I wonder why they didn't just shutdown the US and make them all in Venezuela? US is too expensive.
GM suspended operations for at least three months at its auto assembly plant in Venezuela's central Carabobo state, affecting 1,600 full-time employees who will see their salaries cut to minimum wage during the shutdown. A smaller plant that produces trucks will continue operating in a nearby town.
Car sales soared in Venezuela in recent years as high oil prices fueled a consumer spending boom. In March, the sector employed 40,000 people and indirectly created another 100,000 jobs, according to Venezuela's Automotive Chamber.
GM is the country's largest automaker, producing more than half of the
54,000 cars assembled in the first five months of 2009, according to the chamber.But auto output had already declined by 9.7 percent this year through May as government currency controls restricted imports, pushing GM to close its doors.
The controls, imposed by President Hugo Chavez in 2003, have prevented GM from getting the dollars it needs to import car parts, stalling sales and leaving the company with $1.2 billion in debts to foreign suppliers that it can't get the dollars it needs to pay up.
But lower oil prices, now 51 percent below July's peak, have left crude-reliant Venezuela without its main source of foreign currency, making it more reluctant to part with dollar reserves and forcing it to cut back on dollar sales to importers.
GM's operations could be halted for more than three months if the company doesn't get permission to buy dollars soon, GM's Venezuela chief Ronaldo Znidarsis said in May.
The government plans to sell auto manufacturers $2.5 billion in dollars this year so they can buy car parts, Trade Minister Eduardo Saman said on Thursday -- though he did not say when that sale would happen or if GM would benefit.
"We know when we're leaving, but we don't know when we're coming back," a GM official said, asking not to be identified because she said she was not authorized to talk to reporters.
Local businessmen worry that GM's shutdown will slow other sectors of Venezuela's economy, said Tulio Hidalgo, president of the Carabobo state chapter of the Fedecamaras business chamber.
Venezuela's economy expanded by 0.3 percent in the first quarter, down from
5 percent in the year-ago period.Hidalgo said that nearly 45 percent of Carabobo's small and medium-sized businesses -- from banks that provide consumer credit, to transport service companies -- will be affected by reduced automotive output.
Ford Motor Co., Chrysler Llc, Toyota Motor Corp., Mitsubishi Motors Corp., Mack de Venezuela and Iveco Venezuela also produce cars in Venezuela, but haven't closed any plants this year -- though Toyota and Mitsubishi both briefly halted production amid labor strikes.
In May, GM said it employed 4,000 people in Venezuela and had indirectly created another 70,000 jobs.