GM Ceases Operation in Venezuela as Plant is Expropriated
April 20 2017 - 09:53AM
Dow Jones News
By Anatoly Kurmanaev
CARACAS, Venezuela -- General Motors Co., the world's
third-largest car maker, said it has stopped operating in Venezuela
following the expropriation of its plant.
Venezuelan authorities on Wednesday unexpectedly took over GM's
plant in the central Carabobo state, seizing production facilities
and car stock, the company said in a statement. The company said it
has been forced to lay off its 2,700 Venezuelan workers.
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," the company said.
The Venezuelan government, which frequently blames big business
for economic sabotage, hasn't commented on the expropriation. The
move happened amid deadly nationwide antigovernment protests. The
Information Ministry didn't respond to request for comment.
The government of Nicolás Maduro and his predecessor Hugo Chávez
have expropriated more than 1,400 companies and private assets
since taking power in 1999, according to industry group
Conindustria. The vast bulk of the seized companies have since
shuttered, contributing to an unprecedented economic crisis rocking
the country.
GM, like other Venezuelan manufacturers, has struggled for years
to obtain hard currency to import car parts because of the
country's stringent currency controls.
The company went from producing 5,052 vehicles in 2015 to zero
in 2016 and has yet to assemble a car in 2017, according to the
Venezuelan auto industry group Cavenez.
Mr. Maduro has previously said that every idled plant would be
"recuperated by the Revolution."
The seven private manufacturers that make up Cavenez saw
production fall by 84% to 2,849 cars in 2016 compared with the
previous year. In the first two months of 2017 they produced just
240 vehicles in a country of almost 30 million people.
In June 2015, GM Controller Tom Timko told analysts that the
market presents "significant challenges" but "continues to be very
important to us."
GM in recent years has taken steps to blunt the economic effects
of the turmoil in its South American business, including hundreds
of layoffs and production cuts that helped pare losses last year by
40% vs. a year earlier, to $374 million.
Although executives predicted further improvement this year, the
industry, particularly in Brazil -- the region's largest automotive
market -- "has not recovered as we expected it would," GM finance
chief Chuck Stevens told analysts this month. Still, he said GM
expects "significant" improvement in the bottom line this year.
--Kejal Vyas and Mike Colias in Detroit contributed to this
article.
(END) Dow Jones Newswires
April 20, 2017 09:38 ET (13:38 GMT)
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