Home News Socialist Venezuelan Government Illegally Seizes GM Factory

Socialist Venezuelan Government Illegally Seizes GM Factory

April 20, 2017 at 11:45 am 15 News
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DETROIT (AP) — General Motors has stopped doing business in Venezuela after authorities took control of its only factory there in what GM called an illegal judicial seizure of its assets.

The plant was confiscated on Wednesday as anti-government protesters clashed with authorities in a country that is roiling in economic troubles such as food shortages and triple-digit inflation.

The Detroit automaker said in a statement Thursday that other assets such as vehicles were taken from the plant, causing irreparable damage to the company.

It’s not the first time the Venezuelan government has seized a foreign corporation’s facilities. In July of last year, the government said it would take a factory belonging to Kimberly-Clark Corp. after the U.S. personal care giant said it was no longer possible to manufacture in the crisis-wracked nation due to a lack of materials.

President Nicolas Maduro accused Kimberly-Clark of participating in an international plot to damage Venezuela’s economy and said his socialist government would provide public funds to the workers at the plant.

Kimberly-Clark joined Bridgestone, General Mills, Procter & Gamble, Ford Motor Co. and other multinational corporations in scaling back operations in Venezuela.

In March, a World Bank arbitration panel determined that Venezuela did not have to pay $1.4 billion to Exxon Mobil Corp. for confiscating company assets during a wave of nationalizations.

GM says its plant was seized Wednesday in disregard of its right to due process. The company says it will defend itself legally and that it’s confident that justice eventually will prevail.

GM has about 2,700 workers in the troubled country, where it’s been the market leader for over 35 years. It also has 79 dealers that employ 3,900 people, and its parts suppliers make up more than half of Venezuela’s auto parts market, the company said.

GM, though, hasn’t produced a single car at its plant in the industrial city of Valencia since 2015. Like most carmakers in the oil-producing nation, it has seen production grind to a halt as the cash-strapped government chokes off its access to dollars needed to import parts and repatriate profits.

Nationwide, car makers assembled just 2,849 cars last year, from a peak of 172,218 vehicles in 2007.

Despite Venezuela’s grim outlook, many car makers have decided to stay put and avoid the drastic step of shutting down operations to avoid losing market share in case the economy dramatically improves or a more business-friendly government takes power.

If the government permits it, GM workers at the Valencia plant will get separation benefits “arising from the termination of employment relationships due to causes beyond the parties’ control,” the GM statement said.

Dealers will continue to service vehicles and provide parts, the company said.

GM’s Venezuelan operations have been a drag on earnings for several years. In the second quarter of 2015, the company took a $720 million charge for currency devaluation and asset valuation write-downs as the economy faltered.

South American operations, which include Venezuela, account for a relatively small portion of GM’s earnings and sales. Last year the company lost $400 million before taxes in South America, but as a whole the company made a pretax profit of $12.5 billion. GM sold just over 583,000 vehicles in the region last year, but that was only about 6 percent of its total sales.

In its 2016 fourth-quarter earnings release, the company said that its South America region “remains challenged from macro-economic and political standpoints.”

Shares of General Motors Co. rose 18 cents $33.97 in morning trading.

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Josh Goodman contributed to this report from Caracas.

© 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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This content is published through a licensing agreement with Acquire Media using its NewsEdge technology.

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15 Comments

  1. player88 April 20, 2017 at 1:10 pm

    Did these companies not know it was risky to take their business to other countries?

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    • nodisguisindatruth April 21, 2017 at 11:15 am

      In a smoke-filled room years ago, a decision was made by Group A’s “best and brightest” to move their business out of our country …at the expense of their countrymen’s lost jobs/wages and to avoid taxes that could have benefited OUR economy, etc……. in order to take advantage of lower labor costs, tax reductions, yadaya in another country. ….Miles and miles away,..in a similar smoke-filled room, an equally greedy foreign country’s “best and brightest”, Group B were at work devising plans to lure in companies blinded by greed by offering them a lush, corporate Shangri-la….with all the amenities that accommodate the lush beauty of the mountainous region complete with one small, obscure slippery slope. Casting aside all suspicions due to the financial possibilities and exuberant welcome by their foreign “friends”, the deal was sealed and money would soon be made by all.

