Caterpillar distributor is first U.S. company to get green light to set up shop in Cuba’s Mariel zone

Train tracks run through the Mariel Special Economic Development Zone to Havana. Currently 31 enterprises have been given approval to set up in the zone, including Caterpillar Inc.’s Puerto Rico-based distributor RIMCO.
Train tracks run through the Mariel Special Economic Development Zone to Havana. Currently 31 enterprises have been given approval to set up in the zone, including Caterpillar Inc.’s Puerto Rico-based distributor RIMCO.

A slow, steady campaign to become the first U.S. company to locate in Cuba’s Mariel Special Economic Development Zone has paid off for a Caterpillar distributor. Cuba gave RIMCO, Caterpillar’s Puerto Rico-based dealer, the green light to set up a warehouse and distribution center.

Ana Teresa Igarza, managing director of the zone, said at a news conference during the Havana International Fair — Cuba’s largest commercial fair — that RIMCO hoped to open in the zone in 2018. The Cuban newspaper Juventud Rebelde also reported that a shipment of John Deere agricultural equipment was expected to arrive in Cuba in mid-November for testing with an eye toward possible sales by Illinois-based Deere & Co. to Cuba.

During a recent interview with the Miami Herald, Igarza said Cuba also was in advanced negotiations with another U.S. company in the biopharmaceutical field that was interested in locating at Mariel, which is 28 miles west of Havana.

Cuba has high hopes for the 115,000-acre zone, which includes the Mariel container port, and wants it to become its hub for high-tech, advanced manufacturing and sustainable development. Although 31 companies — both Cuban and foreign — have been approved for the zone, construction on many facilities is just in the beginning stage. Investment in the ventures comes from 14 countries.

Currently nine companies are in operation in the four-year-old Mariel zone.

During the fair, which ends Friday, Cuba’s Ministry of Foreign Trade and Investment announced its new 2017-2018 investment opportunities portfolio. It includes 456 investment projects open to foreign investors that are worth more than $9.5 billion. Cuba is seeking $1.7 billion in investment for the Mariel special zone, $2 billion for agriculture projects and $898 million to build new hotels and other tourist facilities.

The RIMCO deal could be one of the last signed before the Trump administration tightens up on business dealings with Cuba. Under a Cuba policy that President Donald Trump outlined in June, direct transactions between companies under U.S. jurisdiction and enterprises related to the Cuban military, intelligence or security services will be prohibited.

The Mariel zone is controlled by Almacenes Universales, a company that operates under the umbrella of GAESA, a sprawling conglomerate run by Cuba’s military.

But U.S. companies that have signed deals in advance of the issuance of the new Trump administration rules will be grandfathered in. The regulations are still being written.

“Despite President Trump’s harsh rhetoric, Cuba is open for business. The question is, will President Trump and Congress allow U.S. companies to compete for these growing opportunities, or keep them on the sidelines as Cuba’s markets continue to grow?” said James Williams, president of Engage Cuba, a group that lobbies for normalization of relations between the United States and Cuba.

RIMCO is getting in under the wire.

“We are going to set up a warehouse and distribution center at Mariel and we will be distributing Caterpillar equipment,” Caroline McConnie, RIMCO vice president, said at a news conference during the fair. “We have a license from the Commerce Department and other agencies.”

Caterpillar, a heavy equipment manufacturer based in Peoria, Illinois, announced in February 2016 that it had named RIMCO, a private family business, to be its Cat dealer in Cuba in preparation for the day the embargo is lifted. But the Mariel deal advances that timetable. Caterpillar makes construction and mining equipment, power systems, and marine and industrial engines.

RIMCO serves as the exclusive Caterpillar dealer for Puerto Rico, the U.S. Virgin Islands, the British Virgin Islands, Barbados, and other Eastern Caribbean islands. It also distributes other equipment brands but has had a more than 35-year relationship with Caterpillar.

Caterpillar officials said current embargo law would not permit the manufacture of Caterpillar equipment on the island. But since 1998, Caterpillar has been among the corporate leaders in pushing for lifting of the embargo.

Caterpillar and the Caterpillar Foundation also have donated $500,000 to The Finca Vigía Foundation, which works to restore and preserve the Cuban home of the late Ernest Hemingway. Last year Caterpillar also donated a skid-steer loader to be used in the construction of the Taller building, an archival storage and conservation facility on the grounds of the Hemingway home in San Francisco de Paula, Cuba.

Follow Mimi Whitefield on Twitter: @HeraldMimi