Caterpillar distributor is first U.S. company to get permission to set up in Cuba’s Mariel zone
A slow but steady campaign to become the first U.S. company to set up business in Cuba’s Mariel Special Economic Development Zone has paid off for a Caterpillar distributor. Cuba gave RIMCO, Caterpillar’s Puerto-Rico based dealer, approval to set up a warehouse and distribution center.
Ana Teresa Igarza, managing director of the zone, said at a news conference during the Havana International Fair – Cuba’s largest commercial fair – that RIMCO hoped to open in the zone next year. In a recent interview, she said Cuba also was in advanced negotiations with two other U.S. companies interested in locating at Mariel, which is 28 miles west of Havana.
Cuba has high hopes for the 115,000-acre zone, which includes the Mariel container port, and wants it to become its hub for manufacturing and sustainable development. Although 31 companies – Cuban and foreign – have been approved for the zone, construction on many facilities is just beginning. Investment in the ventures comes from 14 countries.
Currently, nine companies operate in the 4-year-old Mariel zone.
During the fair Cuba’s Ministry of Foreign Trade and Investment announced its 2017-2018 investment opportunities portfolio. It includes 456 investment projects open to foreign investors that are worth more than $9.5 billion. Cuba is seeking $1.7 billion in investment for the Mariel special zone, $2 billion for agriculture projects and $898 million to build hotels and other tourist facilities.
The RIMCO deal could be one of the last signed before the Trump administration tightens business dealings with Cuba. Under a policy that President Donald Trump outlined in June, direct transactions between companies under U.S. jurisdiction and enterprises related to the Cuban military, intelligence or security services will be prohibited.
The Mariel zone is controlled by Almacenes Universales, a company that operates under the umbrella of GAESA, a conglomerate run by Cuba’s military.
But U.S. companies that have signed deals in advance of the new rules will be grandfathered in. The regulations are still being written.
“Despite President Trump’s harsh rhetoric, Cuba is open for business. The question is, will President Trump and Congress allow U.S. companies to compete for these growing opportunities, or keep them on the sidelines as Cuba’s markets continue to grow?” said James Williams, president of Engage Cuba, a group that lobbies for normalization of relations between the United States and Cuba.
RIMCO is getting in under the wire.
“We are going to set up a warehouse and distribution center at Mariel and we will be distributing Caterpillar equipment,” Caroline McConnie, RIMCO vice president, said at a news conference at the fair. “We have a license from the Commerce Department and other agencies.”
Caterpillar, a heavy equipment manufacturer based in Peoria, Ill., announced in February 2016 that it had named RIMCO, a private family business, to be its Cat dealer in Cuba in preparation for the day the trade embargo is lifted. But the Mariel deal advances that timetable. Caterpillar makes construction and mining equipment, power systems, and marine and industrial engines.
RIMCO is the exclusive Caterpillar dealer for Puerto Rico, the U.S. Virgin Islands, the British Virgin Islands, Barbados, and other Eastern Caribbean islands. It distributes other equipment brands but has had relationship with Caterpillar for more than 35 years.
Caterpillar officials said current embargo law would not permit the manufacture of Caterpillar equipment on the island. But since 1998, Caterpillar has been among the corporate leaders in pushing for lifting of the embargo.