Former IBMers hope to sell tractors to Cuban farmers
A company co-owned by a Raleigh man has gotten the go-ahead from the federal government to build a small farming tractor in Cuba, paving the way for it to become the first American manufacturer to set up shop in the nation since the revolution and the subsequent U.S. trade embargo more than 50 years ago.
Cleber LLC plans to build an assembly plant in the Mariel Special Economic Development Zone, an industrial area for foreign companies adjacent to a massive new port west of Havana. There, workers will put together parts made in Alabama for a tractor the company calls the Oggun, after the spirit of metal work in the Afro-Cuban religion of Santeria.
The Oggun is an updated version of the Allis-Chalmers Model G tractor that was introduced in the U.S. in 1948 and discontinued seven years later. The company thinks the small, rear-engine tractor will be coveted by Cuba’s 70,000 non-government farming co-ops and small independent farmers, who now rely on animals and aging Soviet tractors to plow their fields.
Cleber was founded by two former IBMers from the Triangle – Saul Berenthal of Raleigh and Horace Clemmons of Alabama, where the company is based. Berenthal is a native of Cuba who fled the country as a teenager and has lived in the Triangle since the 1970s. He and Clemmons have known each other for about 45 years and have established, built and sold three companies in succession that made software for the retail industry.
They chose to build a tractor for the Cuba market because they think it will sell and give a boost to the country’s private-sector agriculture industry. There’s a growing demand for meat and produce from high-end restaurants and resorts that cater to the tourism industry, Berenthal said.
“Cleber chose tractors as the starting point for manufacturing because more than 70 percent of Cuba’s land has been returned to the private sector to be worked for the direct benefit of farmers,” he said in a statement Monday. “Family farmers and cooperative farms are critically important to Cuba’s economy and provide a strong demand for affordable equipment to increase their productivity.”
Cleber’s move into Cuba was made possible by the thaw in U.S.-Cuban relations being carried out by the Obama administration and Cuban leader Raul Castro. The venture would not have been legal without exceptions to the U.S. trade embargo made by the Obama administration, including one allowing the sale of American products to private entities in the agriculture business in Cuba.
“It was a whole bunch of little things here and there that made our proposal valid,” Berenthal said in an interview Monday.
The U.S. Department of the Treasury, which enforces the embargo, issued Cleber the license it needed last week.
Cleber hopes to begin selling tractors by sometime in the first quarter of 2017, Berenthal said. It hopes to price them somewhere between $8,000 and $10,000, he said, but “until we know exactly what the labor costs are going to be, we won’t know for sure.”
If all goes as planned, the Oggun will hit the market about the time a new administration is taking office in the U.S., notes John Kavulich, president of the U.S.-Cuba Trade and Economic Council, a clearinghouse for U.S. businesses based in New York. Whether Obama’s successor maintains the new openness with Cuba or tries to roll it back could affect Cleber’s aspirations there, Kavulich said.
“It could be continuity or it could be disruption. We don’t know,” he said. “But from a business standpoint, that goes into the equation.”
Berenthal and Clemmons hope their business model will show the way for other American companies interested in manufacturing in Cuba. Their long-term goals include exporting tractors from Cuba to other Latin American countries with similar small-farm economies.