Feds approve first U.S. factory in Cuba

Alan Gomez, USA TODAY 1:27 p.m. EST February 15, 2016

(Photo: Alan Gomez, USA TODAY)

MIAMI — The Obama administration approved the first U.S. factory to be built and operated in Cuba in more than 50 years, in the latest sign of the rapidly changing relationship between the United States and the communist nation.

Cleber LLC, an Alabama-based company that builds tractors for small farms, was notified by the Treasury Department that it could open a facility in Cuba. Co-founder Saul Berenthal said the company's attorney was in Havana on Monday to start the lengthy process of finalizing the agreement with the Cuban government and hopes to start production by early 2017.

Berenthal said he was proud to get the approval, but it means even more for the future relationship between the Cold War foes.

"Being first is great," he said. "But for certain, we should not be the only ones. We're hoping and expecting many more will follow."

A U.S. business operating in Cuba is possible because of sweeping changes made by President Obama since his Dec. 17, 2014, announcement that the long-time enemies would re-establish diplomatic relations. Since then, embassies have reopened in Washington and Havana, and diplomats and business people have flooded Cuba.

Starting Tuesday, U.S. airlines can begin applying for more air routes to the Caribbean destination.

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The U.S. maintains an economic embargo on Cuba that restricts most trade and tourism-related travel to the island. The Obama administration, through the Commerce and Treasury Departments. has been working around the edges of that embargo to allow more U.S. exports and cooperation with Cuba. One change allowed U.S. companies to sell products and services directly to private entrepreneurs on the island, including those who work in private farming cooperatives.

That opened the door for Cleber, which was formed by Berenthal and partner Horace Clemmons just weeks after Obama's historic announcement. The longtime business associates designed tractors specifically for the island's small farmers, which they estimate account for 70% of agricultural production in Cuba.

Many American companies have been interested in selling agricultural equipment to Cuba, including Caterpillar, which recently announced that it reached a deal to sell earth-moving equipment to the island through a Puerto Rican distributor. What set Cleber's proposal apart, however, was its plan to build in Cuba and employ Cuban workers.

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The company will make a small, red tractor it calls the "Oggún" in homage to the Afro-Cuban Santeria spirit of metal work. American workers initially will build the pieces in Paint Rock, Ala., and assemble them in a facility at the port of Mariel, a special economic zone about 30 miles west of Havana. Berenthal said the goal is to have American workers train Cubans to do the work and manage the operation in Cuba.

"Cuba doesn't want to just import, Cuba wants to do production," he said. "One of the things that the Cuban economic law prefers is that we bring not only employment and technology to Cuba but also management skills."

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The proposed facility will be able to build about 1,000 tractors a year to be sold in Cuba and to other Latin American countries, Berenthal said. The tractors are smaller than industrial-size machines and designed to accommodate different attachments for varying needs of small-time farmers.

The company wants to sell the 25-horsepower tractors for under $10,000 to make them affordable to farmers throughout Latin America.

"We now have created a framework as to how U.S. companies can win approval," Berenthal said. "Now we know what it takes."