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September 4, 2009

VENEZUELA: GM to resume production after three months

General Motors will end a three-month stoppage at its Venezuela plants next week after reaching an agreement with the government of President Hugo Chavez to free up foreign currency to import parts.

General Motors will end a three-month stoppage at its Venezuela plants next week after reaching an agreement with the government of President Hugo Chavez to free up foreign currency to import parts.

GM suspended operations at its two Venezuelan plants in June, citing debts of US$1.2bn with overseas suppliers.

“We had several currency, labour and permit problems,” GM’s Venezuela president, Rolando Znidarsis, told Reuters. “With the government’s commitment to give us a payment schedule, we are capable of restarting operations on Monday.”

Znidarsis said GM, which saw large increases in its Venezuelan sales until 2007, will begin to build a new family car for the Venezuelan market at its Valencia plant in October.

“A great repressed demand exists and the government and industrial sector should work together to meet that demand,” Znidarsis said, adding that GM would probably build less than 60,000 vehicles in the country this year, just half its installed capacity.

Car sales dropped sharply this year after several companies halted or slowed production in response to labour problems and a government squeeze on dollar sales amid falling oil income in the OPEC nation.

The Mitsubishi Motors and Hyundai Motor assembler, Sojitz, suspended operations at its plant in August after months of labor troubles. Two workers at the plant were killed in clashes with police in January and output has almost halved since then, despite a doubling of workers. The government is trying to persuade Sojitz to reopen.

Toyota said in March it might leave the country because of chronic labour problems. A union leader representing Toyota workers was shot to death weeks later.

GM also closed its Venezuela operations for two months in 2008.

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