Brazil-based Embraer SA ERJ announced that it will close its business jet production factory in Harbin, China, citing low demand for private jets in the country due to a lack of government incentives as the primary reason.
The company’s shares hit a new 52-week low of $20.56 yesterday, before closing at $20.79, down 0.14% from the closing price of Tuesday’s trading session.
With the shutdown of this facility, Embraer ended the joint venture with Chinese partner Aviation Industry Corp’s subsidiaries – Harbin Aviation Industry (Group) Co., Ltd. and Harbin Hafei Aviation Industry Co., Ltd. For as long as 13 years, the joint venture – Harbin Embraer Aircraft Industry Co., Ltd – has manufactured and delivered commercial and executive jets in China. The joint venture made the last delivery of its Legacy 650 aircraft in Mar 2016.
Notably, orders at the Harbin plant started declining as the Chinese government’s tax policies made the import of foreign-made aircraft much cheaper than manufacturing them in the country.
Embraer intends to continue serving the Chinese commercial and executive aircraft market. It will also provide support to existing customers as well as for the 166 company-made planes in China. Moreover, it will offer an outstanding array of products and services backed by its Beijing-based team and infrastructure across the country.
The Zacks Rank #3 (Hold) company is reputed to be the world's third-largest commercial aircraft manufacturer after The Boeing Co. BA and Airbus EADSY. The company designs, manufactures and sells aircraft and systems under both the commercial and executive aviation, and defense and security segments.
A Stock to Consider
A better-ranked stock in the aerospace and defense industry is Engility Holdings, Inc. EGL, carrying a Zacks Rank #2 (Buy).
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