Jose Arechabala, Cárdenas

History

Founded in 1878 as "La Vizcaya" by a 31-year-old Spanish immigrant, "Industrias Arechabala" grew to become Cárdenas' largest employer, "Eminent Benefactor" of our municipality and one of the most important companies in Cuba.

José Arechabala y Aldama arrived in Havana in 1862 at the age of 15. He had come from his native Gordejuela in Vizcaya, Spain, full of ambition and tempered for the struggle. Known as a man of character and high moral value, sixteen years after his arrival he went into business for himself, operating a small distillery in the town he had chosen to raise his family and seek his fortune. Cárdenas was then a bustling new city, with a tremendous railroad industry, a busy port, and new wealth visible everywhere. By 1888 his company had grown so much that it was able to continue prospering even after absorbing a loss of more than $50,000.00 in damages caused by a terrible hurricane that hit the township that year.

In 1921, the company incorporated under the name "José Arechabala, S.A." and although Don José became its first President, by then he was 77 years old and his son-in-law, José Arechabala y Sainz, began running the company as its first "Director" (or chief executive officer). Don José passed away only two years later, on March 15, 1923.

Don Jose's death signalled the start of a plague of tragedies that befell the company. In 1924 his successor was killed by kidnappers who unsuccessfully held him for ransom, and then the successor's successor, another son-in-law, Gabriel Malet y Rodriguez, died in his youth only two years after that, in 1926. Later Don Jose's daughter, the widow of the murdered son-in-law, also became the target of extortionary threats of violence. The Cárdenas police department finally caught those extortionists by having an officer dress up as a woman and posing as the daughter, who had agreed to meet them at a pre-arranged location. Besieged by the tragic turn in their lives and believing their personal safety threatenned in Cárdenas and Cuba, most of the heirs to the Arechabala fortune left for Spain. Some returned, but many would remain there for decades and depend on the work of a distant relative to receive their annual dividends from Arechabala Industries' operations.

Twenty-four years earlier, in 1902, Don José had first brought his 12-year-old grandnephew and godson, José Fermín Iturrioz y Llaguno, "Josechu", to work by his side, sweeping floors and doing other odd jobs. But the child was more interested in remaining in school instead of seeking a permanent job with the company.

Young Josechu was the son of his niece Juana Llaguno y Arechabala and the company's warehouse majordomo, Fermin Iturrioz Michelena, whom Juana had met while living in the Arechabala household after emigrating from Spain to Cárdenas. The couple married in 1889 and had 5 children, but the elder Iturrioz died in 1903 leaving his widow and 4 surviving small children, of which Josechu was the oldest. So at 13, Josechu became the head of his household, having to find a way to continue his education and help support the family. After briefly working for another company while going to school, at 17 Josechu returned to work at Arechabala. Named after his godfather, Josechu Iturrioz was soon recognized as a brilliant young man and proved himself an excellent businessman at Don José's side.

Josechu was the man chosen by the family to take over the reins of the company in 1926, upon the death of Gabriel Malet y Rodriguez. At the time, Cárdenas was still in the midst of an economic decline that had commenced before the turn of the century. The New York stock market crash was only 3 years away and the United States was in the middle of Prohibition, which would last from 1919 until 1933. Cárdenas had lost much of its industrial base, with its railroad company being moved to Havana, while suffering the corresponding loss of population and wealth, which also moved to the capital.

But Josechu Iturrioz would be the man to take Arechabala (and in many ways, Cárdenas too) into the heart of the 20th Century. Almost immediately in his career at the company's helm he teamed up with a brilliant young engineer named Manuel F. Arias. With Iturrioz's business sense and direction, and Arias' mastery of turning dreams into reality, the company would scale unparalleled heights in the Cuban economy.

The decades-old decline of the Cárdenas economy was due in large part to the shallowness of the city's harbor. As sea vessels had continued to grow in size and draught, the harbor had become more and more obsolete, causing international shipping companies to forego Cárdenas as a Cuban trade port, in favor of Havana and Matanzas. An expensive system involving the use of lighters for loading and off-loading the larger trade vessels had become necessary at the port, adding tremendously to the cost of water transportation through Cárdenas.

