GM ceases Venezuela operations after government seizes plant

[kscarbel2]

Bloomberg  /  April 19, 2017

U.S. State Department is reviewing the situation

General Motors shut operations in Venezuela after authorities seized the automaker’s local assembly plant and vehicles in the first nationalization of a major company’s operations in the country in more than two years.

GM’s factory was “unexpectedly taken by the public authorities, preventing normal operations,” according to an emailed statement. The automaker said it “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 plant shutdown took place as protesters flooded the capital city of Caracas in the biggest show of opposition to President Nicolas Maduro’s government in months. The auto industry has collapsed, with sales plunging 92 percent in March, as a shortage of dollars has pushed new car prices beyond the means of all but the wealthiest Venezuelans.

Venezuela is experiencing the worst recession in decades, with gross domestic product plummeting 10 percent in 2016, according to the International Monetary Fund. Revenue from oil, which accounts for 95 percent of foreign-currency earnings, has tumbled along with prices. With the country short on cash for imports, citizens wait in long lines to find scarce household items.

The U.S. State Department is reviewing the details of the case involving GM and is calling for authorities to ensure it’s resolved quickly, spokesman Mark Toner said.

“A fair, predictable and transparent judicial system is critical to implementing the essential economic reforms critical to restoring growth and addressing the needs of the Venezuelan people,” Toner said.

Clorox Co. halted operations in Venezuela in September 2014 after inflation and government-mandated price freezes made business unprofitable for the seller of products ranging from bleach to salad dressing. Maduro’s government took over and reopened the Clorox sites.

GM’s costs

GM plans to pay separation benefits to the workers according to Venezuelan law, the company said. The automaker employs 2,678 workers and has 79 dealers in the country with more than 3,900 workers.

Currency restrictions continue to plague automakers in Venezuela despite an agreement first reached with Ford Motor Co. in 2015 that allowed the automaker to sell some models in dollars. Under the deal, Venezuelans would pay dealers dollars for production materials imported from abroad and bolivares to cover the costs of assembling vehicles locally. The government followed suit last year with GM, Fiat Chrysler Automobiles and Toyota Motor Corp.

Operating in Venezuela has been a costly endeavor for years. GM reported charges of $720 million in 2015 and $419 million a year earlier related to currency devaluation and asset impairment in Venezuela.

GM said in its annual report filed in February that it was closely monitoring the environment in Venezuela to assess whether changes meant it no longer maintained control of its local subsidiaries. If such a determination was made, the company said it could incur a charge of as much as $100 million.

Foreign companies operating in Venezuela have been beset by disruptions stemming from goods shortages, strikes and police raids. Coca-Cola Co. halted production of sugar-sweetened beverages last year due to lack of raw materials, following disruptions to Kraft Heinz Co. and Clorox.

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[TeamsterGrrrl]

No GM plant is worth fighting over...

[1958 F.W.D.]

That's not how Socialism is supposed to work! They're not doing it right! 

[Dirtymilkman]

4 hours ago, TeamsterGrrrl said:

No GM plant is worth fighting over...

Really?  But yet you're a bragger about unions and most import companies that assemble cars here are in right to work states. I bet the 3600 people in Venezuela think it's worth it. 

[TeamsterGrrrl]

I was referring to the obsolescence of GMs plants, not the jobs there.

[TS7]

This is what happens when socialism fails.

[TeamsterGrrrl]

More so caused by an economy overly dependent on high oil prices.

[TS7]

No overly dependent on free stuff.

[david wild]

Yes free stuff, maybe we could Clinton down there to fix things ????

[TeamsterGrrrl]

Not so much free as subsidized, such as reduced price bread. Kinda makes sense, the people have "skin in the game" and don't waste the resource that they couldn't afford otherwise. The U.S. subsidizes a lot of stuff like college education, home ownership, oil, coal, trucking, solar energy, etc.. Sometimes these subsidies are beneficial and sometimes they just distort the market in harmful ways.

[TS7]

Why should I pay for your bread?

[TeamsterGrrrl]

Through subsidies we're paying a bit for your food and mine, as well as the highways your CL is wearing out if you run many miles loaded. Truth is, it's just about impossible to avoid funding and enjoying government subsidies.

[HeavyGunner]

Yep and he pays many taxes to have the privelge of running that CL down the highway. 

[RowdyRebel]

Quote

GM plans to pay separation benefits to the workers according to Venezuelan law, the company said.

Screw that. If, as the story says,

 GM needs to get their people out and wipe their hands, as it was beyond their control. The workers got screwed by their government, and need to take matters up with that government if they are unhappy with the situation their government created.

Quote

GM’s factory was “unexpectedly taken by the public authorities, preventing normal operations,”

, then the "public authorities" can pay the workers who are now out of a job. If the "public authorities" object, they should have thought about it BEFORE they siezed the plant.

 

As for GM's losses, that's the risk you take doing business in a country with no property rights, run by an authoritarian dictator who has the power to seize your assets just because they wake up one morning and feel like you shouldn't have them. If you don't like it, stick to doing business in countries which respect property rights and limited government powers.

 

 

Edited April 22, 2017 by RowdyRebel

[RowdyRebel]

2 hours ago, TeamsterGrrrl said:

Through subsidies we're paying a bit for your food and mine, as well as the highways your CL is wearing out if you run many miles loaded. Truth is, it's just about impossible to avoid funding and enjoying government subsidies.

Highways are funded by user fees, which are not subsidies. Motor fuel taxes, F.E.T., registration fees, etc., all are collected FROM road users with the express purpose of paying for the roads they use. Any "dipping into the general fund" that may occur happens because the highway fund has been depleted for unrelated uses on behalf of users who do NOT pay into the highway fund...things lanes for bicycles, hiking/biking trails, etc. If the highway fund were used only to support transportation means that pay into the fund, then there woud be plenty of money paid by road users to maintain the roads they use.

