Weekly News Review | 1 May 2017 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

Venezuela points the finger at GM

On April 19, General Motor’s Venezuelan plant was unexpectedly seized by public authorities amidst violent protests in the turmoiled country, forcing the oldest and most traditional automaker in the country to cease operations. Venezuela is currently involved in an economic depression that has lasted a number years, with almost worthless currency and vast unemployment. With all this trouble, it was only a matter of time until GM got dragged into the political complications.

The plant has manufactured a range of vehicles since it first started production, such as compact cars, pickup trucks and SUVs, however it has only been producing spare parts over the last two years. Unsurprisingly, GM was forced to halt operations, claiming that the seizure was “granted and enforced in total disregard of GM Venezuela’s right to due process, causing irreparable damage to the company, its 2,678 workers, its 79 dealers (the country’s largest service network with more than 3,900 workers), and to its suppliers (representing more than 55% of the auto parts industry in Venezuela).” Following on from this disruption, is it difficult to pinpoint the exact issue that the Venezuelan government has with GM, although President Nicolas Maduro has had a long vendetta against the US, blaming it for his country’s economic problems. This is not the first issue for the US automotive industry in Venezuela, with Ford having to write off investments upwards of $800 million back in 2015.

Still in shutdown, GM has had no choice but to let go of its employees, albeit without warning. GM was under fire last week for this decision, however the cut back on vehicle production has hinted at a future decision to close the plant; the straw that broke the camel’s back just happened to be this civil lawsuit. In GM’s defence, if its factory has been taken from it then they no longer have the responsibility for those employed. In fact, the Venezuelan government should be supporting these workers in their time of need. On the other hand, union leaders in the region have suggested that each worker at the plant was on too little money, which is certainly GM’s problem. We are not entirely sure what will happen over this week, but let us hope for both the US automaker and the Venezuelan workers we see a solution that benefits both.

Alex Kreetzer

Alex Kreetzer - News Editor

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