Goodyear Shutters Venezuela Operations, Blames Sanctions

The tire manufacturer claimed that economic conditions and sanctions have made production “impossible.”

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US-based Goodyear is shutting down its plant in Valencia, Carabobo State. (Archive)
US-based Goodyear is shutting down its plant in Valencia, Carabobo State. (Archive)
By Ricardo Vaz
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Pays de Gex, France, December 10, 2018 (venezuelanalysis.com) – Multinational tire producer Goodyear announced Monday that it was closing down its operations in Venezuela.

“Goodyear-Venezuela has made the difficult decision to stop producing tires,” the Ohio-based company said in a statement. “Our goal had been to maintain its operations, but economic conditions and U.S. sanctions have made this impossible.”

US-led financial sanctions have severely constrained Venezuela’s ability to service and refinance both government-held debt and bonds held by state oil company PDVSA. In addition, international banks have become increasingly reluctant to serve as intermediaries for financial transactions, hindering transnational firms from operating in the country.

Several multinational corporations have shut down their operations in Venezuela in recent years. However, this is the first time that a company has explicitly cited sanctions as a factor hampering business in the Caribbean country.

Goodyear’s 1,160 workers at its factory in Valencia, Carabobo State, were reportedly caught by surprise by management’s decision to halt operations. Representatives from trade unions have told press that despite operating well below maximum capacity, the company had raw materials to continue producing.

Workers from Goodyear and other tire producers in Valencia had staged protests in June for better wages and working conditions, denouncing at the time the low production levels. In 2016, Goodyear workers had publicly denounced that management was deliberately sabotaging production by letting raw materials deteriorate.

Tires and auto-parts have become increasingly scarce and valued in Venezuela, amid collapsing production in recent years and a growing black market, all of which has strained transportation systems.

In response to Goodyear’s announcement, the Venezuelan government blasted the transnational firm’s decision and vowed to support the workers. In a statement released Tuesday, the Maduro administration declared it would “begin all mechanisms to re-establish production,” in accordance with labor legislation.

Authorities also enacted protection measures to safeguard the 1,160 job posts and called on the Attorney General’s Office to open an investigation into the owners and managers of the Valencia plant to determine their responsibility in what is termed “an attack against the national economy.”

The government also pledged its support to all productive forces, national and foreign investors, to advance towards “a productive economy, of peace and prosperity.”

Under Venezuela’s 2013 Labor Law, workers have the right to take over means of production abandoned by owners with government support. Among other multinational corporations to shut down operations in recent months are Kellogg's and Smurfit Kappa, food and cardboard packaging manufacturers, respectively. In both cases,workers have stepped in with the backing of the Labor Ministry hto safeguard job posts and maintain production.

In another high-profile case, a plant belonging to personal higiene giant Kimberly-Clark, was nationalized in 2016 after the Texas-based firm abruptly pulled out of the country, with production quickly picking up again.

Edited by Lucas Koerner from Caracas.

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