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Defense Industries in Brazil

 
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Since the early twentieth century, the armed forces have pursued the goal of weapons self-sufficiency. Their intention was never to develop a large arsenal but to have the technical capability to produce the arms needed for Brazil's military. During World War I, the large navy was cut off from resupply of big gun shells and became a paper navy, thus reinforcing the drive for self-sufficiency. The rapid industrialization that took place after 1930 provided the infrastructure necessary for developing an arms industry. After World War II, Brazil developed a steel mill at Volta Redonda, in Rio de Janeiro State, and quickly became the largest steel producer in Latin America. In 1954 Brazil began manufacturing its first automatic pistols. The earliest armored personnel carriers (APCs) produced by Brazil, in the 1960s, benefited directly from some of the technology developed by Brazil's dynamic automotive industry. Brazil's push for nationalization of the computer-related industry in the 1970s also began with the navy, which could not decipher the "black box" computerized range-finding and firing mechanisms on the British frigates they had purchased, and did not want to be dependent on imported maintenance.

In the 1950s, Brazil set up the precursor to the Aerospace Technical Center (Centro Técnico Aeroespacial--CTA). Located in São José dos Campos, the CTA became the focal point for the arms industry. The CTA has trained a generation of engineers through its technical institute, the Aeronautical Technology Institute (Instituto Tecnológico da Aeronáutica--ITA). In 1986 it was estimated that 60 percent of 800 Embraer engineers had graduated from the ITA.

Brazil's three largest arms firms were established in the 1960s. Avibrás Aerospace Industry (Avibrás Indústria Aeroespacial S.A.--Avibrás) was established in 1961; Engesa, in 1963; and Embraer, in 1969. It was only in the subsequent period, from 1977 through 1988, that the three firms began to export arms on a large scale. In addition an estimated 350 firms were involved directly or indirectly in the arms production process in Brazil. The fourth largest Brazilian arms company was the War Matériel Industry (Indústria de Material Bélico do Brasil--Imbel), established on July 14, 1975, to unify the army's seven ordnance and ammunition factories.

Engineers associated formerly with the CTA created Avibrás as a private aerospace firm. In 1964 Avibrás was granted the Sonda I rocket contract and since then has been the major firm involved with the development of sounding rockets (Sondas II, III, and IV). It also has taken a leading role in developing missiles. In the 1980s and early 1990s, Avibrás worked almost exclusively with the manufacturing of rockets and multiple-launch rocket systems (MLRS), such as the Astros II, in addition to developing antitank and antiship missiles. At its peak, Avibrás employed 6,000 people.

Engesa also was formed as a private firm. Initially, it was involved in renovating World War II-vintage tanks. Engesa built wheeled APCs, such as the EE-11 Urutu amphibious APC, the EE-9 Cascavel armored reconnaissance vehicle, the EE-17 Sucuri tank destroyer, and the EE-3 Jararaca scout car, in addition to a wide range of other products. Engesa's APCs were all based on an indigenously designed suspension system. Engesa's weapons were exported almost exclusively to the developing world, especially to countries in the Middle East, Latin America, and Africa. By the mid-1980s, Engesa had expanded to a group of twelve subsidiaries and employed more than 5,000 people. By that time, the company had spent US$100 million on the development of the Osório, a main battle tank, but was unable to find a buyer for it. The Osório project came to an abrupt end with Operation Desert Storm against Iraq in 1991. In 1990 Engesa had won the evaluation process by the Saudis. After Desert Storm, Brazil was no match for United States competition, given the close ties that developed between Saudi Arabia and the United States during the war with Iraq.

By the mid-1980s, Embraer had become the largest aircraft manufacturer in the developing world, with sales of more than 4,000 aircraft. It has encountered great success with its Bandeirante and Brasília models, sold to the United States and other foreign countries. In 1988, at its height, it employed more than 12,000 workers. The Brazilian government owned about 5 percent of the company but controlled most of the voting stock. The government supported Embraer with generous interest rates on its loans, a reinvestment of profits into research and development, and purchases of its aircraft.

By 1980 Brazil had become a net exporter of arms. On the demand side, the rapid success resulted from a growing need in the developing world for armaments. On the supply side, Brazil's arms exports were designed for developing world markets and were noted for their high quality, easy maintenance, good performance in adverse conditions, and low cost. The product line was broad and came to include ammunition, grenades, mines, armored personnel vehicles, patrol boats, navy patrol planes, turboprop trainers, tanks, and subsonic jet fighters.

In the early 1980s, Brazil emerged as one of the leading armaments exporters in the developing world. From 1985 to 1989, it was the eleventh largest exporter of arms. Brazil exported arms to at least forty-two countries, in all regions of the world. By far the largest regional market was the Middle East, to which Brazil sold approximately 50 percent of its arms from 1977 through 1988. According to an estimate by the Stockholm International Peace Research Institute (SIPRI), 40 percent of all Brazilian arms transfers from 1985 to 1989 went to Iraq.

Brazil's arms industry nearly collapsed after 1988, as a result of the termination of the Iran-Iraq War (1980-88), a reduction in world demand for armaments, and the decline in state support for the industry. In early 1990, the two major manufacturers, Engesa and Avibrás, filed for bankruptcy.

By late 1994, it appeared that Brazil's arms industry would not disappear completely. It was unlikely, however, that it would return to the robust form of the mid-1980s. Avibrás had paid off a substantial portion of its debt and was seeking ways to convert much of its production to civilian products. Engesa had been dismembered; some of its companies were sold to private interests, and its ordnance-related companies were taken over by the state and integrated with Imbel. Embraer was privatized in December 1994, and despite significant financial difficulties, it rolled out the new jet commuter plane prototype EMB-145 in 1995.

Data as of April 1997

 



 

 


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