Workers at the Ford Motor Co. facility in Venezuela said the American automotive giant halted production earlier this week due in large part to a lack of foreign currency to pay for imported car parts.
Venezuela’s strict currency controls have rankled Ford and many other private companies in the country, which claim the restrictions have prevented them from importing products due to delays in paying in dollars.
“Ford’s production operations have been suspended in Venezuela due to material shortages,” Kristina Adamski, a company spokeswoman, said in an e-mailed statement to Bloomberg Businessweek. “We have received a commitment from the Venezuela government to help resolve the issues and to get our production up and running by the start of next month.”
In the first quarter of this year, Ford lost $510 million before taxes in South America – more than doubling the $218 million it lost a year earlier.
In Venezuela Ford assembled only 499 cars in the first three months of 2014. Its 52 year-old plant here, located in Valencia, currently employs 2,472 Venezuelans according to official data from the company.
The Venezuelan Transport Minister Haiman El Troudi also confirmed the work stoppage, but added that production for cars should begin again within two weeks once the government and the American car manufacturer discuss some "critical bottlenecks."
The auto industry is just one sector of Venezuela’s economy that has faced the anger of the government of President Nicolás Maduro, enough so to withhold the release of more dollars for imports.
While Maduro claims that shady businessmen exaggerate the problem to flip dollars on the black market, Venezuelan officials are holding talks with businesses in an attempt to avert any more issues and ramp up local production in various key industries.
Along with oil, the auto industry is one of Venezuela’s largest and most important economic workhorses with General Motors, Chrysler and Fiat – plus Ford – all operating in the South American country.
There are three different currency controls in Venezuela — 6.3 bolivars per dollar for preferential goods, and at around 11.50 bolivars for other sectors via two Central Bank mechanisms. On the black market, the dollar is trading at about 66-68 bolivars, according to illegal web sites that track it.