General Motors Company (NYSE:GM) says that Venezuela has illegally sized its factory in the country.
General Motors Company’s plant in Venezuela was sized by the country’s government yesterday. GM says that it will seek legal action, but it isn’t likely to get anywhere. The problem arose as the socialist country’s economy remains unstable.
General Motors Company says that it will be offering separation packages to employees that worked at the factory. It also notes that it will continue to offer aftermarket service to customers in the country via its 79 dealerships.
General Motors Company may have been expecting this negative result. A warning in its annual report said it would watch the situation in the country and prepare for losing its financial assets. GM likely won’t be harmed much by the seizure due to already poor sales in Venezuela caused by its unstable economy, reports Detroit Free Press.
“Yesterday, GMV’s (General Motors Venezolana) plant was unexpectedly taken by the public authorities, preventing normal operations,” General Motors Company said in a statement obtained by Reuters. “In addition, other assets of the company, such as vehicles, have been illegally taken from its facilities.”
General Motors Company isn’t the only company that has been facing troubles in Venezuela. Kimberly Clark Corp (NYSE:KMB) left the country last year and the government seized its factory following the departure. The Coca-Cola Co (NYSE:KO) company also had to stop making some drinks in the country last year due to a sugar shortage. Both of these were results of the country’s failing economy.
GM stock was up 1% as of Thursday morning.