¡Tec­nología para el campo!

Two ex-IBMers are build­ing the first Amer­i­can fac­tory in a very low-tech na­tion

Bloomberg Businessweek (Asia) - - FRONT PAGE - Story Ian Frisch Pho­to­graphs Day­mon Gard­ner

Come on, boy! Get dressed! We got to go!” yells Ho­race Clem­mons. He’s heck­ling his long­time friend and busi­ness as­so­ciate, Saul Ber­en­thal, who sits cross-legged on a leather chair in the liv­ing room of Clem­mons’s home in Paint Rock, Alabama. It’s a Tues­day in mid-April, and the duo is sched­uled to give a pre­sen­ta­tion to a group of local in­vestors about their new busi­ness, Cle­ber. In Fe­bru­ary, the U.S. Department of the Trea­sury ap­proved Cle­ber’s re­quest to be the first U.S.-based com­pany to con­struct and op­er­ate a man­u­fac­tur­ing fa­cil­ity in Cuba. They plan to build low-tech trac­tors for small farms.

“All right, all right!” Ber­en­thal says, grin­ning, stretch­ing his vow­els. “But I need to see my choice of dress first.” He stands up and saun­ters into the guest be­d­room. He’s come from his home in North Carolina for the event and is stay­ing with Clem­mons.

“You just have to choose if you want to wear the sport jacket or not,” Clem­mons calls af­ter him in his slouchy drawl. A minute later, Ber­en­thal comes out. He’s wear­ing slacks and a blue but­ton-up shirt, un­tucked, the col­lar loose and the cuffs but­toned.

“You look hand­some, dude!” says Clem­mons. Both men are in their early 70s, sinewy, buoy­ant with energy. Ber­en­thal was born in Cuba in 1944 and moved to the U.S. in 1960 af­ter the revo­lu­tion. He has slicked-back hair, pale olive skin, and a swag­ger high­lighted by in­ces­sant gum chew­ing. Clem­mons, an Alabama local, is de­cid­edly more of a coun­try boy, with a short-sleeved, col­lared shirt tucked into straight­cut Le­vis, wire-frame glasses, a base­ball cap on his head, and pos­ture as straight as a tree trunk. The two met in the early 1970s while work­ing for IBM. Ber­en­thal had a sales po­si­tion in the New York City office; Clem­mons worked in Raleigh, N.C., at

the development branch. Dur­ing a trip

to Raleigh, Ber­en­thal hit a snag with a client and needed help over a week­end. Re­ferred to Clem­mons, Ber­en­thal drove to his home to find him in over­alls, work­ing in the yard. “I thought, ‘This is the guy that’s go­ing to fix my prob­lem?’ ” Ber­en­thal re­calls. But the guys clicked and, af­ter Ber­en­thal trans­ferred de­part­ments and moved to Raleigh, be­came close friends. In 1983 they left IBM to start Post Soft­ware In­ter­na­tional, a point-of-sale soft­ware com­pany. They sold the com­pany in 1997 to Fu­jitsu for an undis­closed sum, though it seems to have been enough for Clem­mons to build his cur­rent home, a 7,000-square-foot man­sion made of cy­press logs, on a 2,200-acre plot.

Now the pair are back at the en­tre­pre­neur­ial grind. Since get­ting the go-ahead from the U.S. government, they have been fi­nal­iz­ing their first trac­tor’s de­sign and sourc­ing ma­te­ri­als, man­u­fac­tur­ing pro­to­types to be tested in Cuba, nail­ing down the con­struc­tion lo­gis­tics of their fa­cil­ity, ne­go­ti­at­ing terms and con­di­tions with the Cuban government, and hop­ing to raise $15 mil­lion in fund­ing. They’re sched­uled to be­gin operations in 2017. They’ve just re­turned from a two-day road trip to Illi­nois to meet with a hy­draulics man­u­fac­turer about some parts. Clem­mons drove, while Ber­en­thal sent e-mails and made phone calls.

As they grab their bags and head for the door, Clem­mons’s wife, El­iz­a­beth, calls out, “Good luck! Bring home lots of money!” She’s wear­ing a pink shirt printed with the com­pany’s logo and “Og­gún,” the name of its trac­tor. In the Afro-Cuban re­li­gion known as San­te­ria, Og­gún is the de­ity of met­al­work­ing. The spirit is a war­rior and a pro­tec­tor. He paves the road ahead—an em­bod­i­ment of po­ten­tial and a sym­bol of hope.

