GM Ceases Operation in Venezuela as Plant is Seized

  • GM Ceases Operation in Venezuela as Plant is Seized

GM Ceases Operation in Venezuela as Plant is Seized

General Motors will immediately cease operations in the country of Venezuela after the USA automaker announced authorities there illegally seized its manufacturing plant and industrial hub.

GM can seek compensation and damages for its lost plant in several different worldwide venues, said Nigel Blackaby, a lawyer at the Freshfields Bruckhaus Deringer law firm, which has battled Venezuela in several high-profile cases in global courts.

GMV called the act "improper, absurd, outside of legal logic and due process".

GM said it is a huge hit on the plant's 2,678 workers, its 79 dealers and to its suppliers. The company is not the first foreign firm whose assets have been confiscated by Venezuelan authorities, but those actions have typically been preceded by repeated public threats from the socialist government. Kimberly-Clark and Exxon Mobil are among the other US companies that have pulled out of the South American country as economic conditions there deteriorate.

President Nicolas Maduro accused Kimberly-Clark of participating in an global plot to damage Venezuela's economy and said his socialist government would provide public funds to the workers at the plant.

President Nicolas Maduro has continued the tradition, while blaming the United States and its companies for Venezuela's economic and political problems. GM's factory in the industrial city of Valencia has not produced a single vehicle since 2015. The cash-strapped government has choked off auto companies' access to dollars needed to import parts and repatriate profits.

GM reported charges of $720 million in 2015 and $419 million a year earlier related to currency devaluation and asset impairment in Venezuela. "In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities", the company said in a statement, quoted by Reuters.

GM will continue to provide aftermarket service and parts for its customers through its dealers, it added.

Last May, tire maker Bridgestone sold its business there after six decades of operating in the country.

General Motors has stopped operations in Venezuela after its only plant there was illegally seized by authorities, the automaker says in a statement. Ford suspended operations at its Valencia, Venezuela, plant in December 2016 due to slumping sales.

South American operations, which include Venezuela, account for a relatively small portion of GM's earnings and sales.