Brazil Defense Industries
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
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
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