As far back as colonial times there had been plans drawn and efforts made to deepen the port, but the job had never been done. This noble quest had even spawned a major scandal in late 1924, when a group of wealthy political insiders had ramrodded a law through the Cuban legislature under which they were to obtain $700,000.00 from the government to deepen the harbor, build a breakwater port (jetty), and be granted a 50-year monopoly over all shipping through the port of Cárdenas. The project was later stopped by the new revolutionary government of Gerardo Machado, but the money disappeared and the job was left undone.

Although Arechabala had its own piers and docks, this company too was haunted by the limitations posed by the shallow port. The rest of Cárdenas' piers were aging and rotting old rat-infested hulks badly in need of replacement, a reflection of the tough economic times that plagued the entire city. This was the world inherited by Josechu Iturrioz in 1926 when he took over the direction of the company. But immediately he set about changing it.

Depending on your point of view, Cárdenas was unfortunately (or fortunately) hit by another killer hurricane on September 1, 1933. With more than one hundred injured and over 30 killed, the storm leveled the city's beleaguered piers. This time Arechabala suffered losses of over $500,000.00 in hurricane damages.

After putting the company back on its feet following the storm, Iturrioz and Arias set out to finally remedy the problem that was as old as Cárdenas itself. José Arechabala, S.A., having proven itself a dependable and capable enterprise, would take on the job of deepening the harbor and constructing a modern and permanent port facility. Arechabala marshalled engineering talent, equipment, and the manpower necessary for this immense job and began dredging the harbor and constructing the "Espigon" (jetty) in 1939. For four years, countless Cardeneses were employed in this monumental task. By 1944 the job had not only been completed, but Cárdenas had also received a new shoreline with a seaside drive, a seaside walk, new green spaces, a marina, and a monument commemorating the first raising of the Cuban Flag on Cuban soil. (Just 6 years later, in 1950, Cárdenas would be the scene of splendid celebrations of the flag's centennial). In turn, Arechabala now had at its disposal a new state-of-the-art port facility with limitless possibilities for prosperity.

And so it was for many years until the Castro regime took over Arechabala and condemned it to anonymity. The regime has stolen the name "Ron Havana Club" from the company and now produces the product for foreign consumption at a distillery in Havana. A recent foreign-produced Cuba travel book shows a photo of the weathered and dilapidated Arechabala complex with a cryptic caption that only reads: "Sugar refinery, Cárdenas"

Here is a listing of the products produced by Arechabala Industries in the late 50's: REFINED SUGAR, CANDIES, HAVANA CLUB RUM, RELICARIO BRANDY, ARECHABALA CREAMS, QUIRINAL VERMOUTH, ARECHABALA CONAC, CANA RUM, ALCO-ELITE, NATURAL ALCOHOL, FUELS.

A profile of Arechabala's business during the same general period revealed the following activities: sugar warehousing capacity of 2 million 325 lb. sacks; one of the oldest and most productive sugar refineries in Cuba with fully modernized equipment; a very high quality-controlled candy manufacturing plant; syrup plant; molasses plant with capacity for 5 million gallons; Cuba's oldest and largest distillery of alcohol, spirits and rums; aging cellars for millions of liters of rum; liquor manufacturing plant; barrel manufacturing plant; Petroleum plant; hydrocarbons plant - pioneering the use of alcohol as a motor fuel; pioneering the use of bagasse (pressed sugar cane refuse) as raw material for the manufacture of paper; a coastal trading ship line; a maritime terminus; shipyard (initiated during WWII when ships for trade with the U.S. were scarce).

One of the things that best characterized Josechu Iturrioz's administration of Arechabala was his constant quest to bring new industry to Cárdenas in order to provide more jobs for its citizens. A jute sack factory, the bagasse paper plant, and the candy factory were prime examples. In the forties the company jumped at the opportunity to contract with the American candy giant "Charms" to build the candy factory, which put out a very high quality product for consumption in Cuba and the United States. During WWII as many as 1,024 Cardenenses worked at that factory, satisfying the sweet tooth of a country at war. Later Arechabala bought the factory from Charms and continued producing excellent candies on its own.

