First U.S. Factory in Cuba Will Manufacture Tractors

The Obama administration has approved the first U.S. factory in Cuba in more than half a century, allowing a two-man company from Alabama to build a plant assembling as many as 1,000 small tractors a year for sale to private farmers in Cuba.

Partners Horace Clemmons and Saul Berenthal will build tractors and other heavy equipment in a special economic zone started by the Cuban government to attract foreign investment. They expect production to begin by the first quarter of 2017.

“Everybody wants to go to Cuba to sell something and that’s not what we’re trying to do. We’re looking at the problem, and how do we help Cuba solve the problems that they consider are the most important problems for them to solve,” Clemmons said. “It's our belief that in the long run we both win if we do things that are beneficial to both countries.”

The $5 million to $10 million plant would be the first significant U.S. business investment on Cuban soil since Fidel Castro took power in 1959 and nationalized billions of dollars of U.S. corporate and private property. That confiscation provoked a U.S. embargo on Cuba that prohibited virtually all forms of commerce and fined non-U.S. companies millions of dollars for doing business with the island.

The relationship changed when Presidents Barack Obama and Raul Castro declared on Dec. 17, 2014, that they would restore diplomatic relations and move to normalize trade and travel, among other things.

The Oggun tractor plant, named after a god in Cuba's syncretic Santeria religion, will assemble commercially available components into a durable and easy-to-maintain 25-horsepower tractor selling for less than $10,000, Clemmons and Berenthal said. The men believe they can sell hundreds of the tractors a year to Cuban farmers with financing from relatives outside the country and to non-government organizations seeking to help improve Cuban agriculture.

Berenthal said they are optimistic that they also will be able to export Oggun tractors to other Latin American countries, which have low or no tariffs on Cuba products, making them competitive on price. The men expect a 10 to 20 % profit on each tractor.

For the project's first three years, Clemmons and Berenthal say they will export components from the United States for assembly in Cuba. They hope to eventually begin manufacturing many of the parts themselves on the island. They expect to start with 30 Cuban employees and, if things go as planned, grow within five years to as many as 300.

Source: New York Times S