Venezuela Seizes General Motors Car Plant
ZeroHedge.com
While the US has a habit of invading or attacking sovereign nations any time the president’s approval rating dips below a certain threshold, Venezuela has a similar, if less dramatic mechanism to provide a brief boost to Maduro’s popularity: it nationalizes foreign plants on its soil.
It did so last July, when the country was once again suffocating under a wave of violent protests, when just hours after Kimberly-Clark said it will shutter its Venezuela operations after years of grappling with soaring inflation and a shortage of hard currency and raw materials, Venezuela retaliated by announcing it would seize the factory.
It did so again overnight, when General Motors said on Wednesday that Venezuelan authorities had illegally seized its plant in the industrial hub of Valencia; as a result the carmaker said it would immediately halt operations in Venezuela.
“Yesterday, GMV’s (General Motors Venezolana) plant was unexpectedly taken by the public authorities, preventing normal operations. In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities,” the company said in a statement.
The automaker said the seizure showed a “total disregard” of its legal rights. “[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.”
GM’s subsidiary in the country – General Motors Venezolana – has operated in Venezuela for nearly 70 years. It employs nearly 2,700 workers and has 79 dealers in the country. GM said it would make “separation payments” to its workers.
While the US carmaker vowed to defend its rights, it has no chance of success of recouping its property under the current regime, which no longer recognize either local or international law. The seizure comes amid a deepening economic crisis in leftist-led Venezuela that has already roiled many U.S. companies.
GM said the seizure would cause irreparable damage to the company, its 2,678 workers, its 79 dealers and to its suppliers.
The seizure will hardly be of use to the Maduro regime as Venezuela’s car industry has been in freefall, hit by a lack of raw materials due to lack of foreign currency to fund imports and stagnant local production, with many plants are barely producing at all. Last month, according to official statistics, only several hundred cars were sold.
GM is not the first US carmaker to suffer the irrational wrath of Venezuela’s dictator: in early 2015, Ford wrote off its investment in Venezuela when it took an $800 million pre-tax writedown. Others have been hit too, and as a result a growing number of US companies are taking their Venezuelan operations out off their consolidated accounts. ExxonMobil pulled the plug on its operations in Venezuelan in 2007 after former President Hugo Chavez attempted to nationalized one of its projects. The oil producer then took the government to court. Coca-Cola was forced to halt production of Coke and other sugar-sweetened beverages last year due to a sugar shortage.
Finally, for those seeking legal remedies, we have one word of advice – patience: Venezuela still faces around 20 arbitration cases over nationalizations under late leader Hugo Chavez.
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http://www.zerohedge.com/news/2017-04-20/venezuela-seizes-general-motors-car-plant