Former IBMers hope to sell tractors to Cuban farmers
When President Barack Obama visited Cuba in March he said that a small Alabama company that makes tractors would “be the first U.S. company to build a factory here in more than 50 years.”
That was jumping the gun because although Cleber, based in Paint Rock, Alabama, had authorizations from the U.S. Office of Foreign Assets Control and the Commerce Department to pursue its dream of assembling small tractors in Cuba’s Mariel Special Economic Development Zone, the plan still needed Cuban approval.
After months of anticipation and just days before the company was scheduled to take part in the Havana International Fair, a massive trade show that attracted exhibitors from 73 countries, Cleber finally got its answer: No.
It was a disappointment for a high visibility project that had been touted as a potential example of how the rapprochement process that began on Dec. 17, 2014 was working for both countries.
But this week Saul Berenthal, who co-founded the company with Horace Clemmons, was busy working the Cleber booth at the Havana fair as a video of the tractor in action rolled in the background.
“We’re not giving up. We’re here for the long run,” said Berenthal. “We understand the process.”
We’re not giving up. We’re here for the long run.
Saul Berenthal, co-founder of Cleber
But the company is changing its strategy.
Instead of pinning its hopes on assembling its Oggún tractors — named for the Santeria god of iron, tools and weapons — in the Mariel zone, it has begun manufacturing them in Alabama with the hope of exporting them to Cuba and elsewhere.
Cuban authorities “told us Mariel was not the proper venue,” said Berenthal. “They encouraged us and directed us to work with the Ministry of Agriculture and other agencies interested in importing tractors.”
While at the fair, which ran through Friday, Berenthal said, “People from the agriculture ministry and the import-export agencies have already come to see us.”
Ana Teresa Igarza Martínez, a zone official, told EFE, the Spanish news agency, that Cleber, which uses tractor technology from the 1940s, wasn’t the type of technologically advanced project that Cuban hopes to attract to the zone.
It’s been a lengthy journey for Cleber.
Berenthal, who was born in Havana and came to the United States in 1960, and Clemmons set up the company shortly after the rapprochement was announced. It took about 8 1/2 months for the company to get a U.S. license to begin pursuing the project in Cuba. After a series of visits to the island to meet with Cuban officials, Cleber put its final proposal in Cuban hands on June 30 and the waiting game began.
“It’s tragic it took as long as it did,” said John Kavulich, president of the U.S.-Cuba Trade and Economic Council. “The Cuban government was either seriously considering this or it found some political value in not saying no for so long.
The Cuban government was either seriously considering this or it found some political value in not saying no for so long.
John Kavulich, U.S.-Cuba Trade and Economic Council
“I think optics may have had something to do with this as well,” Kavulich said. “By giving Cleber the green light, Cuba might have worried that would signal it was accepting U.S. statutes and piecemeal regulations that allow U.S. companies in some sectors to pursue business with Cuba even though the embargo is still in effect.”
But Cleber insists it will persevere. “This [setback] does not mean we are stopping. It means we are reassessing and pursuing other strategies,” Berenthal said. “We Americans never give up.”
Cleber also has another Cuban business possibility. The company recently received a U.S. license that would allow it to sell a wide range of U.S.-made construction and agricultural components and parts to the Cuban government. It was showing catalogs of some of its new offerings at the fair.
We Americans never give up.
Saul Berenthal, co-founder of Cleber
The United States recently clarified that while food exports to Cuba can’t currently be financed, exports of agricultural equipment can be. “That would put us on par with the rest of the world with financing,” said Berenthal. “That doesn’t mean we still don’t have the bank issue.”
Even though the Obama administration has allowed the use of the U.S. dollar in third-party financial transactions involving Cuba, many U.S. banks are still reluctant to handle any Cuba business. Financial institutions operated by the Cuban government also aren’t allowed to have correspondent accounts in U.S.-based financial institutions, making payments difficult.
Some banks also don’t know how to interpret the regulatory changes and don’t want to face the risk of a miscue and potential fines.
Another strike against the Cleber tractor project may have been a competitive one. Cuba is currently importing agricultural equipment from countries such as Japan, India, China, Belarus and France that supply grants, credits and export guarantees, said Kavulich.
But Berenthal still holds out hope that if Cleber’s export business to Cuba goes well, perhaps later on the Oggún tractor, a simple machine designed to be used in small-scale farming, can be manufactured in Cuba — just not in the Mariel zone.
The special economic development zone, which is about 30 miles west of Havana, wants to attract foreign investment in clean, sustainable projects with export potential. There’s a preference for companies offering technological innovation and efficient production processes.
There are 19 projects in various stages of development at the zone and Cuba is offering foreign investment opportunities for another 24 Mariel projects.
Among the joint ventures that will be locating in Mariel is BrasCuba, a Cuban and Brazilian ventures that makes Popular, Cohiba and H. Upmann cigarettes. When its new state-of-the-art factory is completed, BrasCuba will be able to produce nearly four times as many cigarettes as it does currently.
If clinical trials of a Cuban cancer vaccine set to begin soon at Roswell Park Cancer Institute in Buffalo, N.Y. go well, a Roswell Park-Center of Molecular Immunology joint venture also could begin production in the Mariel zone. Igarza told CubaDebate, a government-affiliated website, that the vaccine project is one that “corresponds to the high technology the zone wants to attract.”
Berenthal said his tractor, which uses parts that are widely available, still has the potential to help Cubans.
“I wanted to do something that could bring the people together,” he said, “and I think this was as good a vehicle as I could find.”