CARACAS – General Motors de Venezuela said on Friday that is it suspending production at its two assembly plants until at least September because the government has not provided the firm with sufficient dollars to pay external suppliers.
GM de Venezuela said it currently owes suppliers some $1.2 billion and that upwards of 80 percent of the total debt is more than 290 days past due.
“Due to these delays, suppliers have suspended provision of production materials since four months ago,” forcing the shutdown of GM’s two assembly plants in the western Venezuelan city of Valencia, the company said in a statement.
The Venezuelan government imposed exchange controls in February 2003 amid a devastating general strike organized by opponents of leftist President Hugo Chávez.
The president announced a year ago the start of a trial program allowing firms already registered with the foreign-exchange agency, Cadivi, to get up to $50,000 without presenting the extensive documentation that is usually required.
Chávez said the initiative would greatly speed up the delivery of dollars to importers, who complained of six-month delays in receiving the currency they need to complete transactions.
But the subsequent plunge in world oil prices – Venezuela is a leading exporter of crude – led economists here to predict the government would limit the amount of dollars available to importers.
Trade Minister Eduardo Samán said on Thursday that Cadivi would be providing $2.5 billion in greenbacks for Venezuela’s auto sector.
“These resources are for all the assemblers, including General Motors. If they close now, it’s because they want to, not for lack of currency,” Samán said, though without specifying when the dollars would be distributed.
The president of GM de Venezuela, Ronaldo Znidarsis, said last month that delays in obtaining foreign currency from Cadivi “have worsened since November” of last year.
He said then that assuming a solution of the currency problem, the plants would not reopen until the third week of September, “in the best of cases.”
Unions representing GM de Venezuela’s workers “understand that the problem is with the currency,” Znidarsis said on May 19.
Sinvensoc union chief Wilmer Cedeño confirmed to Caracas daily El Universal that GM has no materials on hand to continue assembling vehicles.
“We don’t know when activity will be resumed,” he told the newspaper, adding that management promised to continue paying workers’ wages during the shutdown.
Last year, GM de Venezuela fell more than 50 percent short of its production target of 120,000 units and the most optimistic forecast calls for only around 42,000 vehicles to roll off the company’s assembly lines in 2009.
“As a consequence of the fall in assembly activity during 2008 and 2009, some domestic suppliers and dealers are in precarious shape and could definitively shut down, with which unemployment would increase even more, as would the shortage of vehicles, spare parts and service,” the company said on Friday.
GM de Venezuela employs 4,000 people at its two plants in Valencia and accounts for another 74,000 jobs at supplier companies and dealers.
The firm has been the automotive sales leader in Venezuela for the last 29 years. EFE