Caterpillar is eager to give its sluggish sales a shot in the arm by bringing its dozers, trucks and other products to market in Cuba, just as the Caribbean nation and the U.S. re-established diplomatic relations.
While a travel ban and trade embargo remain in place, the heavy-equipment manufacturer believes the diplomatic ties being renewed today are the first step toward restoring commerce between the two countries.
Cuba could end up being a bigger market for Cat than Puerto Rico, said Bill Lane, global government affairs director at Peoria-based Caterpillar. Despite its recent debt-related economic troubles, Puerto Rico recorded gross domestic product of more than $103 billion in 2013. Cuba’s GDP that year was $77.2 billion, according to the World Bank.
“There’s significant pent-up demand for the types of products we make,” Lane said. “The infrastructure in Cuba, at very best, is tired. It needs to be built from the ground up.” He did not have an estimate of the market size Cat expects Cuba to be.
One big challenge for Caterpillar will be that its archrivals haven’t been restricted from doing deals in Cuba, and already dominate equipment sales there. Komatsu of Japan is the leader in the island nation’s construction equipment sector, Lane said, while Swedish firm Volvo is No. 1 in the mining sector.
“Just because the U.S. hasn’t been there doesn’t mean everyone else hasn’t,” Lane said.
Caterpillar ultimately wants to see the trade embargo and travel ban lifted, he added. Lane declined to specify when the company hopes to get a dealership open in Cuba.
The manufacturer is trying to reignite growth amid a slowdown in mining and other sectors. In the first quarter, sales topped $12.70 billion, down 4 percent from the year-earlier period. Full-year sales in 2014 were $55.18 billion, off slightly versus 2013.
Caterpillar has advocated for changing U.S.-Cuba relations since 1998, according to the company.
By Micah Maidenberg, Crain’s Chicago Business
July 20, 2015