The manufacturer says the action was illegal and caused “irrepairable damage to the company.”
General Motors has announced an immediate cessation of operations at its plant in Venezuela following what the manufacturer says was an illegal seizure of the facility and other related assets – including vehicles – by public authorities.
In a statement released today, GM said the action “was granted and enforced in total disregard of GMV’s right to due process.” The plant was GM’s only manufacturing facility in the country, employing 2,678 workers directly and supporting another 3,900 through 79 dealerships. The plant was established in 1948, making GM the oldest automaker in the country. It was also the market leader for 35 years.
GM dealers in Venezuela will continue to provide aftermarket service and parts for customers, but employees at the plant are left holding the proverbial bag. GMV will provide separation benefits to workers “as far as the authorities permit,” suggesting the automaker has some doubts about what all can be accomplished in the face of Venezuela’s ruined economy, questionable legal tactics, and deepening economic crisis. Never the less, GM expresses confidence that justice will ultimately be served.
GM had no further comment on the situation or specifics regarding production. According to The Washington Post, the seizure stems from a decades-old lawsuit filed by a GM dealership in the western region of the company seeking the equivalent of $665 million. It would seem a lower Venezuelan court initiated the action for the seizure based on that suit, though with Venezuelan currency in a freefall there are certainly more questions than answers regarding the true motivation of the seizure.
General Motors isn’t the only company to experience hardship in the struggling nation. Ford Motor Company stopped operations at its Venezuela plant in December because of poor sales. Numerous other corporations have scaled back operations because of the economic situation, and Venezuela is currently in arbitration the the World Bank over claims of illegal asset seizures with 25 other companies.
Source: General Motors, The Washington Post