GM halts operations in Venezuela after factory is seized

The GM logo is seen in Warren Michigan

The GM logo is seen in Warren Michigan

GM said on Wednesday that Venezuelan authorities had illegally seized its plant in the industrial hub of Valencia.

ExxonMobil pulled the plug on its operations in Venezuelan in 2007 after former President Hugo Chavez attempted to nationalized one of its projects.

"[GM] strongly rejects the arbitrary measures taken by the authorities and will vigorously take all legal actions, within and outside Venezuela, to defend its rights", the auto giant said in a statement, according to CNN Money.

GM vowed to defend itself legally but getting compensated could be hard. The oil giant sought compensation of $16.6 billion.

In March, a World Bank arbitration panel determined that Venezuela did not have to pay $1.4 billion to Exxon Mobil Corp. for confiscating company assets during a wave of nationalizations.

Clorox Co. halted operations in Venezuela in September 2014 after inflation and government-mandated price freezes made business unprofitable for the seller of products ranging from bleach to salad dressing. And if the price of oil doesn't recover, the problems that Venezuela could spread to other countries like Russian Federation, which depend on petroleum for revenue. The Venezuelan government has previously seized assets belonging to US companies including those of cleaning products maker Clorox in 2014. He said the takeover was led by the president of a national dealership, describing this individual as "a representative of the dealerships all over the country of Venezuela". Like most carmakers in the oil-producing nation, it has seen production grind to a halt as the cash-strapped government chokes off its access to dollars needed to import parts and repatriate profits.

Along with Chrysler, Ford, Mitsubishi, and Toyota, that included the GM plant in Valencia - known as of Latin America's pequeña (or little) Detroit. It employs almost 2,700 workers and has 79 dealers in the country, CNN Money reported.

Its suppliers, the company said in a statement according to the AP, account for more than half the auto-parts market in the country.

GM, which has 79 vehicle dealerships in Venezuela, also promised it would make "separation payments" to Venezolana employees following the reported seizure. It was seeking damages from GM of 476 million bolivars - about $665 million at the official exchange rate, but just $115 million on the black market where many Venezuelans are forced to turn to sell their increasingly worthless currency.

The U.S. State Department is reviewing the details of the case involving GM and is calling for authorities to ensure it's resolved quickly, spokesman Mark Toner said.

Everyday seems to bring a new story of suffering and dysfunction from inside Venezuela, whose people are enduring one of the worst economic and political breakdowns in recent memory. In July of previous year, the government said it would take a factory belonging to Kimberly-Clark Corp. after the American personal care giant said it was no longer possible to manufacture due to a lack of materials.