Friday, April 21, 2017

"Amid Venezuela Protests, G.M. Plant Is Seized, and Company Exits"

On Thursday April 20th, the Venezuelan government seized control of a General Motors company stationed there, which resulted in the laying off of 2,700 workers. While the General Motors said that they were unfairly shut down due to an "illegal judicial seizure of it assets", it should be recognized that the plant was hardly the picture of success. It was stated in the article that last year automakers were only able to sell 3,200 new vehicles. The demand used to be higher, but has declined steadily in recent years due to the "devaluation" of their national currency and limited imports of necessary technology to increase efficiency, which translates to a slash in revenue. These days in Venezuela most business is done with the government and state-owned companies and this has resulted in the state taking away more than 1,400 businesses, signaling corruption, which explains all the current political tension. Another pitfall to having a state-owned business is the period of time in which one has to wait for their payments. There is also a huge decline in the availability of resources, as evidenced by the withdraw of Coca-cola due to the lack of sugar. This is horrifying because there was a day where Venezuela was one of the top sugar producers in South America. The biggest concern of all, is the amount of oil companies being expropriated. Oil is the economy's most valuable resource, and since the election of Hugo Chavez in 1998, millions of oil-producing companies have been expropriated. The successor of Chavez, Nicolas Maduro is not helping this as he is attempting to keep all the oil-companies on board, despite not paying them enough, with the hope that Venezuela will return to its once successful days of oil producing.

No comments: