General Motors has shut down its operations in Venezuela after the government has seized possession of the company’s assembly plant. The seizure marks the first nationalization of a large corporation’s facility in the country in over two years.
GM said in a statement that their factory was, “unexpectedly taken by the public authorities, preventing normal operations.” The company went on to say it, “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.”
Currently undergoing a deep economic recession, Venezuela is experiencing massive protests in capital city Caracas against President Nicolas Maduro’s government. The country’s recession largely stems from declining oil revenues in recent years as global oil prices plummeted. Subsequently, the auto market in the South American country has effectively collapsed in recent months, with sales declining by nearly 92 percent.
GM will now have to pay separation benefits to its 2,678 employees in the country, per Venezuelan law. The costs may be minor compared to the financial turmoil the company’s Venezuelan operations have seen in recent years. In 2014 and 2015 reported $720 million and $419 million in financial charges associated with the company, respectively.