GM halts operations in Venezuela after factory is seized
22 April, 2017, 01:43 | Author: Jonathon Greene
General Motors has shut down operations in Venezuela after it says authorities illegally seized its plant there, fueling growing concerns about the ability of worldwide companies to do business amid the country's deepening political and economic crisis. GM said they were notified this week that a low-level court ordered an embargo of its plant, bank accounts and other assets in the country. Exxon Mobil sought arbitration after the government of President Hugo Chavez nationalized the company's oil project in the South American nation's oil-rich Orinoco region in 2007.
In its statement, General Motors said it has operated in Venezuela since 1948 and employs almost 2,700 workers in the country.
General Motors Company says that it will be offering separation packages to employees that worked at the factory.
Venezuela's Information Ministry was not immediately available for comment to explain the seizure. It said that authorities had removed assets including cars from company facilities. Opponents of President Nicolas Maduro called on Venezuelans to take to the streets in marched against the embattled socialist leader.
Long-standing divisions in Venezuela have come about due to an economic crisis.
The seizure arose from an nearly 20-year-old lawsuit brought by a former GM dealership in western Venezuela.
In 2016, Kleenex maker Kimberly-Clark suspended its operations in Venezuela, citing the country's "rapidly escalating inflation" and the "continued deterioration of economic and business conditions". It also notes that it will continue to offer aftermarket service to customers in the country via its 79 dealerships. GM says that the plant had stopped making cars recently, presumably due to deteriorating economic conditions.
Foreign firms that have pulled out of Venezuela or whose properties have been expropriated rarely receive compensation and have struggled to collect on worldwide court judgments against the cash-squeezed government.
In recent years, Bridgestone, General Mills, Procter & Gamble, Ford Motor Co. and other multinational corporations have also scaled back operations in Venezuela. GM's local subsidiary did not provide many details on the plant seizure, however, they have stated authorities are preventing the facility from operating.
Of course, in this case, the valuable plant in question is not an illicit cash crop, but rather an automotive plant, General Motors Venezolana (GMV), which has been manufacturing vehicles in Venezuela since 1948.
Maduro has been accused by the opposition of behaving like a dictator.
GM will be taking legal action, but it is unclear what action that will be, according to the statement.
So far this month, clashes associated with the protests have resulted in seven deaths, more than 200 injured and 538 arrests.
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