Venezuela seizes GM factory as crisis in country escalates
Automaker denounces move but faces limited ability to save its assets
Venezuela’s seizure of a General Motors factory marks a step in the country’s economic crisis that boosts risks to the remaining operations of other U. S. and multinational companies.
Amid turmoil punctuated by skyrocketing prices, unemployment, low oil prices and failed economic policies, the government seizure put an abrupt end to GM’s operations — a fate that other companies have faced.
“GM is not the first and they’re not going to be the last because the government of Venezuela is desperate for any assets they can take,” said Peter Quinter, Miami- based chair of law firm GrayRobinson’s Customs and International Trade Law Group. “It really is a vicious cycle they’re in.”
The Venezuelan government has previously seized assets belonging to U. S. companies, including those of cleaning products maker Clorox in 2014, glassmaker Owens- Illinois in 2010 and nationalized a rice mill operated by Cargill.
GM denounced the South American country’s actions as an “illegal judicial seizure of its assets” and vowed a legal battle, but protections are minimal in a country with a dubious commitment to the law.
Although other automakers, including Fiat Chrysler and Toyota, said their plants had not been touched, the government’s assault on the world’s third- largest automaker suggests the country is getting bolder as economic circumstances deteriorate.
The move comes amid intense public protests in Venezuela against the government of President Nicolas Maduro. Three people were killed late Wednesday as tens of thousands of Venezuelans took to the streets to demand fresh presidential elections and the release of jailed opposition politicians.
General Motors Venezolana, GM’s local subsidiary, was established in 1948 and employs about 2,700 workers and has 79 dealers in the country. The firm said it would make “separation payments” to affected workers.
GM representatives did not respond to questions about if the company had contacted the Trump administration for help.
The direct financial impact on GM is not likely to be large. Consequently, investors were not shaken by the plant’s demise. GM shares rose 31 cents Thursday to close at $ 34.10.
“Any lost production is unlikely to prove material,” Evercore ISI analyst Arndt Ellinghorst wrote to investors, adding the “day may have arrived” where the plant is unsalvageable.
Ford already had shut down its Venezuela plant because of lack of demand but the company remains in possession of the facility, spokeswoman Kelli Felker said Thursday.
Toyota’s “operations in Venezuela are currently operating normally,” spokesman Scott Vazin said.
Fiat Chrysler “is maintaining its production plans in Venezuela in support of efforts to rebuild the country’s automotive sector,” the company said in a statement.
GM said it would “vigorously take all legal actions, within and outside of Venezuela, to defend its rights.”