U.S. companies drawn to Cuba, unsure if profits will follow

HAVANA (Reuters) - About 50 American businesses came to Havana this week for a trade expo, many of them intrigued but still unclear how to make money in a Communist-ruled country of 11 million people who have little purchasing power.

A man walks near logos of Pepsi and Gatorade at the U.S. pavilion during the Havana International Fair (FIHAV) November 5, 2015. REUTERS/Enrique de la Osa

With detente raising hopes that full commercial ties could be restored, U.S. companies are being drawn to Cuba. But it is a market whose attraction defies convention, given that foreign businesses complain about the island’s bizarre dual-currency system, rigid labor market and opaque legal guarantees.

Some U.S. companies are attracted to the forbidden fruit - the island has been largely off bounds to U.S. business for more than five decades. Others say they can fill a need, or lament that the United States is ceding a neighboring market to the rest of the world.

One U.S. company that is in line to open the first American factory in Cuba in more than half a century is interested in the island only because its co-founder was born here.

Alabama-based Cleber LLC says it has been approved by the Cuban government to assemble tractors at the special development zone surrounding the port of Mariel. But because of the continuing U.S. trade embargo, Cleber would need special U.S. permission to open shop.

“We can open businesses anywhere in the world. Cuba is special on a personal basis,” said Saul Berenthal, a Cuban-American who left the island in 1960, the year after Fidel Castro’s rebels came to power.

U.S. President Barack Obama and Cuban President Raul Castro agreed last December to end Cold War-era animosity and restore diplomatic relations, but the embargo remains in place as only the U.S. Congress can lift it.

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Obama has permitted some commerce, such as telecommunications, and allowed U.S. companies to sell to Cuba’s nascent private sector, adding to existing limited business.

For its part, Cuba is enticing foreigners with tax cuts and a Chinese-style special development zone around Mariel.


The newcomers can look at the experience of privately held shipping company Crowley Maritime Corporation, which has been making losses or breaking even in Cuba for 14 years.

Jacksonville, Florida-based Crowley entered Cuba in 2001, after Washington started allowing food sales to Cuba, largely because Jay Brickman fell in love with Cuba in 1978, when his boss Thomas Crowley first sent him to Cuba to investigate business opportunities.

Brickman, now vice president of government services for Crowley, said he expects profits soon under the market-friendly changes from the U.S. and Cuban governments.

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“Is it worth it, only in a business sense? No,” Brickman said from the annual Havana International Fair. His reward has been many friendships and a book he authored, he said.

As Crowley and European, Canadian and Latin American investors can attest, uncertainties hang over the business climate.

“How guaranteed is your investment? Are you sure that you can make profits? Are you sure that there will be no confiscation of your industry?” Brickman said.

There are U.S. companies with a firm business plan. Sprint Corp S.N signed an agreement with Cuba's state telecoms monopoly Etecsa on Sept. 25 and added an agreement on roaming services on Monday.

Others are global giants that see every market as worthy of capturing. Among the visiting U.S. companies this week were PepsiCo PEP.N, American Airlines AAL.O, Boeing BA.N, Cargill [CARG.UL] and Caterpillar CAT.N.

U.S. businesses at the trade fair appeared united in opposing the embargo. Congressional advocates of the embargo argue it should remain in place to pressure Cuba on human rights.

“It’s not fair for our politicians to be blocking us from at least exploring the opportunity,” said Michael Maisel, international liaison for Commonwealth Packaging Company. “At that point, we take the risk, but at least let us get to that point.”

Reporting by Jaime Hamre; Editing by Daniel Trotta and Frances Kerry