Ber­en­thal had been bug­ging Clem­mons for years about start­ing a busi­ness in Cuba. He watched the changes on the is­land, most no­tably Fidel Cas­tro’s off­hand re­mark in 2010 that the economic model wasn’t work­ing. In De­cem­ber 2014, when President Obama an­nounced that the U.S. would be­gin reestab­lish­ing diplo­matic re­la­tions with Cuba, Ber­en­thal called Clem­mons. As he puts it, “I said, ‘This is the time. Let’s go do it.’ ”

De­spite be­ing a great place to grow things, Cuba im­ports 80 per­cent of its food at a cost of $2 bil­lion per year. Al­most 70 per­cent of its land, about 19 mil­lion acres, is fer­tile, but only 40 per­cent is used for farm­ing and agriculture; 20 per­cent of the labor force, or about 1 mil­lion peo­ple, is em­ployed in agriculture. The coun­try has about 200,000 small, pri­vately owned farms, as well as re­gional co-ops. The government runs the pro­duc­tion of crops such as sugar cane. About 4 mil­lion peo­ple, 36 per­cent of the pop­u­la­tion, de­pend on agriculture in some way for their liveli­hood.

“Cuban farm­ers all agree that Cuba has the po­ten­tial to pro­duce more. All that needs to change is the mech­a­nism of pro­duc­tion,” says Mario González-Corzo, a pro­fes­sor of eco­nomics at Lehman Col­lege at the City Univer­sity of New York, who was born and raised in Cuba and spe­cial­izes in Cuban agriculture. “When I visit Cuba and talk to farm­ers, it all comes down to ma­chin­ery.” Much of the is­land’s equip­ment is al­most 30 years old, pieced to­gether from al­lies such as China and the for­mer Soviet Union (González-Corzo’s cousin owns a farm in Cuba; his trac­tor was built in the 1950s). Main­tain­ing a work­ing trac­tor has be­come so dif­fi­cult that many farm­ers have gone back to us­ing an­i­mal labor. “I said, ‘Saul, the Cubans will evolve dif­fer­ently than Amer­i­cans evolved, but they will start at the same place we started,’ ” Clem­mons says. “They are go­ing to start at the sin­gle-row trac­tor.” By that, he means a small trac­tor that will plow one fur­row at a time. More than any­thing, Ber­en­thal and Clem­mons know that Cuba is still Cuba, and that the Cuban government will want a so­cially con­scious busi­ness model. “If you are go­ing to ap­proach Cuba with ‘I want to sell you some­thing,’ it ain’t go­ing to work,” Ber­en­thal says. “That’s not what they want. They don’t want to be de­pen­dent and buy­ing from the rest of the world for­ever. If you are go­ing to pro­pose a project, it has to have an economic, social, and cul­tural jus­ti­fi­ca­tion.”

At the pre­sen­ta­tion, the two ad­dress about 15 po­ten­tial in­vestors. Clem­mons opens, not­ing that, although they’ve re­ceived calls from in­ter­ested par­ties about Cle­ber, this is their first of­fi­cial pitch for seed fund­ing. He then turns the podium over to Ber­en­thal. “Ho­race is in­spi­ra­tional, and I am op­er­a­tional,” Ber­en­thal says. “I want to try and get you through how I al­ways try to make hap­pen what he dreams.” The crowd laughs, and Ber­en­thal dives in.

The Og­gún may be the world’s first open source trac­tor. The frame of the Og­gún 1.0 base model is an orig­i­nal de­sign but rooted in the Al­lis-Chalmers Model G, a main­stay of the post­war farm­ing boom of the late 1940s and early ’50s. (Coin­ci­den­tally, the Model G was man­u­fac­tured in Alabama.) It’s a bare-bones de­sign, the tubu­lar frame of which is rem­i­nis­cent of a home­made go-cart—sturdy, sim­ple, and open to the el­e­ments. The driver sits high up for vis­i­bil­ity; the mo­tor is be­hind, bolted to the frame be­tween the rear wheels.

