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General Motors says it will immediately halt operations in Venezuela after its plant in the country was unexpectedly seized by authorities.

  

Category:  News & Politics

Via:  community  •  7 years ago  •  26 comments

General Motors says it will immediately halt operations in Venezuela after its plant in the country was unexpectedly seized by authorities.

GM( GM ) described the takeover as an "illegal judicial seizure of its assets."

 

The automaker said the seizure showed a "total disregard" of its legal rights. It said that authorities had removed assets including cars from company facilities.

"[GM] strongly rejects the arbitrary measures taken by the authorities and will vigorously take all legal actions, within and outside of Venezuela, to defend its rights," it said in a statement.

Authorities in Venezuela, which is mired in a severe economic crisis , did not respond to requests for comment.

It was not immediately clear why authorities seized the GM plant. Huge swaths of Venezuela's economy have been nationalized in the years since former President Hugo Chavez rose to power. Under Chavez, who took office in 1999, the state took control of private oil, telecommunications, energy and cement businesses.

President Nicolas Maduro has continued the tradition, while blaming the United States and its companies for Venezuela's economic and political problems.

"Government decision making is increasingly incoherent. It's difficult to understand the rationale," said Nicolas Watson, head of Latin American research at Teneo Intelligence.

Automakers in the country have struggled because they've been unable to access U.S. dollars to import parts, said Watson.

The GM plant in Valencia employs nearly 2,700 workers, but stopped producing cars in 2015 and has only been selling spare parts since then, a company spokesperson said.

GM said it would make "separation payments" to its workers.

Venezuela is in crisis mode: The country's economy shrank by 18% in 2016 -- its third consecutive year of recession. Unemployment is set to surpass 25%, and its people have suffered from widespread shortages of food and medicine.

Hyperinflation has wiped out the value of its currency, the bolivar. The price of consumer goods has skyrocketed.

Large-scale protests erupted in recent weeks after Maduro's administration barred opposition leader Henrique Capriles from holding political office for the next 15 years. At least nine people have been killed in the protests.

Maduro has been accused by the opposition of behaving like a dictator.

In late March, the loyalist-backed Supreme Court tried to strip the opposition-led National Assembly of its powers, but quickly reversed course after a severe public outcry. The Supreme Court also blocked all reforms from opposition lawmakers.

Related: As protests swell, Venezuela spirals into 'deep economic crisis'

A slew of global firms have pulled out of the country or been forced to halt operations as a result of government interference or moves to put key sectors of the economy under state control.

ExxonMobil( XOM ) pulled the plug on its operations in Venezuela in 2007 after former President Hugo Chavez attempted to nationalize one of its projects. The oil producer then took the government to court.

In 2016, Kleenex maker Kimberly-Clark ( KMB ) suspended its operations in Venezuela, citing the country's "rapidly escalating inflation" and the "continued deterioration of economic and business conditions."

The government called the closure illegal. It took over operations at the facility days later, according to state-run media.

Related: GM isn't the only company under siege in Venezuela

Coca-Cola( KO ) was also forced to halt production of Coke and other sugar-sweetened beverages last year due to a sugar shortage .

http://money.cnn.com/2017/04/20/news/gm-venezuela-plant-seized/index.html


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96WS6
Junior Quiet
link   seeder  96WS6    7 years ago

Socialism at it's finest.

 
 
 
Spikegary
Junior Quiet
link   Spikegary    7 years ago

Amazing how they can't even provide the easiest essential items to their population, but will seize assets that don't belong to them and wipe out jobs.  There doesn't seem to be any rhyme or reason besides up top, where 'It's good to be King'.

 
 
 
Dean Moriarty
Professor Quiet
link   Dean Moriarty    7 years ago

That GM socialism didn't work out too well for us either.

GM has earned a stunning $22.6 billion since the dark days of the financial crisis, when the automaker was bailed out by the U.S. government. Taxpayers didn't fare nearly as well. They'd lost $10.6 billion by the time the U.S. Treasury department closed the books on the  $49.5 billion bailout  in December.

 
 
 
Cerenkov
Professor Silent
link   Cerenkov    7 years ago

Venezuela will likely never recover from these dictators.

 
 
 
Dowser
Sophomore Quiet
link   Dowser    7 years ago

I don't blame GM one bit.

However, comparing it to health care seems to be a bit of a stretch...

 
 
 
Randy
Sophomore Participates
link   Randy  replied to  Dowser   7 years ago

However, comparing it to health care seems to be a bit of a stretch...

A bit? A New York to Tokyo leap is more like it!

 
 
 
TTGA
Professor Silent
link   TTGA    7 years ago

Obviously Venezuela wasn't a great move.  The country is bad for GM and for it's own people.  I recall very clearly that, when GM first started moving jobs out of the US, the GM CEO was told, "If you think that the UAW is bad, just wait till you start having problems with the foreign governments.  They don't have the restrictions that ours has and will take everything from you".  But, of course, he was just soooooo smart and could safely break the union.  They haven't seen anything yet, China is worse than Venezuela ever thought of being (as far as they're concerned, your property is theirs) and Mexico is almost as unstable.  I just wish Roger Smith was still alive so we could watch his policy blow up in his face.

 
 
 
Kavika
Professor Principal
link   Kavika     7 years ago

Just a though. What if all foreign car companies decided to close their US plants in protest to an isolationist view taken by the US?

How many jobs would be lost. Add to that the parts companies that help supply these companies and you'd see a huge jump in unemployment in the US.

Auto's are a world wide business. For car companies and that isn't going to change IMO. Building plants in foreign countries is simply good business sense for the companies.

In 2011, Toyota employed a bit over 400,000 at their auto plants, parts plants and auto dealerships in the US.

Interesting scenario if all car companies only manufactured and assembled in their home country.

 
 
 
Kavika
Professor Principal
link   Kavika   replied to  Kavika   7 years ago

That should read, Toyota, Nissan and Honda...not just Toyota.

 
 
 
Randy
Sophomore Participates
link   Randy    7 years ago

My VW Bug is almost all Mexican, except it has a Japanese transmission and some German electronic parts. My Fiat 500L is only 19% Italian, which is the engine and transmission. The rest is from various countries like Mexico, Japan and Serbia, which is where it's assembled. So my German car is not really German and my Italian car is not really Italian. My old Chevy Tracker was assembled in Canada completely of Japanese parts. Only the name was American.

 
 
 
XXJefferson51
Senior Guide
link   XXJefferson51  replied to  Randy   7 years ago

Your old Tracker was actually a rebadged Suzuki.  As was the Metro whether they had the Chevy or Geo label on it.  There was also a Geo coupe that was made by Isuzu in those days.  

 
 

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