Venezuela seizes GM plant, company ceases operations

Venezuela seizes GM plant, company ceases operations

As protests, civil disorder grows, GM seizure is highest profile to date.

April 21, 2017
By Robert Schoenberger
Cars/Light trucks Manufacturing

Cleveland, Ohio – Venezuela’s government seized General Motors’ 2,700-worker plant in Valencia, Venezuela, as civil unrest grips that country with thousands of protestors demonstrating against the current regime there. The automaker has responded by ceasing all operations in the country – effectively shuttering 79 dealerships with nearly 4,000 workers.

Established in 1948, General Motors Venezolana (GMV) has been the nation’s market leader for more than 35 consecutive years. Government agencies seized the plant, vehicles on its property, and froze GM’s Venezuelan bank accounts as part of a 20-year-old civil suit. GM officials called the action illegal.

“The seizure was granted and enforced in total disregard of GMV’s right to due process, causing irreparable damage to the company, its 2,678 workers, its 79 dealers (the country's largest service network with more than 3,900 workers), and to its suppliers (representing more than 55% of the auto parts industry in Venezuela),” GM officials said.

Venezuela has seized dozens of companies in recent years as the nation has embraced far-left political leadership, most notably its late president Hugo Chavez. As the Associated Press notes:

The seizure is the latest in a long string of government confiscations of factories and other assets that have been a staple of the so-called 21st century socialist revolution in Venezuela started by the late Hugo Chavez two decades ago. Venezuela is currently fighting claims of illegal asset seizures at a World Bank-sponsored arbitration panel from more than 25 companies.

The New York Times reported that GM hasn’t been able to operate the plant for more than a month.

Enrique Tahan, head of corporate and government relations for G.M. in Venezuela, said on Thursday that for the last 42 days, the plant had been shut down by an aggressive takeover by members of one of its unions.

GM had asked the government to help the company retake control of the plant, he said, but instead, the government took over the facility itself.

“In other words, we are twice out of control of our plant,” Mr. Tahan said.

About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and a contributor to Today's Medical Developments and Aerospace Manufacturing and DesignHe has written about the automotive industry for more than 17 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.