The frame of the Og­gún can sup­port an 18- to 25-horse­power gas or diesel en­gine. Cle­ber has seven man­u­fac­tur­ers—Amer­i­can, Ja­panese, Bri­tish, Ger­man, and Ital­ian—that can sup­ply a com­pat­i­ble mo­tor, al­low­ing more ver­sa­til­ity when sourc­ing. A se­ries of belts drives two hy­dro­static transaxles—es­sen­tially, axles turned with­out shift­ing gears—one for each rear wheel, sim­i­lar to many lawn trac­tors. You push the gas pedal and go. The axles can be widened—from 38 to 60 inches in the front and 36 to 46 inches in the rear—pro­vid­ing ver­sa­til­ity when plant­ing rows of crops, nav­i­gat­ing nar­row paths, or trans­port­ing the trac­tor in a trailer or the back of a truck. The rear axles can be loos­ened us­ing hand tools, ex­tended out­ward, and tight­ened again. At the front, the frame has notches ev­ery two inches. All the farmer has to do is jack it up, re­move the bolts, slide the wheels over, and put the bolts back in.

Ad­di­tional farm­ing im­ple­ments can be hooked up to the trac­tor. The more pop­u­lar ones are likely to be a plow to break the ground, a cul­ti­va­tor to aer­ate the soil, and a planter to drop in seeds. Un­der the belly of the trac­tor is a hitch sys­tem for at­tach­ing im­ple­ments.

Only a hand­ful of com­po­nents makes up the fin­ished trac­tor: the frame, which is split into two parts that bolt to­gether at the cen­ter; the mo­tor and both axles; four rims and tires; the shaft for the front wheels; the steering wheel and col­umn; the seat; hy­draulic fuel tanks; and gas. “It’s ex­cru­ci­at­ingly sim­ple,” Clem­mons says.

Og­gún 1.0 is ex­pected to re­tail for $10,000, which is low for a trac­tor of this horse­power. The parts would ini­tially be man­u­fac­tured in the U.S., sent to Cuba, and

as­sem­bled by Cuban work­ers at a planned 66,000-sq.-ft. fa­cil­ity in Mariel, a bur­geon­ing port and spe­cial development zone west of Ha­vana along Cuba’s north­ern coast. As the busi­ness ex­pands, Ber­en­thal ex­plains, the com­pany plans to even­tu­ally man­u­fac­ture parts on-site and hire more em­ploy­ees. The Cuban government would take care of hu­man re­sources, us­ing cri­te­ria sub­mit­ted by Cle­ber to find em­ploy­ees and ne­go­ti­ate salaries.

The com­pany could break $100 mil­lion in sales within 10 years if all goes well, Ber­en­thal says. By the se­cond year, the two hope the Mariel-based fa­cil­ity will be ex­port­ing trac­tors to other coun­tries in Latin Amer­ica.

The com­pany’s busi­ness model has its risks. It’s con­tin­gent on farm­ers hav­ing money to buy a trac­tor or hav­ing fam­ily in the U.S. who can send them money to buy one; or on a Euro­pean bank­ing in­sti­tu­tion will­ing to give out loans; or on the Cuban government, a no­to­ri­ously fickle and un­pre­dictable en­tity, al­lo­cat­ing funds in the national budget to pur­chase trac­tors for its res­i­dents. “The ques­tion re­ally is, can they pro­vide, or work with the government to of­fer, some form of fi­nanc­ing so the farmer can af­ford the cost of the trac­tor?” says González-Corzo.

Af­ter the pre­sen­ta­tion, Clem­mons and Ber­en­thal drive back home to Paint Rock to eat a late din­ner. No one at the con­fer­ence made any on-the-spot of­fers, although a few po­ten­tial in­vestors said they were in­trigued and ex­pressed ad­mi­ra­tion. “This was a good test round, a learning ex­pe­ri­ence,” Clem­mons tells me in his kitchen, carv­ing sliv­ers off a block of manchego cheese, while Ber­en­thal eats ce­real. “Like I told them at the begin­ning, we’ve never had to ask for money be­fore.”

It seems promis­ing, though, that no one ques­tioned the va­lid­ity of their idea or the im­pact it would have on the Cuban peo­ple.

