Venezuela Seizes GM Plant (1 Viewer)

[Foosball God]

http://money.cnn.com/2017/04/20/news/gm-venezuela-plant-seized/

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

GM (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.

Authorities in Venezuela, which is mired in a severe economic crisis, did not respond to requests for comment.

It was not immediately clear why authorities seized the GM plant. Huge swaths of Venezuela's economy have been nationalized in the years since former President Hugo Chavez rose to power. Under Chavez, who took office in 1999, the state took control of private oil, telecommunications, energy and cement businesses.

President Nicolas Maduro has continued the tradition, while blaming the United States and its companies for Venezuela's economic and political problems.

"Government decision making is increasingly incoherent. It's difficult to understand the rationale," said Nicolas Watson, head of Latin American research at Teneo Intelligence.
Automakers in the country have struggled because they've been unable to access U.S. dollars to import parts, said Watson.

The GM plant in Valencia employs nearly 2,700 workers, but stopped producing cars in 2015 and has only been selling spare parts since then, a company spokesperson said.
GM said it would make "separation payments" to its workers.

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 Maduro's administration barred opposition leader Henrique Capriles from holding political office for the next 15 years. At least nine 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 a severe public outcry. The Supreme Court also blocked all reforms from opposition lawmakers.

A slew of global firms have pulled out of the country or been forced to halt operations as a result of government interference or moves to put key sectors of the economy under state control.
ExxonMobil (XOM) pulled the plug on its operations in Venezuela in 2007 after former President Hugo Chavez attempted to nationalize one of its projects. The oil producer then took the government to court.

In 2016, Kleenex maker Kimberly-Clark (KMB) suspended its operations in Venezuela, citing the country's "rapidly escalating inflation" and the "continued deterioration of economic and business conditions."

The government called the closure illegal. It took over operations at the facility days later, according to state-run media.

-- Marilia Brocchetto and Ana Melgar contributed to this report.

How soon does the country implode.  What foreign business would want to invest there after this?

 

[Fat Nick]

http://money.cnn.com/2017/04/20/news/gm-venezuela-plant-seized/

How soon does the country implode.  What foreign business would want to invest there after this?

My company pulled out ~2 years ago.  Even if you can make money there, you can't do jack with it.  You can't leave it in a bank because it'll be worth nothing in a few months.  They've got crazy laws on taking money out of the country.  The only thing you can really do is reinvest it there, but who wants to do that?  Especially given stories like this.

 

[msommer]

Not sure anyone in their right mind has invested in Venezuela in the past decade (or even since Chavez was first elected)

 

[RokNRole]

I thought this was going to involve Monsanto

 

[Da Guru]

Some of the suppliers I work with stopped shipping to that plant a couple of years ago.  The plant stopped making actual vehicles in 2015 and it now just a parts depot that with the turmoil there would probably had been closed in the next year or two anyway.  The country is so unstable no business is going to open or keep operating there.

 

[RedmondLonghorn]

Not sure anyone in their right mind has invested in Venezuela in the past decade (or even since Chavez was first elected)

A number of oil service firms kept operating there because there was lots of work that needed to be done for PDVSA and the potential market is huge.

But getting paid is always a problem. And even when they did get paid it was in those bull#### Bolivars. It has been a crappy currency for years but is now just fancy toilet paper.

Populism + Socialism + weak rule of law = failed state. 

Chavez and Maduro are basically just Spanish speaking versions of Robert Mugabe.

 

[msommer]

A number of oil service firms kept operating there because there was lots of work that needed to be done for PDVSA and the potential market is huge.

But getting paid is always a problem. And even when they did get paid it was in those bull#### Bolivars. It has been a crappy currency for years but is now just fancy toilet paper.

Populism + Socialism + weak rule of law = failed state. 

Chavez and Maduro are basically just Spanish speaking versions of Robert Mugabe.

Let's just hope their collective reigns are a lot shorter than Mugabe's

 

[RedmondLonghorn]

Let's just hope their collective reigns are a lot shorter than Mugabe's

Somebody should have put a bullet in Chavez in 2002 when they had the chance.

That is tough for me to say as somebody who respects the democratic process and the rule of law, but it would have been better for everybody in the long run.

 

[sbonomo]

A number of oil service firms kept operating there because there was lots of work that needed to be done for PDVSA and the potential market is huge.

But getting paid is always a problem. And even when they did get paid it was in those bull#### Bolivars. It has been a crappy currency for years but is now just fancy toilet paper.

Populism + Socialism + weak rule of law = failed state. 

Chavez and Maduro are basically just Spanish speaking versions of Robert Mugabe.

One of the companies in my prior book (Chicago Bridge and Iron - ticker - CBI) learned the hard way why nobody does business there. They had a $750MM refurb project in the Oil and Gas space that was proceeding on schedule.  As they were finishing the project, the Venezuelan government called the LC's for non performance to the tune of $250MM.  The way performance LC's are written they don't have to actually prove a non-performance, only notice of non-performance.  They will never see that money again.   They frantically called me as the agent to stop the payment but my hands were tied due to the language in the LC.  DO NOT do business in Venezuela.    

 

[sbonomo]

Somebody should have put a bullet in Chavez in 2002 when they had the chance.

That is tough for me to say as somebody who respects the democratic process and the rule of law, but it would have been better for everybody in the long run.

i honestly will never understand why we do business or allow US companies to do business with countries such as this.  We just need to pull the plug and walk away.  

 

[Foosball God]

Seems like only a matter of time before it is in full scale collapse and anarchy.

 

[Sand]

Seems like only a matter of time before it is in full scale collapse and anarchy.

How about a 16.5% contraction in 2016?  I don't think even Zimbabwe had a year that bad.

 

[Binky The Doormat]

Feel sorry for the people.  Their gubmit/mob system has done nothing but take from them for years.

 

[Kal El]

I wonder if the people would actually revolt to try and change their fates.

 

[tdoss]

With some of the most beautiful women tough, my god!

 

[gbill2004]

With some of the most beautiful women tough, my god!

Pics please. 

 

[Bojang0301]

#notrealsocialism

 

[dickey moe]

What a surprise.