DETROIT -- General Motors said it would deconsolidate its operations in Venezuela, reducing global profits by up to $100 million after the government seized GM’s plant there last month.
The deconsolidation, announced Tuesday, means GM will no longer include earnings or losses from Venezuela in its South American results, but it does not necessarily signal that GM is pulling out of the country permanently. GM has ceased operations and terminated its workers there while it appeals the plant seizure to Venezuela’s Supreme Court.
“The company expects a prompt decision and favorable outcome,” GM said in a statement. “GM executives have expressed a willingness to talk with government officials and union leaders about the circumstances under which it could be possible to start production and employ some number of workers with a new, viable business model.”
GM’s deconsolidation of Venezuela follows a similar move by Ford in that country two years ago. Ford’s action resulted in an $800 million charge, but the effect on GM’s finances will be much smaller because it had not produced any vehicles in Venezuela for more than a year.
“The illegal seizure of the plant accelerated some decisions that we needed to make,” GM CFO Chuck Stevens told reporters last week. “We don’t necessarily want to exit the country, but certainly it’s not an environment that you can invest in or run a normal business at this point.”
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