“All our lives we have been used to being called revolutionaries,” Saul Berenthal and Horace Clemmons respond almost in unison, the founders of a tractor company seeking to build the first U.S. plant in Cuba since January 1959.
The two engineers met over four decades ago when they worked for IBM. A short time later they decided to found their own cash register software company and managed to compete with industry giants such as National Cash Register, Fujitsu and their former employer.
The key to their success, Clemmons recalls, was in creating open software, not subject to licenses, which anyone could use. They began assembling their own machines, adapting Epson printers to the personal computers of the time. “We changed the rules of the market and today most cash registers work through a PC.”
Their company, based on technical support and advice, came to earn more than 30 million dollars a year and was sold in 1995.
They are now ready to fight against the giants once again.
Berenthal left Cuba as a teenager in 1960, but he never lost touch with his country. Following December 17, 2014, when presidents Raúl Castro and Barack Obama announced they were ready to open a new chapter in bilateral relations, he saw an opportunity.
“What Saul did was to consider the needs of the Cuban people and seek a business model which would be beneficial to all parties,” Clemmons notes, who did not hesitate to join him in this new venture.
The substitution of food imports is one of the priorities of the island with regards to foreign investment, hence the idea of founding a company to manufacture medium size tractors in order to help Cuban producers be more efficient.
Clemmons had the experience of his childhood and youth in the U.S. countryside, where he witnessed his grandfather working the land every day with two mules, while his uncles and cousins made the first steps towards mechanization.
The company name, Cleber LLC, stems from the fusion of the surnames of its founders and a word play on the pronunciation of “clever”.
“We didn’t want to come to Cuba to sell anything,” Berenthal explains, “Our idea was to establish a permanent project, invest, create a plant that would hire a skilled Cuban workforce and obtain a product that would benefit the people.”
Clemmons recalls that the first thing that came to his mind was to call the tractor the “iron horse”, but a Cuban friend of Saul spoke of Oggún, the Yoruba deity of metal work. This blend with Cuban culture seemed perfect to them.
A blockade-proof project
Given their previous business experience, Berenthal and Clemmons followed the philosophy of avoiding restrictive licenses in the production of agricultural machinery.
The Oggun tractor is based on an Open Source Manufacturing Model (OSMM).
This means it will be assembled from a base group of modular off-the-shelf components, available in a wide variety of markets from different suppliers.
This provides for varied and economical equipment that can be made available to small-scale farmers and easily adapted to suit their needs.
In addition, it will make servicing and maintenance easier, as parts and components are available on the international market and are interchangeable between different machines.
This open system is contrary to the business model of the largest international tractor and lightweight construction machinery manufacturers, which force clients to be dependent on a single supplier. Thus they ensure a continued income based on required spare parts and maintenance services.
According to official statistics published in Granma, Cuba has some 62,000 tractors, manufactured in 26 different countries. The majority have been in use for nearly thirty years and those operating them are accustomed to using their ingenuity to solve daily technical problems, rather than original suppliers.
Cleber LLC is not interested in protecting its inventions with patents and actually encourages others to copy its models. “We will compete based on quality of service,” its founders state.
An example for the world
In recent months, Cleber’s idea has expanded and using the same platform as the Oggun, they have already planned the assembly of other similar equipment such as excavators, forklifts and trenchers.
The assembly plant they hope to build in the Mariel Special Development Zone will use cutting edge technology and produce up to 1,000 tractors per year, with an eye on both the domestic and export market.
“Although we will initially be importing parts, we will not be dependant on any country,” Clemmons notes.
Even if Cuba is unable to buy certain products in the United States, these could be substituted by similar products from other markets, he adds.
But his hope is that one day they will be able to acquire most of the necessary equipment within the island. “That way, much more money would stay in the country.”
Berenthal believes that Cuba could take the lead in the Open Source Manufacturing Model. “Cuba is an icon for the rest of Latin America. Not only from the ideological point of view, but also given certain things it has accomplished in its economy.”
“If we are successful here, it will be an example for the rest of the region,” he says.
Cleber has been in the midst of the storm of transformations underway across the Florida Straits, with the process toward the normalization of relations advancing, but the bulk of the blockade policies, in force for over half a century, remaining in place.
“We have always said that the blockade has no political justification, no economic justification, and no moral justification,” Berenthal stresses.
“I have made many trips to the island, but I’ve never met a Cuban who could tell me that the blockade is good. Everyone I know who supports the blockade lives outside Cuba.”
Cleber became the focus of international media in February this year, after becoming the first U.S. company to obtain a license from the Office of Foreign Assets Control, one of the entities regulating the blockade, allowing it to initiate the required procedures before the Cuban authorities for the establishment of the plant at Mariel.
Berenthal and Clemmons acknowledged that these were hectic days, with hundreds of calls and many companies, large and small, interested in how they obtained the license.
Berenthal recalls that they were waiting for the necessary permission from the departments of Commerce and the Treasury for nine months.
We began by requesting a specific license, he notes, which means seeking approval to undertake a precise list of things, “no more or less.”
OFAC and Commerce Department regulations evolved to the point that we were able to apply for a general license, which is much broader, as long as activities fall within approved limits, he says.
Given the experience they have gained in these legal intricacies, as well as the Cuban economic scenario, Cleber is now advising other companies with similar objectives.
The firm has worked together with a company that wants to introduce a pig raising unit that transforms manure into fertilizer and fuel. Their size ranges from six to sixty thousand animals. Another firm is interested in installing prefabricated equipment for building construction.
”Our goal is to make it easier for the next in line,” Clemmons notes.
The final phase
As with companies from all countries who hope to establish themselves in the Mariel Special Development Zone (ZEDM), Cleber LLC must meet certain requirements and submit a project proposal for approval.
Foreign investment in the Zone is governed by Decree-Law No. 313 “On the Mariel Special Development Zone” and its complementary regulations, while Law No. 118 is of supplementary application, as outlined in the Investor Guide produced by the Ministry of Foreign Trade and Investment.
According to the Berenthal himself, the Mariel authorities favorably assessed their proposal in the first instance, meaning they were left waiting for permission from the U.S. side.
Now that they have the OFAC authorization, the cofounder of Cleber explains that the company expects to be able to present the final project proposal to the ZEDM authorities later this April, which is being updated to include ideas beyond the tractors.
Under current legislation, “a decision is issued within 60 calendar days, from the date of filing the application, and applicants should be notified.”
In the case of Cleber, final approval rests with the Council of Ministers. The two entrepreneurs are optimistic.
Berenthal recalls his Jewish ancestry and a traditional saying, “If not us, who? If not now, when?”
In addition, according to the Yoruba annual predictions and recommendations known as the “Letter of the Year”, the governing Orisha of 2016 is Oggun.