Kim Hjelmgaard and Nathan Bomey, USA TODAY Published 6:12 a.m. ET April 20, 2017
Venezuelan authorities suddenly seized the General Motors plant there, the company confirmed late Wednesday, in a move that broadens the international implications of the country's political and economic decomposition.
The development puts a sudden end to GM's operations in the country. The world's third largest automaker on Wednesday assailed the takeover as an "illegal judicial seizure of its assets."
It comes as the South American nation experiences intense public protests against the government of President Nicolas Maduro. Three people were killed late Wednesday as tens of thousands of Venezuelans took the streets to demand fresh presidential elections and the release of jailed opposition politicians.
The country has high crime and inflation rates and there are shortages of many basic goods and services. It is oil-rich but cash-poor. Maduro has used his Socialist government's institutions to pursue political opponents.
Relations with the U.S. have been tense in recent years, although Maduro's anti-American rhetoric has softened since President Trump took office. Venezuela's Information Ministry was not immediately available for comment.
"We are concerned that the government of Maduro is violating its own constitution and is not allowing the opposition to have their voices heard, nor allowing them to organize in a way that expresses the views of the Venezuelan people," U.S. Secretary of State Rex Tillerson told reporters Wednesday, before the GM episode came to light. "Yes, we are concerned about that situation."
GM said in a statement that vehicles and other assets had been taken from its facilities. The Detroit-based company did not provide details about how the seizure unfolded and did not respond to questions about whether the disruption would affect sales of certain vehicles.
The troubled Venezuelan economy has dragged down the auto industry for several years, as tanking sales and abysmal currency exchange rates have undermined earnings reports.
Consequently, investors were not shaken by the plant's demise. GM shares rose 0.6% to $33.98 shortly after the opening bell Thursday.
"Any lost production is unlikely to prove material," Evercore ISI analyst Arndt Ellinghorst said in a note to investors, adding that the "day may have arrived" where the plant is unsalvageable.
The fate of other automotive plants in Venezuela was not immediately clear. Representatives for Toyota and Fiat Chrysler could not immediately comment Thursday. A Ford representative was not immediately available.
The Venezuelan government has previously seized assets belonging to U.S. companies including those of cleaning products maker Clorox in 2014. Clorox subsequently exited the Venezuelan market.
A look inside the Venezuela General Motors plant
General Motors Venezolana, GM's local subsidiary, was established in 1948 and employs about 2,700 workers and has 79 dealers in the country. The firm said it would make "separation payments" to affected workers.
GM representatives did not respond to questions about whether the company had contacted the Trump administration for help.
"GMV 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.
"The company is confident that justice will eventually be served, and looks forward to continue leading the Venezuelan market. In the meantime, GMV, through its dealers, will continue to provide aftermarket service and parts for its customers."