airline guy than an OEM (original equipment manufacturer) executive,” he said. “I really enjoy hearing how our products are operating.”
His other passion is simply being around people. “I love human resources,” he said, because he enjoys the process of helping people grow in their jobs. “If I were not the CEO and had the chance to serve in another role, I would choose one of our senior HR positions. When I retire from Embraer, maybe that’s something I’ll do.”
Hear Frederico Curado on the key to success