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GM Ceases Operation in Venezuela as Plant is Expropriated
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a425couple
2017-04-20 21:26:44 UTC
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GM Ceases Operation in Venezuela as Plant is Expropriated
Published April 20, 2017

General Motors Co., the world's third-largest car maker, said it has stopped
operating in Venezuela following the expropriation of its plant.

Venezuelan authorities on Wednesday unexpectedly took over GM's plant in the
central Carabobo state, seizing production facilities and car stock, the
company said in a statement. The company said it has been forced to lay off
its 2,700 Venezuelan workers.

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," the company said.

The Venezuelan government, which frequently blames big business for economic
sabotage, hasn't commented on the expropriation. The move happened amid
deadly nationwide antigovernment protests. The Information Ministry didn't
respond to request for comment.

The government of Nicolás Maduro and his predecessor Hugo Chávez have
expropriated more than 1,400 companies and private assets since taking power
in 1999, according to industry group Conindustria. The vast bulk of the
seized companies have since shuttered, contributing to an unprecedented
economic crisis rocking the country.

GM, like other Venezuelan manufacturers, has struggled for years to obtain
hard currency to import car parts because of the country's stringent
currency controls.

The company went from producing 5,052 vehicles in 2015 to zero in 2016 and
has yet to assemble a car in 2017, according to the Venezuelan auto industry
group Cavenez.

Mr. Maduro has previously said that every idled plant would be "recuperated
by the Revolution."

The seven private manufacturers that make up Cavenez saw production fall by
84% to 2,849 cars in 2016 compared with the previous year. In the first two
months of 2017 they produced just 240 vehicles in a country of almost 30
million people.

In June 2015, GM Controller Tom Timko told analysts that the market presents
"significant challenges" but "continues to be very important to us."

GM in recent years has taken steps to blunt the economic effects of the
turmoil in its South American business, including hundreds of layoffs and
production cuts that helped pare losses last year by 40% vs. a year earlier,
to $374 million.

Although executives predicted further improvement this year, the industry,
particularly in Brazil -- the region's largest automotive market -- "has not
recovered as we expected it would," GM finance chief Chuck Stevens told
analysts this month. Still, he said GM expects "significant" improvement in
the bottom line this year.

By Anatoly Kurmanaev; Kejal Vyas and Mike Colias in Detroit contributed to
this article.

http://www.foxbusiness.com/markets/2017/04/20/general-motors-says-venezuela-illegally-seizes-auto-plant.html
a425couple
2017-04-20 22:01:07 UTC
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Post by a425couple
GM Ceases Operation in Venezuela as Plant is Expropriated
Published April 20, 2017
General Motors Co., the world's third-largest car maker, said it has
stopped operating in Venezuela following the expropriation of its plant.
and related:

Venezuela Seizes GM, Warning Sign to U.S. Companies?
By Brittany De Lea Published April 20, 2017 Business Leaders

U.S. multinationals with plants in Venezuela are likely on edge Thursday,
after American automaker General Motors (GM) pulled the plug on its
operations in the poverty-stricken country, following a government takeover
of its plant amid large-scale violent protests.

"All foreign companies, and especially U.S. firms, should be concerned with
the increasingly extreme and aggressive behavior of the Venezuelan regime,"
Ian Vasquez, director of the Cato Institute's Center for Global Liberty and
Prosperity, told FOX Business.

American beverage company Coca-Cola (KO), however, indicated to FOX Business
Thursday it didn't have any plans to pull its operations from the distressed
South American country.

"There is no indication that any of our facilities in Venezuela are
currently at risk of being altered and we're working closely with Venezuelan
authorities to assure a continuous operation in the country," the company
said.

Some other U.S.-based multinational companies that still have operations in
Venezuela, despite the country's worsening economic and political situation,
include PepsiCo (PEP), McDonald's (MCD) and Goodyear Tire & Rubber Co (GT).

Japan-based international automaker Toyota (TM), which has large-scale
operations in the U.S., told FOX Business it was keeping a close eye on how
the developing situation in Venezuela was affecting its business.

"Our operations in Venezuela have not been affected so far. Our team
members, dealers and customers remain our top priorities, and we are
monitoring the situation closely."

Italian automaker Fiat Chrysler (FCAU) told FOX Business it would continue
production in Venezuela.

"FCA is maintaining its production plans in Venezuela in support of efforts
to rebuild the country's automotive sector."

While Venezuela sits on one of the largest oil reserves in the world,
inflation within the country escalated more than 800 percent in 2016 and is
expected to surge 720 percent this year, according to the IMF. In 2016
Venezuelan GDP shrank more than 18 percent.

Despite vast criticism of the country's socialist policies, the Venezuelan
regime will continue to blame the U.S. -- and its companies -- for the
economic hardship that has befallen it, Vasquez said.

"Instead of reforming failed socialist policies, the authorities are
increasing repression, so we can expect them to carry out more
expropriations and flagrant violations of Venezuela's own laws," he said.

On Thursday, GM issued a statement claiming public authorities
"unexpectedly" took over its plant, prevented normal operations and
illegally removed assets including vehicles.

"[General Motors Venezolana] 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," the automaker said.

Many U.S.-based companies have already ceased operations in "one of the
least free economies in the world" and that trend will likely continue,
Vasquez said.

"It would be surprising if the few U.S. companies that still have a presence
in Venezuela would choose to remain there much longer," he said.

Venezuela has been mired in political controversy throughout recent weeks
after the country's Supreme Court, loyal to President Nicolás Maduro,
temporarily rescinded the legislative powers of the opposition-led National
Assembly. That decision, condemned by the U.S. Department of State as a
"setback for democracy in Venezuela," was quickly reversed following a
deafening domestic and international outcry.

Earlier this month Maduro's administration suspended the political career of
one of his top rivals, opposition leader Henrique Capriles, for 15 years.

According to Reuters Opens a New Window. , at least three people were killed
during the anti-government protests Wednesday.

Calls to PepsiCo, McDonald's and Goodyear Tire & Rubber Co for comment were
not i

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