Notwithstanding his success in business and his industrial achievements, Josechu Iturrioz's greatest qualities were his humanity, honesty, honor, and dedication to church, family and the company. He used to refer to the company as "La Casa". During 50 years of his life he dedicated all his work, energies, and the rectitude of his principles, with all of the consistency and enthusiasm of which he was capable, to the success of La Casa, not only for its shareholders, but for the betterment of all of its personnel. Josechu Iturrioz succeeded in bringing prestige, dependability and honorability to Arechabala.

Although he never had children of his own, the children of his siblings, as well as his wife's little sister, might as well have been his own. The author's mother was one of those children. She is his niece, and "Tio Josechu" virtually became her father when she lost her own dad in 1949.

From the 1930's to 1960, Jose Arechabala, S.A., a Cuban company owned by the Arechabala family, produced Havana Club rum at its distillery in Cárdenas, Cuba and sold it in the United States. In 1935, 1936 and 1953, Jose Arechabala, S.A. was issued U.S. trademark registrations for the Havana Club mark.

In October of 1960, the Cuban assets of Jose Arechabala, S.A., along with other Cuban companies, were seized without compensation by the Castro government pursuant to Cuban Decree No. 890.(3) The confiscation was carried out by armed members of the military. A member of the confiscating force installed himself as the company's director. Not surprisingly, the business soon deteriorated. The Arechabala family members were told not to report back to work. Today, all but one of the living shareholders of Jose Arechabala, S.A. reside in exile outside of Cuba.

In 1976, a Cuban state enterprise, Cubaexport, registered the "Havana Club" mark in the U.S. In 1993, Cubaexport's Havana rum business was reorganized to incorporate a foreign partner. Cubaexport reached agreement with the French liquor distributor, Pernod Ricard, S.A., to form two companies: (1) Havana Club Holding, of which 50% equity and board representation was to be held by a newly formed Cuban company, Havana Rum & Liquor, S.A., and 50% by Pernod; and (2) Havana Club International, which has a 50-50 equity split between Havana Rum Liquors and Pernod, both through direct holdings and through holdings in Havana Club Holding. As part of this reorganization, the Havana Club trademark was transferred by Cubaexport to Havana Rum & Liquors, which then transferred it to Havana Club Holding. Havana Club Holding then granted Havana Club International an exclusive license to sell Havana Club Rum and to use the Havana Club trademark. As part of this transaction, Cubaexport applied for and obtained from the PTO an assignment of the 1976 Havana Club trademark registration in the U.S. Pursuant to the assignment, the U.S. trademark registration for Havana Club was transferred to Havana Club Holding.

While Cubaexport and Pernod Ricard were working on their joint venture, the Arechabala family was still trying to get back into the rum business and seeking a partner who could assist them in re-establishing their rum business outside of Cuba. After speaking to other possible partners, the Arechabala family chose to enter into an agreement with Bacardi, whose officers and shareholders were sympathetic to the Arechabala family's plight having suffered the confiscation of their Cuban assets at the hands of the Castro regime.

Bacardi began distilling Havana Club rum and distributing it in the United States. As a result, in December of 1996, the Cuban government's joint venture entities with Pernod Ricard, namely Havana Club Holding and Havana Club International, sued Bacardi and its distributors alleging federal trademark infringement of the trademark registration granted by the PTO. The lawsuit was filed in the United States District Court for the Southern District of New York, Case No. 96-CIV.-9655(SAS).

The lawsuit presents the unbelievable scenario of the successor-in-interest to the government that illegally confiscated the trademark being able to sue the legitimate and original owner. Worse still, the claim is made in the United States under federal trademark law.

The Arechabala family and Bacardi continue to fight in the U.S. and abroad to retrieve that which was illegally confiscated from the Arechabalas without compensation by the Castro regime and which legitimately belonged to the Arechabala family.

The company is on the list of distilleries confiscated by Fidel Castro in 1960.