Friday, June 26, 2015

An Alabama tractor company wants to set up shop in Cuba, if only Washington will let it

An Alabama tractor company wants to set up shop in Cuba, if only
Washington will let it
By Nick Miroff June 25 at 5:18 PM

Two U.S. businessmen are trying to become the first Americans to set up
a manufacturing operation in Cuba in more than half a century, with
plans to build inexpensive tractors on the island for sale to local farmers.

Horace Clemmons and Saul Berenthal, former IBM engineers and longtime
business partners, said they have been working with officials in Cuba
and regulators in Washington to turn their seemingly implausible
business plan into a trailblazing pilot project for a new era of
U.S.-Cuba relations.

Cleber LLC, their Alabama-based company, is seeking to build a
small assembly plant in the Mariel Special Economic Zone, an area west
of Havana with a new $1 billion deepwater port terminal where the Cuban
government is trying to attract foreign investment.

Two Mexican companies that plan to set up a meatpacking plant and
a paint factory are the only two projects that Cuba has announced so far
in the Mariel zone. Cleber LLC is believed to be the first U.S. company
to apply.

"I believe we can pull it off," said Clemmons, 71, "and it'll be good
for everyone."

Clemmons and Berenthal have never made tractors before-- they're working
on their first prototypes-- but that may be the least of their problems.

The U.S. trade embargo on Cuba remains firmly in place even as the two
countries are moving to restore diplomatic relations severed by
Washington in 1961. It remains a bureaucratic minefield for even the
most basic forms of U.S.-Cuba commerce -- like charter flights or
shipments of frozen chicken-- never mind something as complicated as a
tractor-assembly operation.

Officials at the U.S. Treasury Department and Commerce Department have
told the men their plan could be approved "as long as we comply with the
spirit of the law," said Berenthal. "They're cooperating with us."

Officials in Washington have told them to expect a response within 180 days.

The tractor-making plan would take advantage of loopholes in the trade
sanctions that allow for agricultural exports and farm equipment, as
long as the end users of those products are private farmers and
non-government cooperatives.

And Berenthal said they would hire a non-government cooperative to
assemble the tractors, a labor arrangement that does not appear to be
possible under Cuba's existing investment framework. They would start
with five to 10 employees, he said.

The tractor parts will come from Alabama, Berenthal said, but eventually
the company would like to source parts from Cuba.

Clemmons and Berenthal have hired an engineering firm to build the first
tractors based on the simple designs of the Allis-Chalmers G model that
was made in the United States from 1948 to 1955. It was specially
tailored to the type of small family farms that have mostly disappeared
in the United States, but remain the standard in Cuba.

"These tractors are perfect for 100-acre farms," said Clemmons.

A similar-sized model made in the United States or Korea might cost
$20,000 or so, said Clemmons. He wants the Cleber version to retail for
half as much. They plan to call it "Oggun," named for the orisha,
or Afro-Cuban Santeria spirit, of metal.

Clemmons and Berenthal are planning to bring their prototype version to
the annual Havana trade fair in November.

As far-fetched as the plan may seem, the colorful biographies of the two
men suggest they might actually be able to do it.

Berenthal and Clemmons left IBM to start their own North Carolina-based
software service firm, PSI, which grew to 400 employees before they sold
it to Japan's Fujitsu Corp in 1997, for an undisclosed sum. "It was more
than enough to retire on," said Clemmons.

He returned home to northern Alabama, where he grew up farming cotton
and corn. "My grandfather didn't have a tractor, and I would help him
plow the fields with a mule," he said.

Clemmons bought a 3,000-acre parcel of land, donating most of it to the
Nature Conservancy, and then built a 7,000-square-foot house to
run mostly on wind and solar power, drawing water from a nearby cave. He
ran for commissioner of Jackson County (pop. 53,000) in 2008 and won,
serving a four-year term.

Berenthal, 70, grew up in Cuba and left the island with his family in
1960 after Fidel Castro's revolution. After the sale of PSI, he began
traveling back to Cuba more often, and then leading Jewish tour groups
to visit the island's synagogues.

His grandparents, who settled in Cuba to escape the Holocaust, are
buried at the island's Jewish cemetery. "I still go back every time I
visit the island," he said.

Berenthal said both men are motivated, more than anything, by an urge to
help small farmers who rely mostly on old Soviet-era tractors and oxen
teams. Cuba imports most of its food, despite an abundance of fertile land.

"With a tool like this, these farmers will be able to increase their
output," he said. "We think this will be a mitzvah-- a good deed."

Source: An Alabama tractor company wants to set up shop in Cuba, if only
Washington will let it - The Washington Post -

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