“How of­ten do you get the op­por­tu­nity to make his­tory and money at the same time?” Clem­mons says, munch­ing on a slice of cheese. “All you have to do is lis­ten to what peo­ple need.”

The next day, Clem­mons and Ber­en­thal wake up at 5 a.m. Af­ter a break­fast of eggs, ba­con, and rye toast with home­made black­berry jelly, they drive 40 miles east to Lib­erty Steel Fab­ri­ca­tion in Fyffe, Ala., for a 9 a.m. meet­ing with its owner and president, Kelly Pittman, who’s in charge of de­sign­ing the fa­cil­ity in Mariel as well as man­u­fac­tur­ing many of the parts for the Og­gún 1.0. De­tails have to be ironed out be­fore the team presents the plans to Cuban of­fi­cials and ships a batch of five trac­tors to be tested on farms in dif­fer­ent parts of the coun­try.

Pittman, round-bel­lied with thick hands, leads Clem­mons and Ber­en­thal through his plant to a mock-up of their trac­tor. The men dis­cuss and de­bate as­pects of the trac­tor’s con­struc­tion and how that could play into its assem­bly once the parts are in Cuba. Should the frame be sep­a­rate parts bolted to­gether? How durable is the de­sign? Are they miss­ing any­thing?

“We gotta have this one tested, and six more built, and five shipped to Cuba for July, and I’m count­ing on you to do it,” Clem­mons tells Pittman.

“And that’s what I’m gonna do,” Pittman replies, smil­ing. “The big­gest thing we gotta do is make sure it lasts—that it doesn’t fail when it gets to work down in Cuba.”

Af­ter tin­ker­ing a bit more, the men sit down and dis­cuss con­struc­tion plans for the fa­cil­ity in Mariel. Pittman has de­signed Cle­ber’s fa­cil­ity to ac­com­mo­date three eight­stage assem­bly lines that, over a four-day, sin­gle-shift work­week, could make 16,000 Og­gún trac­tors per year. “If I’m putting a part to­gether over and over, it’s fast, it’s sim­ple,” Pittman says. “It ain’t a rocket we’re build­ing here.” For the fac­tory roof, he rec­om­mends a tilt-panel de­sign with an in­su­lated roof, a more durable op­tion that could with­stand po­ten­tial hur­ri­canes. He of­fers to bring down ex­perts to over­see con­struc­tion.

Clem­mons ex­plains that he’s hir­ing Pittman not only to erect a build­ing or fab­ri­cate trac­tor parts but also to help with ev­ery as­pect. “We’re not just look­ing at a build­ing, we’re look­ing at an end-to-end process of turn­ing out 16,000 trac­tors a year,” Clem­mons tells him. Ber­en­thal sits to his left, nod­ding in agree­ment. The fa­cil­ity is the linch­pin of their vi­sion, and they trust Pittman’s judg­ment. “We’d like to say, ‘Kelly, it’s yours—we’re de­pen­dent on you, not just for the build­ing but the en­tire process.’ ”

Pittman ges­tures at the plans, which de­tail the assem­bly area as well as a sec­tion of of­fices. “If it’s go­ing to be as suc­cess­ful as you say it’s go­ing to be,” he says, point­ing to the of­fices on the blue­prints, “you’ll need more.”

Clem­mons laughs and nods to Ber­en­thal. “He was go­ing to re­tire un­til he met me,” he says.

The men shake hands, and Clem­mons and Ber­en­thal walk out to the park­ing lot. “All right, I’m go­ing to get on the road,” Ber­en­thal tells his friend. He has to drive back to North Carolina—an eight-hour trek. Clem­mons walks him to his car. He gives Ber­en­thal a hug.

“I’ll see you next week,” Clem­mons says. “We’ve got a lot to do.” <BW>

The gas tank holds 4 gal­lons Top speed is about 10 mph The hand lever con­trols the depth of the plow blades Avail­able im­ple­ments in­clude a plow, a planter, and a cul­ti­va­tor The axle de­sign also al­lows the driver to ad­just the trac­tor’s wheel width—rang­ing from 36 to 46 inches in the rear

The frame’s two halves bolt to­gether here The frame can sup­port an 18- to 25-horse­power gas or diesel hor­i­zon­tal­shaft en­gine The front tires can be widened, too

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