Embraer says it’s still in talks on fate of China aircraft factory

Embraer says still mulling China factory status

SHANGHAI — Brazilian aircraft maker Embraer said Friday it is still discussing plans for its aircraft factory in northern China, denying reports it will close the plant.

Brazil’s Estado news agency, citing Embraer’s vice president of commercial aviation, Paulo Cesar de Souza e Silva, said the company planned to shut down the factory because China, in light of its own ambitions in aircraft manufacturing, viewed the Brazilian company as competitors.

“Embraer clarifies that, at the present time, no decision has been made in this respect, and that the company is negotiating with the government of China and the Chinese partner for the purpose of continuing the operations,” said the statement, issued by the company, also known as Empresa Brasileira de Aeronautica SA.

Embraer makes 50-seat ERJ-145s at the factory in Harbin, Harbin Embraer Aircraft Industry Co., Ltd., a joint venture with Harbin Aircraft Industry Group that opened in 2003.

The Chinese government committed in 2002 to buy planes from Embraer in return for a promise by the Brazilian company to build a plant in China.

Embraer jet sales have stalled in recent years as European and U.S. airlines have cut purchases due to the financial crisis and rising fuel costs. The Harbin factory was set up to serve as a foothold for the Asian market, and especially fast-growing China.

But China is pushing ahead with plans to develop and market its own regional and large jets in a challenge to established aircraft makers.

Meanwhile, China has scaled back purchases of the ERJ-145s, and given the lack of demand, the company reportedly hopes to make larger jets at the facility.