Tuesday, 22 August, 2017

GM halts operations in Venezuela after factory is seized

General Motors Corp. initials are seen inside of the company's compound in Valencia in a 2009 file General Motors Corp. initials are seen inside of the company's compound in Valencia in a 2009 file
Cecilia Poole | 21 April, 2017, 00:15

The leftist-led Venezuela is facing deepening economic crisis, and the country has already roiled many US companies.

Venezuela faces around 20 arbitration cases over nationalizations under late leader Hugo Chavez.

GM called the expropriation of its plant "an illegal judicial seizure of its assets" and vowed legal action to defend itself. The company sold its Venezuela assets to Grupo Corimon, a local industrial company. The oil giant sought compensation of $16.6 billion. GM said that it would be paying separation benefits "as far as the authorities permit".

"If today we were millions, tomorrow even more of us need to come out", said opposition governor and two-time presidential candidate Henrique Capriles, who last week was barred from running for office for 15 years.

Tens of thousands of protesters demanding elections and denouncing what they consider to be an increasingly dictatorial government were met by a curtain of tear gas and rubber bullets as they attempted to march to downtown Caracas on Wednesday.

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

The Associated Press reports that the GM plant in Valencia "hasn't produced a single car" since 2015. Nationwide, auto makers assembled just 2,849 cars previous year, from a peak of 172,218 vehicles in 2007. Still, many vehicle makers have stayed put in case the economy experiences a turnaround. The automaker employs 2,678 workers and has 79 dealers in the country with more than 3,900 workers.

The seizure arose from an nearly 20-year-old lawsuit brought by a former GM dealership in western Venezuela. "In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities", the statement read.

Hundreds of workers desperate for information about their jobs gathered at the plant Thursday to meet with government and military officials, as well as representatives of the dealership that brought the lawsuit. The statement said a fair judicial system is critical to economic reforms that would restore growth, but it made no mention of any action the US government might take.

Clorox Co. halted operations in Venezuela in September 2014 after inflation and government-mandated price freezes made business unprofitable for the seller of products ranging from bleach to salad dressing. President Nicolas Maduro accused Kimberly-Clark of participating in an worldwide plot to damage Venezuela's economy.

Bridgestone joined other foreign multinationals including Halliburton, Ford Motor and Procter & Gamble who have either slowed or abandoned their investments in Venezuela.

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