Friday
July 28, 2017

Moves comes after its factory seized by government

Friday, April 21, 2017

General Motors shuts down operations

VALENCIA, Venezuela — General Motors announced yesterday that it was shuttering its operations in Venezuela after authorities seized its factory in the country, a move that could draw the Trump administration into the escalating chaos engulfing the South American nation amid days of deadly protests.

The plant in the industrial city of Valencia was confiscated on Wednesday as anti-government protesters clashed with security forces and pro-government groups in a country battered by economic troubles, including food shortages and triple-digit inflation. Three people were killed and hundreds arrested in the deadliest day of protests since the unrest began three weeks ago.

The seizure arose from an almost 20-year-old lawsuit brought by a former GM dealership in western Venezuela. The dealership had been seeking damages from GM of 476 million bolivars — about $665 million at the official exchange rate, or $115 million on the black market where many Venezuelans are forced to turn to sell their increasingly worthless currency. GM said it was notified this week that a low-level court ordered the seizure of its plant, bank accounts and other assets in the country.

Hundreds of workers desperate for information about their jobs gathered at the plant yesterday to meet with government and military officials, as well as representatives of the dealership that brought the lawsuit. The neglected factory hasn’t produced a car since 2015 but GM still has 79 dealers that employ 3,900 people in Venezuela, where for decades it was the market leader.

General Motors’ announcement came as Venezuela’s opposition moved to keep up pressure on President Nicolas Maduro, taking to the streets again yesterday a day after the biggest anti-government demonstrations in years.

It’s not the first time the Venezuelan government has seized a foreign corporation’s facilities. Last July, the government said it would take over a factory belonging to Kimberly-Clark Corp. after the American personal care giant said it was halting manufacturing because materials weren’t available in Venezuela.

But the move against GM, the United States’ biggest automaker, was a much more powerful statement, and could lead to a further erosion of relations between the two countries.

“This is a test case for Trump,” said Raúl Gallegos, a Bogotá-based analyst at Control Risks consultancy. “His response to a rogue nation taking over the assets of a brand name US company will be indicative of the road it wants to take with Venezuela.”

The State Department said yesterday it was reviewing details of the GM case but called on authorities to act swiftly and transparently to resolve the dispute.

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