General Motors says its sole plant in Venezuela has been illegally seized by government authorities, forcing it to halt its operations in the region until further notice.
GM’s Venezuelan subsidiary, General Motors Venezolana, has operated in the country for nearly 70 years and employs nearly 2,700 workers there. The automaker said its Venezuelan workers will be given “separation payments” as it looks to exit the politically tumultuous country.
“Yesterday, GMV’s (General Motors Venezuela) plant was unexpectedly taken by the public authorities, preventing normal operations,” a statement released by the automaker said. “In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities.”
Former Venezuelan president Hugo Chavez, who took office in 1999, saw the state take over much of the country’s industries, including its hugely profitable oil reserves and it telecommunications and energy sectors. 2016 marked its third straight year of recession and the unemployment rate is set to swell past 25% in 2017. There’s also reports of widespread food shortages and extremely poor access to healthcare.
GM is far from the first major corporation to bail out of its Venezuelan operations. ExxonMobil exited the country in 2007 after Chavez tried to put one of its projects under state control and in 2014 cleaning product company Clorox was forced out after government officials took over one of its plants. Additionally, Coca-Cola was forced to put a pause on beverage production in the country last year due to a sugar shortage.
It’s not immediately clear why Venezuelan officials felt the need to take over GM’s plant or how this may affect the automaker in surrounding South American markets such as Brazil, Colombia and Argentina.
[Source: CNN Money]