What’s more powerful: government or industry? We may be about to find out as General Motors is headed for a battle with the government of Venezuela.
According to reports, government authorities have seized (or “nationalized”) the GM plant in Valencia, the capital of Carabobo State and the third largest city in the South American country.
Though hardly the largest automotive manufacturing hub in the world, Venezuela ranks as the fourth largest producer of automobiles in Latin America (behind Brazil, Mexico, and Argentina). Or at least it did until 2014 when the local industry essentially collapsed.
Along with Chrysler, Ford, Mitsubishi, and Toyota, that included the GM plant in Valencia – known as of Latin America’s pequeña (or little) Detroit. The factory, established in 1948 as General Motors Venezolana) produced an array of Chevy models – from the little Aveo to the ginormous Tahoe – as well as a handful of Suzukis for local and regional markets. But in 2014, the facility (along with those of many of its competitors) effectively shut down due to lack of supplies. This past October, the automaker put an indefinite hold on the prospect of resuming production, with the plant sitting idle ever since.
Its mothballed status evidently lead the government of Nicolas Maduro – who took over as president after Hugo Chavez died in 2013 – to believe it could simply seize the facility, a move to which GM naturally and vehemently objects. “GMV strongly rejects the arbitrary measures taken by the authorities,” read a statement from the manufacturer, “and will vigorously take all legal actions, within and outside of Venezuela, to defend its rights.”
In the meantime, it has had to terminate its 2,678 employees, paying separation benefits. Just what recompense it has at its disposal against a government which controls the laws within its own borders, we don’t know, but this isn’t the first time the communist dictatorship has undertaken such measures. Reuters reports that the government “temporarily” took over two plants owned by California-based chemical giant Clorox after it left the country in 2014. Ford was forced to write off $800 million in assets within Venezuela in 2015, however GM appears at present defiantly opposed to absorbing the loss.