GE Sees 15% Boost by 2020 in Brazil Aircraft-Engine Service Unit

(Bloomberg) -- General Electric Co.'s Brazilian operation overhauling aircraft engines is poised to expand 15 percent by 2020 even as the country's economy continues to sputter.

The U.S. company's Celma unit will handle 550 engines in three years from the current level of 480, said General Manager Julio Talon. Celma's sales have doubled over the last seven years to $2 billion as the operation catered to international customers such as Southwest Airlines Co., American Airlines Group Inc., and FedEx Corp.

“I bring a jet engine or a part from anywhere in the world in five days,'' Talon said in an interview in Rio de Janeiro's International Brazil Air Show. “In 65 days, the engine is back with my customer after being serviced. This is 15 to 20 days faster than any competitor.”

Talon has added 100 mechanics annually during the last six years to maintain, repair and overhaul the engines, connecting with prospective employees through a partnership with the social-service arm of Brazil's Industry Federation. That kind of hiring is a rarity in a country where the economy has contracted two years in a row and the jobless rate rose to a record 13.2 percent in the three months through February.

The competitiveness of the GE operation is taking a blow as the Brazilian government ended a payroll tax break in an effort to meet budget targets. As a result, Petropolis, Brazil-based Celma faces a 6 percent increase in labor cost.

“My competition is in China or Malaysia,'' Talon said. “Tax incentives can't be applied as short-term policies.''

To contact the reporter on this story: Fabiola Moura in Sao Paulo at fdemoura@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Brendan Case, Tony Robinson