 

In other words, trucks subsidize people riding the bus, peddling their bicycle, riding the train, and walking...not the other way around.

[TeamsterGrrrl]

Rowdy, I've seen the numbers- Much more general fund revenue is diverted to paying for roads than is diverted from user fees to bikes, trains, etc.. Bike and transit funding isn't a diversion either- They are part of the transportation system. I've seen the traffic counts on bike trails that are carrying more commuters than many rural roads, and transit take millions of passengers and vehicles off our crowded highways.

[RowdyRebel]

1 hour ago, TeamsterGrrrl said:

Rowdy, I've seen the numbers- Much more general fund revenue is diverted to paying for roads than is diverted from user fees to bikes, trains, etc.. Bike and transit funding isn't a diversion either- They are part of the transportation system. I've seen the traffic counts on bike trails that are carrying more commuters than many rural roads, and transit take millions of passengers and vehicles off our crowded highways.

You missed my point ENTIRELY! If bicycles want their own lanes or separate paths, then bicyclists need to fund them. That is how "user fees" work...the people USING whatever it is PAYS for it. Highway dollars, paid by motor fuel taxes, FET, and vehicle registrations, should be used entirely for the roads and bridges USED by the people PAYING the fees. If that were the case, there would be no need to divert money from the general fund to the highways. Bus and train fares should be sufficient to support moving that person paying the fare without additional revenues from the general fund. Want sidewalks and hiking trails? Those USING those paths should PAY for them, NOT the highway fund.

[TeamsterGrrrl]

Rowdy, you don't understand "avoided costs". Have you noticed how your electric company will almost give you LED lights for free and will buy up your old inefficient appliances? They do that because it's cheaper than building new power plants! Same with bikes and transit- It's cheaper to subsidize those modes than it is to build more lanes if those people drive instead.

[HeavyGunner]

So your original post telling another member that their truck was subsidized to run on the highway WAS a load of BS. 

[kscarbel2]

3 hours ago, RowdyRebel said:

You missed my point ENTIRELY! If bicycles want their own lanes or separate paths, then bicyclists need to fund them. That is how "user fees" work...the people USING whatever it is PAYS for it. Highway dollars, paid by motor fuel taxes, FET, and vehicle registrations, should be used entirely for the roads and bridges USED by the people PAYING the fees. If that were the case, there would be no need to divert money from the general fund to the highways. Bus and train fares should be sufficient to support moving that person paying the fare without additional revenues from the general fund. Want sidewalks and hiking trails? Those USING those paths should PAY for them, NOT the highway fund.

In a perfect world, you're 100 percent right. But ours is not a perfect world.

In some countries, it is the cars and trucks on the toll roads that bear the full burden of the road's construction and maintenance costs. But, Americans wouldn't accept $20-$30 tolls in place of the current $1-$5.

 

[david wild]

If she has seen numbers they are numbers invented by those that also create the fake news, those numbers fill their wish list and are not the real numbers, road use taxes and all the rest are more than enough to have provided us the best roads in the world but the government raids the highway fund for un highway projects. and the union wage prevailing law doubles the cost of most highway projects, higher wages and less productivity. The taxpayer should get the most for it's tax dollar not prop up some ailing notion that union wages will build a better road when in fact the opposite is true.  

[RowdyRebel]

On 4/23/2017 at 7:21 AM, kscarbel2 said:

In a perfect world, you're 100 percent right. But ours is not a perfect world.

In some countries, it is the cars and trucks on the toll roads that bear the full burden of the road's construction and maintenance costs. But, Americans wouldn't accept $20-$30 tolls in place of the current $1-$5.

When you're already paying $0.244 per gallon in federal fuel tax, anywhere from $0.13 (Oklahoma) to $0.747 (Pennsylvania) per gallon in state fuel tax, 12% excise tax on new trucks and trailers, $0.945 per 10 pounds of load capacity above 3500# federal excise tax for tires, any STATE excise taxes on truck/trailer/tire purchases, truck registration fees, HVUT, etc...and now they want AN ADDITIONAL $5, $10, or $20 to drive on a short little segment of road? F*ck that. If they can't manage the money I already paid for the use of the road, I'm not paying extra for that specific little segment...especially when I can run a parallell route that is funded by the taxes I'm already paying.

Do away with all of the other taxes we pay to fund the roads, and I'd be open to the idea of toll roads and toll bridges. As long as my tax dollars are supposed to be funding those roads, they don't need to be charging extra for me to use them.

[grayhair]

On 4/20/2017 at 6:15 PM, kscarbel2 said:

GM’s costs

GM plans to pay separation benefits to the workers according to Venezuelan law, the company said. The automaker employs 2,678 workers and has 79 dealers in the country with more than 3,900 workers.

No wonder a nicely-equipped Chevy pickup truck costs $65K here in the U.S.  

And talk about management being slow on the uptake.  Coke, Clorox, and others saw this coming and closed facilities.  But not the super sharp GM management.  Idiots.

Edited April 23, 2017 by grayhair

[TeamsterGrrrl]

From the non-partisan CBO: http://www.cbo.gov/sites/default/files/114th-congress-2015-2016/workingpaper/50049-Freight_Transport_Working_Paper-2.pdf

Shows trucking costs taxpayers around 2 to 5 cents per ton/mile. Is your truck paying anywhere near that?

[TS7]

Until you start paying highway use taxes, do not tell me how little I pay to run my trucks. How many trucks do you own?