Wednesday, March 08, 2006

Whats good for Venezuela is good for G.M. 

A couple of days ago in the comments it was mentioned that automobile sales in Venezuela were up another 41% in February. This is on top of last year which was an all time record year for car sales. With all these cars being sold someone must be making money, and indeed they are. G.M. in particular would seem to be doing quite well:

CARACAS (MarketWatch) -- General Motors Corp.'s (GM) sole vehicle assembly plant in Venezuela has been closed since March 1 due to problems obtaining dollars from the country's currency commission, but will reopen Friday, the company's branch president said Tuesday.
"We expect the closing to last until this Friday," after ten days, Jose Favarin, head of GM in Venezuela told reporters. "We can't pay our suppliers because (the government's) dollar delivery system is not fast enough," he said. He declined to say how much the closing of the plant will end up costing the company in lost sales.
The government's currency commission, known as Cadivi, serves as the state agency in charge of servicing the economy's dollar needs. Companies and individuals must follow an application process with Cadivi to buy dollars for any use.
Favarin said Cadivi has to become more efficient now that the economy is growing at a much higher pace.
GM's 2,700-worker plant can assemble 300 cars a day and Favarin said the company hopes to produce 100,000 vehicles this year. GM is investing $21 million to expand operations in 2006.
The car company's sales in the oil-rich country exceeded $1 billion in 2005, Favarin said, and added that sales could rise to anywhere between $1.3 billion and $1.4 billion this year.

This was rather stunning news to me. G.M. is doing over a BILLION dollars of business in Venezuela?!?! And its going up to 1.4 billion this year! That must be great news to a company watching its North American business go down the tubes. Quite frankly, I was stunned by the size of G.M.s operations in Venezuela - assembling 300 cars a day and selling 100,000 a year.

In a reversal of the old addage "whats good for G.M. is good for the U.S." maybe we now have what is good for Venezuela is good for G.M. I wonder if the CEO of G.M., Rick Wagoner, has a portrait of Chavez on his wall.


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