      Today Group A can be found licking their wounds and crying “Foul!” with little hope of having the ‘wrong'(tic) made right; ….the “best and brightest” of Group B are now lighting their cigars with pre-calculated $100 bills.

      Poetic justice…

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    • ltuser
      ltuser April 21, 2017 at 5:05 pm

      I certainly wouldn’t be shocked to see the commies in Venesualia smoking a 100 dollar bill and going “How dumb those yanks are”…

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  2. tws500 April 20, 2017 at 1:19 pm

    Doing business in Venezuela is a nonsequitor as is banking, grocery shopping, and higher standards of learning and living. GM should have left years ago. Venezuela will only fall further and further into ruin as socialism prevails.

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    • peleus April 20, 2017 at 2:07 pm

      Another fine example of the kind of world Bernie was talking about. He forgets to mention when they run out of other peoples money it just falls apart.

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    • ltuser
      ltuser April 20, 2017 at 6:59 pm

      I agree. GM knew the risks but lie the dolts they are, they stayed.

      It’s almost to the point, if I owned a business that had a facility in one of these foreign countries, KNOWN for seizing the place from under you, i would be sorely tempted to have a Self destruct put i place to blow it sky the F high, if it ever DID get taken over..

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  3. laurence5905 April 20, 2017 at 1:34 pm

    GM didn’t seem to mind Socialism so much when they were the beneficiary of it! (i.e. when *our* government was handing out billions to bail them out).

    What has happened to their factory in Venezuela is the end-result of Socialism — when the government forcibly takes everything back that it gave in the first place. There will either be a revolt by the people (not likely, because they’re all disarmed — thank God we have the 2nd Amendment protecting us here!) or it will devolve into a completely lawless dictatorship (which it’s well on its way to doing, as evidenced by the government’s actions in recent weeks).

    I feel sorry for the people of Venezuela.

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    • peleus April 20, 2017 at 2:08 pm

      The money the tax payers had to give them was to prop up the union coffers

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    • ltuser
      ltuser April 20, 2017 at 7:03 pm

      [GM didn’t seem to mind Socialism so much when they were the beneficiary of it! (i.e. when *our* government was handing out billions to bail them out).]

      That is why i call them Government motors!!

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  4. crustyoldgeezer April 20, 2017 at 1:48 pm

    I guess Libya and other middle east countries nationalizing the oil companies in the 70’s and 80’s didn’t get the message across in an OBVIOUS ENOUGH manner….

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    • ltuser
      ltuser April 20, 2017 at 7:09 pm

      Heck, the same thing got done in a # of south and central American countries as well. Same with Russia and China.. Yet you STILL see these dunce company bosses wanting to “break open that foreign market”..

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  5. sam236 April 20, 2017 at 2:32 pm

    I hope every American who thinks socialism is so great reads this story, along with ones about the people of Venezuela struggling to survive by eating dogs, cats and pigeons!

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  6. columba April 20, 2017 at 2:59 pm

    Didn’t Obama do something similar in Detroit?

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  7. Eagle525 April 21, 2017 at 12:40 am

    “Socialist Venezuelan Government Illegally Seizes GM Factory”
    That is exactly what socialist do. So, the next time A an avowed socialist democrat (i.e. Bernie Sanders, Elizabeth Warren, Chuck Schumer or Nancy Pelosi ask for your vote remember this: After socialist take all your money, they become communists and take all your property.

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  8. Srini Varadarajan
    Srini Varadarajan April 21, 2017 at 12:50 am

    (poor attempt at humour but) GM thought that due to its meaning “(mis)government motors”, it was safe from any shenanigans of Maduro — but being dolts, forgot that that only meant 0bama misgovernment of US (and no misgovernment of Venezuela).

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