The auto industry in Venezuela is crumbling image

The South American country, rich in oil, was not long ago the region’s third biggest automotive industry provider, but as the “black blood’s” production stagnated and the government was unable to manage the local currency, private businesses have faltered.

For example, the Jeep assembly factory in the central Venezuelan city of Valencia has last produced a car no less than five months ago – when it had more than 1,000 workers. But, as materials were not supplied, they were sent back home and the plant idled.

“They are asking to fire 119 workers,” says union leader Henry Ospina, who represents employees of Chrysler. “We’re fighting, but the company says everyday it’s harder to maintain staff costs.”

“In all of the automotive industry, 1,500 jobs are at risk,” said Cristian Pereira, the president of a union federation.

Similar to Jeep’s facility, the plants run by Ford, General Motors, Toyota, Iveco, Mack and Mitsubishi have been shut down or function at their minimum capacity. According to the Venezuelan Automotive Chamber, vehicle production this year crumbled to just 7,000 cars – a steep 84% dive from the 43,000 units made in the same period last year.

The government of President Nicolas Maduro, who followed longtime leader Hugo Chavez after his death in 2013, is said to owe to carmakers $1.9 billion in dollar liquidations – but officials deny the currency problems. Even if the government exchange rate for the bolivar-dollar stands at 6.3 and on the black market the rate goes to 70 bolivars for a dollar.

Via Reuters