As American CEOs contemplate the potential market for their goods and services in Cuba, they face a myriad of restrictions from the U.S. embargo and the Cuban government.
While the barriers currently make the island an impenetrable market for most U.S. companies, one CEO said now is the time to start establishing relationships and laying the groundwork for future opportunities.
Saul Berenthal is co-founder and CEO of Cleber, LLC, a tractor manufacturer based in Paint Rock, Ala. Last year, the company became the first U.S. business in more than a half century to receive authorization from the U.S. government to invest in and operate a manufacturing facility in Cuba. Berenthal told Chief Executive it was a long and tedious process that included petitioning multiple U.S. agencies and documenting how they would operate on the island. It took more than a year to secure the necessary export licenses from the U.S. Department of Commerce.
“It really took a while and was a tedious process. We had to not only convince them and explain what we were looking to do but that [our operation] was in the mutual best interest of both the U.S. and Cuba,” Berenthal said.
“THERE’S A LOT OF REFURBISHING AND RECONSTRUCTION GOING ON IN HAVANA AND SOME COMPANIES ARE DONATING MATERIALS AND TOOLS. IT’S NOT ONLY AN ACT OF GOODWILL, IT ALSO IS A GOOD OPPORTUNITY TO SHOW OFF THE QUALITY OF U.S. GOODS AND SERVICES.”
Berenthal said Cleber now has all the licenses it needs from a U.S. perspective to export to Cuba in both the agriculture and construction industries. Yet in January 2017, the Cuban government declined the project and said Cleber did not meet the Mariel requirements for worker safety and technology. Despite the setbacks, Berenthal said he is still working to satisfy the requirements in Cuba. “We just now have to convince the Cuban side that it is in their interest to do business with us here in the U.S.,” Berenthal said.
While the project is currently in limbo, Berenthal has so far been the only one to succeed on the U.S. end. Cleber’s plan is to assemble small farm tractors in the Mariel Special Development Zone outside of Havana using an open source manufacturing model. Berenthal, a former software engineer, is a Cuban American who left the island as a teenager in 1960. Berenthal worked at IBM with current business partner Horace Clemmons until 1982 when they both left and founded Post Software International. Berenthal and Clemmons grew the company to annual revenues of $30 million and had 700 employees worldwide before it was acquired by Fujitsu in 1995 for an undisclosed price.
With a population of 11 million people only 90 miles off the coast of Florida, Cuba has the potential to be a market for U.S. companies in many sectors. Berenthal said industries that have the most potential for growth include construction, tourism, agriculture and transportation. As the island relies on manufactured goods from Russia and China, he said U.S. companies could be better positioned to serve the market.
Other CEOs also are laying the foundation for future opportunities. Last year, Caterpillar CEO Doug Oberhelman and other executives from the company, led a delegation to Cuba to lay the groundwork to serve the market “once the remaining trade restrictions are lifted,” he said. Marriott CEO Arne Sorenson also has been promoting stronger ties with the island nation. Berenthal noted that some industrial companies also are donating materials to the island to make a goodwill gesture and position their products.
“There’s a lot of refurbishing and reconstruction going on in Havana and some companies are donating materials and tools. It’s not only an act of goodwill, it also is a good opportunity to show off the quality of U.S. goods and services,” Berenthal said.
President Trump announced in June that he would undo some of the policies made by President Obama in 2014 which made it easier for Americans to visit the island. The new policies aren’t immediately taking effect, and administration officials said regularly amendments would be made in the coming months. Yet Berenthal believes Trump will eventually act as a “businessman” and that CEOs should now start considering how they might capitalize on opportunities when the embargo falls.
Berenthal said the path to political freedom can start with and be significantly influenced by developing economic freedom and that American CEOs can play a big role in opening up the island. “I think goodwill from the private sector will show the Cuban government and the people that it is in the interest of both countries to develop trust in commerce,” Berenthal said.