Risk Sharing Partnerships With Suppliers: The Case of EMBRAER

Abstract

Since the mid 1990s, the global aircraft industry has been creating new solutions for product development. Risk-sharing partnerships with suppliers began to be established in an attempt to reduce investments and, consequentially, the dependence on loans. The partners began not only to invest in tooling, engineering and infrastructure, but also to participate more directly in the projects, in the investments and design activities, acquiring rights to future sales income of products. This contractual modality, called risk-sharing partnership, is the focus of this study. Specifically, it analyzes the risk-sharing partnerships made by Embraer during the projects of the ERJ-170/190 family of aircrafts. It also aims to justify these partnerships, considering the current global aircraft market conditions, evaluating the critical success factors, requirements and macro-economic conditions which supported the adoption of this new policy.