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, 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. Nevertheless, 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
After the Illegal Seizure of Its Plant, General Motors Is Forced to Cease Operations in Venezuela
- The company announces immediate cessation of operations in Venezuela
- GMV will pay separation benefits to the workers according to Venezuelan law.
Established in 1948, General Motors Venezolana (GMV), the oldest and most traditional automaker in the country, and market leader for more than 35 consecutive years, is forced to cease operations in Venezuela due to an illegal judicial seizure of its assets.
Yesterday, GMV’s 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 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).
As a consequence, GMV announces the immediate cessation of its operations in the country, and ensures (as far as the authorities permit) payment of the employees’ separation benefits arising from the termination of the employment relationships due to causes beyond the parties’ control.
GMV 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 is confident that justice will eventually be served, and looks forward to continue leading the Venezuelan market. In the meantime, GMV, through its dealers, will continue to provide aftermarket service and parts for its customers.