US-based automaker General Motors (GM) has announced that it will pull out of Venezuela following a lengthy legal and political fight.
Mid last month the company’s primary factory in Venezuela was reportedly seized by the state due to the decision of a judge.
According to the Venezuelan officials, the plant had not been seized but rather put under embargo due to a legal dispute relating to an alleged breach of control dating back to 2000.
The officials also stated that GM should continue employing the plant’s workers despite the ’embargo’, however, these terms were rejected by GM, which announced it would pull out of the country instead.
“The deconsolidation follows the unexpected seizure of GM’s Venezuelan plant on April 18 by judicial authorities, which forced the company to cease operations and terminate employment relationships due to causes beyond the parties’ will,” the company stated in a press release.
GM went on to state that it would appeal the decision in the Venezuelan Supreme Court, and is expecting a favorable outcome.
The company also stated that it had a “willingness to talk” with government officials and union leaders about what it would take to restart production at the plant.
Shutting down the plant and pulling out of the country would see GM incurring losses of around $100mn.
Following the April 18 seizure, GM was forced to lay off the approximately 2700 workers who were employed at the plant.
While the seizure was the final straw from GM, the plant itself had not produced a single car for more than a year due to difficulties sourcing parts.
Venezuela is mired in a deep economical crisis due to currency controls, making business incredibly difficult for local and international manufacturers.
This situation had earlier forced fellow US automaker Ford out of the country in 2015, resulting in a charge of $800mn for the company.
The economic crisis is also further exacerbated by an ongoing political crisis causing almost daily rioting and violent clashes that have killed over 30 in the last month alone.