Burt Hanna, owner of Fayetteville-based Hanna’s Candles and a longtime supplier to Walmart U.S., told Talk Business & Politics he is working on a proposal to set up a small manufacturing site in Cuba. Hanna met with members of the Cuban Trade Delegation touring Northwest Arkansas this week and attended a press conference held Wednesday (April 13) at the World Trade Center in Rogers.
“When I visited Cuba in October I saw a lots of opportunity there. There is major infrastructure work to be done and I only saw one candle the whole week of my visit. Cuba is attractive to me because of their new super port which has a tax free zone. If I had a factory there I could sell to the Caribbean nations pretty easily,” Hanna told Talk Business & Politics. “I already sell candles to Walmart in Puerto Rico, Mexico and Chile. I would never close the Fayetteville plant, but with a smaller production site in the Caribbean I could help to expand my business there as well.”
Hanna said he plans to revisit Cuba in the next couple of months to get a better feel for what it will take to make this work.
“There really aren’t any set rules about this, it’s pretty much up for discussion and debate. But I have had very favorable meetings with the Cuban trade delegation here and there so far,” Hanna said. “We will see where it goes in the next few months. I would like to start small, find a site, or build a small production site and bring in some equipment and train a small workforce there. When I shared with them my payroll had grown to $150 million annually in Fayetteville alone, that got their attention.”
AGRI, TOURISM OPPORTUNITIES
In February, the Obama administration approved the first U.S. factory to be built and operated in Cuba in more than 50 years, one of the latest signs of the changing relationship between the United States and the communist nation.
During the press conference, Juan Lamiguerio Leon, deputy chief of mission for the Embassy of the Republic of Cuba, said U.S. investment is welcome in Cuba as there are major infrastructure issues that need addressing. When asked about the business climate and sentiment of the Cuban government trading with the U.S., he reiterated the major barrier to that commerce is on the U.S. side of the equation in that transactions must be done in cash because of the lack of commercial credit extensions to Cuba from the U.S.
Leon said they are watching recent legislation that would allow Cuba to buy agricultural good such as long grain rice from Arkansas companies on credit. He said the lack of credit is the biggest barrier to trade with the U.S.
When asked about the tourism industry and the prospects for U.S. consumers to travel freely to Cuba, Leon said tourism is one of the biggest opportunities that exist between the nations.
“Right now three million tourists come to Cuba from around the world each year. In our recent meetings with the U.S. airline industry all of the major airlines expressed interest in making direct flights from the U.S. to Cuba. We expect as early as next month there could be 120 direct flights to Cuba from the U.S. and that means more investment is needed to construct new terminals,” Leon said. “That is one of the reasons we are here in Arkansas.”
Dan Hendrix, CEO of the Arkansas World Trade Center in Rogers, said the trade group had visited with construction companies, as well as the University of Arkansas Dale Bumpers College on issues such as avian influenza and food safety. He said they also met with a local biomedical company and had positive discussions around retail and poultry, two of the region’s largest employment sectors. On their final night in Northwest Arkansas, Hendrix said the trade group would tour Crystal Bridges Museum before traveling home Thursday.
Talk Business & Politics asked Leon about the upcoming government leadership changes and how such changes may help or hurt efforts to open up the country. Cuban President Raul Castro, brother of Fidel, has announced he is leaving office in 2018, and the country is preparing for his successor. Leon said the Cuban government is putting economic prosperity at the forefront of its priorities in the future and that will undoubtedly include continued collaboration with the U.S. He said Arkansas and Cuba have become friendly through various visits back and forth and more than ever Cuba is interested in the human capital it can glean from Arkansas, in the form of idea and innovation sharing, investment and trade.
Few dispute the opportunity Cuba holds for U.S. companies willing to invest there. The tiny nation is home to more than 11 million consumers with nearly 60 years of pent-up demand for U.S. goods.
Mike Periu, president of Promimo International, said the close proximity from Cuba to the U.S. is a major reason the relationship between the two counties is favorable. That said, he also warns that the business climate could be harsh at times and concepts such as due process or honoring contractual agreements which are the standard in the U.S. may not exist in Cuba.
ARKANSAS EFFORTS TO OPEN TRADE WITH CUBA
The Cuba Agricultural Exports Act, which would make agri products eligible for credit transactions, has been introduced in the U.S. House of Representatives. However, action on any legislation during the election cycle is doubtful. U.S. Rep. Rick Crawford, R-Jonesboro, is a sponsor of the legislation.
On Nov. 3, Gov. Asa Hutchinson (R) sent letters to four Arkansas Congressional leaders asking them to support legislation that would help open the Cuban economy to “nearly $40 million” in Arkansas products. The letter followed up on his three-day trade trip to Cuba – the first visit to the island nation by a state governor.
“As you know, while in Congress, I voted to maintain the embargo on Cuba, and my opinion of the importance of increasing the freedom of the Cuban people remains the same,” Hutchinson noted in the letter to then newly-elected U.S. House Speaker Paul Ryan. “However, I don’t believe that lifting the embargo is an all-or-nothing matter. Congress, under your leadership, can undertake efforts that would benefit Americans while maintaining political pressure on a regime that has violated human rights for more than fifty years.”
On Monday, the Engage Cuba Coalition, a Washington, D.C.-based nonprofit of top U.S. companies and organizations working to end the travel and trade embargo on Cuba, announced the formation of its Arkansas State Council chapter during a press conference in downtown Little Rock at the Capital Hotel.