Caterpillar, with plants in Waco, wants to send heavy equipment to Cuba

Caterpillar Inc., a heavyweight in heavy equipment that makes and warehouses products in Waco, would like to parade its Cats into the Cuban market in the near future. When it does, officials say, machinery made locally likely will have a place in the procession.

The Illinois-based company signed a deal this week with a distributor, Rimco, of Puerto Rico, to sell products in the island nation 90 miles off the Florida coast when the U.S. Congress removes a more than 55-year-old trade embargo put in place in response to Fidel Castro’s rise to power.

Rimco has enjoyed a 34-year relationship with Caterpillar and already distributes product in its own territory and in Eastern Caribbean countries.

Caterpillar for nearly 20 years has been lobbying for the U.S. to lift the sanctions and now believes the political climate will make it possible. President Barack Obama announced in January the United States was easing some restrictions on commerce with Cuba, allowing the financing of authorized exports and re-exports to the country.

Company spokesman Matt Lavoie said in a phone interview the new rules already in place don’t apply to the type of equipment Caterpillar makes. Its product lines include construction and mining equipment, power systems and marine and industrial engines. But in the future, Cat sees plenty of opportunities in Cuba, which needs an infrastructure overhaul.

“Some people who visit Cuba talk about the 60-year-old cars they drive,” Lavoie said. “We at Caterpillar talk about their 60-year-old roads.”

He said Caterpillar is readying itself to send dozers, tractors and dump trucks into Cuba as soon as such a move becomes legal. Its lobbyists continue to pursue the ear of U.S. lawmakers on both sides of the aisle, and reportedly are meeting little opposition to the idea of normalizing relations with Cuba.

“They are hearing from their constituents, farmers and businesses that they want to go into Cuba,” Lavoie said.

Lavoie said declines in the mining and oil-production industries globally have created financial difficulties, but Caterpillar has faced strong and weak markets before.

“The market is cyclical, and what goes down typically goes up,” Lavoie said, adding that having Cuba along for the ride would prove icing on the cake.

The company knows the nation needs to upgrade its sagging infrastructure of streets, bridges and highways, and Caterpillar can help if the laws allow it.

Lavoie said the company continues to study the economic impact of entering Cuba and to gauge what parts and equipment “would sell like hotcakes.”

“It has about 11 million people and is comparable in size to the state of Ohio, which is a pretty good sized island,” he said. “We do believe we could create robust business there, but reforms are needed to create a more pro-business atmosphere because someone obviously will have to finance these purchases.”

Caterpillar has proved its fondness for Waco, having invested $52 million to build and equip plants on Texas Central Parkway to make excavation buckets that are attached to machines involved in digging operations, as well as large surface-blasting hammers that look like jackhammers on steroids.

It also has created a 1.25-million-square-foot logistics center at the rear of the old General Tire plant.

From this center and another 750,000-square-foot center at Bagby Avenue and Gateway Boulevard, Cat ships stock and emergency parts to dealers.

$2.2 million in incentives

Through the Waco-McLennan County Economic Development Corp., the city and county have awarded Caterpillar $2.2 million in incentives to locate and expand in Greater Waco. Meanwhile, the Waco Industrial Foundation made 103 acres of prime land available to the company.

Caterpillar has far exceeded the employment levels it had to maintain to qualify for incentive funds and now has about 500 people on its local payroll.

“Texas continues to be a positive state for Caterpillar, which creates good value-added jobs,” said Kris Collins, senior vice president for economic development for the Greater Waco Chamber of Commerce. “We are glad they are here and look to help them expand or seize other opportunities should they arise.”

Caterpillar said it first began to look at Waco in the late 1990s, when it was searching for a prime location to build articulated trucks to serve markets in North, Central and South America. The plant it built was operational by 2002, but employment remained low as worldwide demand for Cat equipment turned sluggish.

Cat shuttered the facility but kept it ready to accommodate possible future uses. It later became home to the Caterpillar Work Tools Complex.

February 11, 2016

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