I wonder why they didn't just shutdown the US and make them all in
Venezuela? US is too expensive.
GM closes Venezuela plant, fueling economic fears
GM closes Venezuela plant, suspending local car production and fueling
CARACAS, Venezuela (AP) -- General Motors Corp.'s Venezuela affiliate
temporarily shuttered a local assembly plant on Friday, suspending all car
production in Venezuela and boosting fears that the closure could further
slow sputtering economic growth.
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
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
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
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
"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.