Reuters logo
GM writes down Venezuela operations after authorities seize plant
May 2, 2017 / 2:52 PM / 5 months ago

GM writes down Venezuela operations after authorities seize plant

FILE PHOTO: The GM logo is seen at the General Motors Assembly Plant in Valencia, April 21, 2017. REUTERS/Marco Bello

(Reuters) - General Motors Co (GM.N) said on Tuesday it would take a charge of up to $100 million after a judge ordered the seizure of its plant in Valencia last month, a move that prompted the halting of its operations in Venezuela.

The largest U.S. automaker said it was deconsolidating its business in the country following the seizure of its Valencia plant on April 18 by judicial authorities, which led GM to fire 2,700 workers. The plant had not produced a car since the beginning of 2016 because of parts shortages and strict currency controls.

GM, the market leader in Venezuela for 35 years, said executives have expressed a willingness “to talk with government officials and union leaders about the circumstances under which it could be possible to start production and employ some number of workers with a new, viable business model.”

Total auto production in Venezuela fell to a historic low of 2,849 cars in 2016, about 75 percent less than the year before, according to Venezuela’s automotive industry group.

In the first two months of 2017, total Venezuelan auto production was just 240 vehicles, down 50 percent over the same period last year.

Declining auto production comes amid rising protests. On Tuesday, Venezuela’s opposition was blocking streets to decry unpopular leftist President Nicolas Maduro’s decision to create a new super-body known as a “constituent assembly,” a move they say is a veiled attempt to cling to power by avoiding elections.

Venezuela’s car industry has been hit by a lack of raw materials stemming from complex currency controls.

Nearly all vehicles built in Venezuela in the first two months this year were assembled by Toyota Motor Corp (7203.T), which said last month its plant was operating normally. But the company said it was “only producing based on orders that come in.”

In early 2015, Ford Motor Co (F.N) wrote off its investment in Venezuela when it took an $800 million pretax writedown. The company does not currently produce vehicles in Venezuela.

The South American nation’s economic crisis has hurt many other U.S. companies, including food makers and pharmaceutical firms. A growing number of them, like GM, have removed their Venezuelan operations from their consolidated accounts.

Reporting by David Shepardson; Editing by Andrea Ricci and Bernadette Baum

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below