Ford Motor Co. stopped building vehicles at its Valencia site in Venezuela this week until the end of May as the United States dollars needed to import parts were not adequate in the country, plant workers told Reuters. Carmakers, as well as other private businesses in Venezuela, have been complaining about the government’s currency exchange controls are preventing them from importing needed products.
Venezuelan Transport Minister Haiman El Troudi confirmed the work stoppage at the Ford plant, but remarked that the site would reopen in two weeks following a meeting between the carmaker’s representatives and government officials that resulted to resolution of some "critical bottlenecks."
El Troudi said that state currency board Cencoez would release $20 million in debt to Ford this week. Japanese carmaker Toyota Motor Corp. stopped vehicle assembly in Venezuela in February over the same reasons.
The auto industry in Venezuela posted a 76-percent drop in production in the first quarter of 2014 to just 3,424 vehicles, according to national automakers' organization Cavenez.
Auto output in the same period last year was 14,316 units. As for Ford, it only produced only 499 cars in Venezuela in the first three quarter 2014. The government of Venezuelan President Nicolas Maduro is facing increasing pressure to release more dollars for imports.
Maduro has claimed that unscrupulous businessmen overstress needs just to flip dollars on the black market for profit. His ministers, however, are holding urgent meetings with business leaders in order resolve issues and help reverse the slump in local auto production.
The country operates three exchange controls -- at VEB6.3 per dollar for preferential goods, and at around VEB11 and VEB50 for other sectors via two Central Bank mechanisms. According to illegal Web sites that track trading of the currency, the dollar is trading at between VEB66 and VEB68 on the black market.
Ford logged a 39-percent decline in net income in the first quarter of 2014 to $989 million, no thanks to weaker pricing in the US and higher warranty expenses. The carmaker posted less than 1 percent hike in revenue to $35.9 billion.
Ford logged a 35-percent drop in profit margins in North America due to higher incentives as well as a $410 million increase in warranty reserves linked to recalls and other service campaigns for past model year vehicles. Ford recorded a 36-percent decline in pretax operating profit to $1.4 billion in the first quarter of 2014.
Once taxes are taken into account, Ford’s operating profit in the first quarter of 2014 was equal to 25 cents per share, which is a sharp drop from 41 cents in the same period in 2013.