GM forced to cease operations after Venezuela seizes car plant - WNEM TV 5

GM forced to cease operations after Venezuela seizes car plant

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General Motors says it will immediately halt operations in Venezuela after its plant in the country was unexpectedly seized by authorities.

GM described the takeover as an "illegal judicial seizure of its assets."

The automaker said the seizure showed a "total disregard" of its legal rights. It said that authorities had removed assets including cars from company facilities.

"[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," it said in a statement.

GM's subsidiary in the country -- General Motors Venezolana -- has operated in Venezuela for nearly 70 years. It employs nearly 2,700 workers and has 79 dealers in the country. GM said it would make "separation payments" to its workers.

Venezuelan authorities did not immediately respond to a request for comment.

Venezuela is in crisis mode: The country's economy shrank by 18% in 2016 -- its third consecutive year of recession. Unemployment is set to surpass 25%, and its people have suffered from widespread shortages of food and medicine.

Hyperinflation has wiped out the value of its currency, the bolivar. The price of consumer goods has skyrocketed.

Large-scale protests erupted in recent weeks after President Nicolas Maduro's administration barred opposition leader Henrique Capriles from holding political office for the next 15 years. At least four people have been killed in the protests.

Maduro has been accused by the opposition of behaving like a dictator.

In late March, the loyalist-backed Supreme Court tried to strip the opposition-led National Assembly of its powers, but quickly reversed course after severe public outcry. The Supreme Court also blocked all reforms from opposition lawmakers.

Related: As protests swell, Venezuela spirals into 'deep economic crisis'

GM isn't the only foreign company to run into trouble in Venezuela.

A slew of global firm have pulled out of the country or been forced to halt operations in recent decades as a result of government interference or moves to put key sectors of the economy under state control.

ExxonMobil pulled the plug on its operations in Venezuelan in 2007 after former President Hugo Chavez attempted to nationalized one of its projects. The oil producer then took the government to court.

Coca-Cola was forced to halt production of Coke and other sugar-sweetened beverages last year due to a sugar shortage.

The following is a statement from General Motors about the incident

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.

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