President Obama made headlines recently as the first U.S. leader to visit Cuba since the communist revolution.
The two neighboring countries have resumed diplomatic relations and are taking cautious steps toward full normalization, including trade and travel.
Last October, however, a group of Kentucky business leaders, including John McPearson of Richmond, CEO of Lectrodryer, visited this island nation only 90 miles south of Florida.
The mission was sponsored by the World Trade Center of Kentucky, which may plan another this October, if enough interest is shown, according to Sherry Mulkins, WTCKY spokesperson.
“This was only an exploratory mission, designed primarily to start building relationships,” McPhearson said of the October 2015 trip.
But international business deals often begin with personal relationships, McPhearson said, and getting started early can be a key to success.
At present, trade will Cuba is on the radar of businesses but still over the horizon. The next step would be to have a representative in the country, and then perhaps trade agreements can be negotiated.
While the U.S. has restored diplomatic relations with Cuba, direct trade cannot take place until Congress lifts its economic embargo enacted during the Cold War when Cuba was closely allied with the former Soviet Union.
In 1962, the U.S. came close to war with the Soviet Union when it attempted to put nuclear missile bases in Cuba.
Even if full trade relations are restored, many years may be required before the Cuban economy recovers from nearly 60 years of communism and the U.S. economic embargo, McPhearson said.
Cuba is a market of 13 million people, but the Cubans “have very little money,” he noted.
The guide who accompanied the Kentucky visitors has a master’s degree and is fluent in four languages, but her government job pays only $25 a month, McPhearson pointed out.
However, a few small opportunities would be available if the embargo is lifted.
Most taxi cabs operating in Havana are American automobiles from the 1950s, McPhearson said. Because of the embargo and their lack of money, the Cubans have been unable to buy replacement parts, even from specialty producers.
They keep going only because they have all been jury-rigged.
Even the “psycho-billy Cadillac” that Johnny Cash made famous in a popular song would be a step up from what can be seen on Havana streets, McPhearson said.
But that situation provided an opening for two members last year’s trade mission from a Louisville firm that produces parts for vintage car restorers.
They became the first American members of the Havana Car Club and one of them brought a Havana cab driver to tears when they gave him a set of taillights for his 1953 Chevrolet.
That was an example of starting a business relationship with a personal relationship, McPearson said.
Dr. Pearse Lyons of Alltech was one of the more prominent members of the Kentucky trade mission to Cuba.
Lectrodryer continues to export more than half of its product, even as a strong U.S. dollar has made American goods more costly abroad, according to McPearson.
He has long been a proponent of international trade and will become the WTCKY’s board chair in July 2017.
International trade agreements have become an issue in the 2016 presidential campaign with some candidates claiming lowering of trade barriers has cost American jobs and been a disadvantage for domestic producers.
But the WTCKY cites state government figures that at least 125,000 Kentucky jobs can be attributed to exports.
In 2014, Kentucky led the nation in exports per capita, McPhearson said. “We’re sixth overall, with more than $28 billion in exports.”
Kentucky’s top export is aerospace products, followed by automotive products.
The WTCKY is promoting export business in counties that are part of the Shaping Our Appalachian Region where employment has declined with the coal industry, McPearson said.
The WTCKY conducts several trade missions a year and will continue to seek international markets for Kentucky products, McPearson said.
It will continue to keep an eye Cuba and “try to understand what we need to do as the situation continues to evolve,” he said.