A telling detail in the current scenario of Cuba's cement industry is the removal of the name Karl Marx from one of the country's largest cement plants. As ruling Marxists finally distance themselves from their hero, the aging, inefficient factory along Cuba's south-central coast has been renamed Cementos Cienfuegos S.A. The joint venture is 50% owned by Cemvid, a subsidiary of Cuba's Ministry of Basic Industry, and 50% by Las Pailas de Cemento S.A., a Spanish company controlled by a private investment bank.

In a mid-March interview at his office in Havana's Miramar Trade Center, Cementos Cienfuegos President and General Manager Bruno Aerne noted that total investment in the venture is around $105 million. The goal, says Aerne, is to modernize the plant, bring it up to international standards, and boost production so that Cuba can become a major cement exporter to the Caribbean and possibly West Africa.

“With our expansion, we will have two kilns producing a total 1.6 million metric tons. One will produce 1.1 million tons of cement, the other one 550,000 tons,” he reports. The primary equipment supplier is Polysius, a subsidiary of Germany's Thyssen Krupp AG, by a contract valued at around $20 million; Danish and Colombian firms also are supplying equipment.

Affirms Ralf Bohme, commercial director of Polysius for Latin America, “These plants in Cuba emit a lot of dust, and their filters are in very bad shape. With this modernization, the Cienfuegos plant will meet the highest standards of the world.”

After the expansion is completed in August, says Aerne, Cuba's total cement production will come to around 2.5 million tons, of which 1.0 million tons will stay in Cuba and 1.5 million tons will be exported. “We envision the west coast of Africa and maybe Brazil as customers,” the Swiss executive elaborates, noting that Cuba presently exports between 700,000 and 800,000 tons of cement — about half to the Dominican Republic and the rest mainly to other Caribbean markets.

The Karl Marx plant was built in 1982 with now-obsolete East German technology. Until its “privatization” in 2000, the facility employed 650 people, more than triple the number required when the current expansion is finished: the new factory will employ only 200 people.

“We are outsourcing several functions like the quarry operation and services like food, security, and transportation,” Aerne explains. “Our employment levels are now more or less normal compared to world standards. The quarry is run by a contractor, so we have 40 people less. It's not fair to compare our plant with another company that runs its own quarry.”

Multinational companies like Cementos Mexicanos S.A. de C.V. (Cemex) did not bid on the Karl Marx factory, mainly to avoid jeopardizing their U.S. interests. In mid-2002, Cemex acquired the Puerto Rican Cement Company Inc., which has a production capacity of about 1.2 million tons per year. Cemex also has interests in the Dominican Republic, Venezuela, Colombia and more than a dozen other countries.

Once heavily involved in a venture with the Cuban government to operate the island's largest cement plant, Cementos Curazao N.V., in Mariel, Cemex officially pulled out of the enterprise in May 1996 for fear of running afoul of the Helms-Burton Act. That law prohibits companies from “trafficking” in property confiscated by the Castro regime., (The Mariel plant had belonged to Lone Star Cement before the 1959 revolution that brought Fidel Castro to power.)

In 1895, two years ahead of Brazil, Cuba became the first country to produce cement in Latin America. In 1989, just a year before the Soviet collapse plunged Cuba into an economic crisis, the Karl Marx factory produced a record 1.115 million tons. Today, the island's cement production capacity stands at around 4.0 million tons. Besides Cementos Cienfuegos and Cementos Curazao, there are also four smaller wet-process plants in Santiago de Cuba, Artemisa (La Habana province), Nuevitas (Camagüey), and Siguaney (Sancti Spíritus).

Asked what the venture's break-even point is, Aerne contends, “That depends so much on the future of Cuba.” Yet, he observes that cement consumption grew 1.5% last year and is expected to register similar growth in 2004.

Heading the venture since January, Aerne reports that few tears were shed following the decision to scrap the Karl Marx name. “Right from the beginning, we agreed that the new company should be named Cementos Cienfuegos. In fact, it was our partner, the Cuban government, which suggested the new name.”

More controversial, as Aerne puts it delicately, is that “not everybody is profit-minded … The Cuban entity has a social responsibility, which very often is regarded as more important than economic targets.” And, while wages are generally low in Cuba, those savings are rarely passed onto foreign investors. “We do not pay the workers directly,” Aerne says. “There's a filter in between.”

What a big filter that is. According to Aerne, labor costs his venture an average $1,000 per worker per month, though the workers themselves earn an average monthly salary of only 400 pesos (equivalent to $15).

One way to boost profits at Cementos Cienfuegos is to increase Cuba's cement consumption, which currently stands at only 90 kilograms per inhabitant, among the lowest in the Caribbean. Typically, cement is used in major infrastructure projects, such as ports and bridges. Since early 2003, however, portland cement has been sold directly to the Cuban public through Cimex hard-currency outlets. (Cimex is a Cuban government-owned entity that controls the sale of all products in foreign-exchange stores.)

“We are very positive on this idea,” asserts Aerne, noting that such consumer sales account for about 5% of Cuba's total cement market, and growing rapidly, might soon reach 10%. That, in spite of Cimex selling this cement at $6 per 100-lb. bag, the equivalent of $142 per metric ton — one of the highest retail prices in the Caribbean.

“The more there is to buy, the more money will come into Cuba,” Aerne predicts. “Why would you send money to your relatives in Cuba if there is nothing to buy? But once a man can add a room to his house, his relative overseas will send him some money.”

Author Larry Luxner, who also supplied the photos for this article, is editor and publisher of “CubaNews,” a monthly newsletter published in Bethesda, Md. He can be reached by e-mail at larry@luxner.com.