Amid Venezuela Protests, G.M. Plant Is Seized, and Company Exits

Venezuela was once among the most lucrative markets in Latin America for foreign businesses, a country oozing in oil and blessed with an emerging middle class hungry for everything modern, from new cars to snug-fitting disposable diapers.

But the good times are long gone, and on Thursday, General Motors became the latest in a wave of international companies that have shut their doors voluntarily or under duress.

In G.M.’s case, the Venezuelan authorities seized the company’s local vehicle assembly plant. America’s largest automaker said it had been forced to cease operations in Venezuela because of an “illegal judicial seizure of its assets” and would lay off its 2,700 workers there.

The move came amid violent street protests against the government of President Nicolás Maduro and a deepening economic crisis fueled by Venezuela’s heavy foreign debt and the retreat of world oil prices, which have slashed the country’s main source of income.

The average Venezuelan must now wait in long lines for bread and medicine, and many are going hungry and unpaid, as the government struggles to avert default. But the situation is rough for businesses, foreign and domestic, as well.

Political tensions, corruption, high crime rates, a restrictive investment law and interruptions of electric service have made doing business in Venezuela akin to running an obstacle course en route to bankruptcy. Especially burdensome have been harsh currency restrictions and repeated devaluations of the bolívar, the local currency, which have limited imports of vital machine parts and goods, while shrinking the value in dollars of company revenues.

Much if not most business is done with the government and state-owned companies, and invoices can go unpaid for months on end. The government has expropriated more than 1,400 private businesses since 1998, according to the State Department.

“Nowadays, there is no country in Latin America more difficult for a company to operate in,” said Luis Giusti, a former chief executive of Petróleos de Venezuela, or PDVSA, the national oil company, who also worked for Shell Corp. of Venezuela. “There is uncertainty for the future of the economy, and companies have long periods to wait for cash.”

Coca-Cola, long one of the most successful companies in Latin America, suspended production in Venezuela last summer because of a scarcity of sugar in a country that once was one of the prime producers in the region. Bridgestone, Clorox, Ford Motor, General Mills, Kimberly Clark and Procter & Gamble have all left Venezuela or scaled back production sharply in the country amid political hostility and a general shortage of necessary raw materials in recent years.

In the economy’s most vital sector, oil production, the international companies that remain are barely hanging on. Scores of international and domestic oil service companies have been expropriated since President Hugo Chávez, who was elected in 1998, came to power. Under Mr. Chávez, the government took a majority stake in four giant oil projects in 2007, prompting Exxon Mobil and ConocoPhillips to leave the country. Chevron has chosen to stay as a minority partner to PDVSA.

Mr. Chávez, who died in 2013, also seized a major gas injection project run by Williams Companies of Tulsa, Oklahoma, and seized 11 rigs from Helmerich & Payne, another major service company based in Oklahoma.

Life under Mr. Chávez’s successor, Mr. Maduro, has been no better, especially since oil prices plunged in late 2014.

Several international service companies are keeping staff members, offices and equipment, including rigs, in the country despite a lack of payments from PDVSA in hopes that Venezuela will return to its traditional place as South America’s leading oil producer.

But Baker Hughes, Halliburton, Schlumberger and Weatherford have all reduced their activities in the country. PDVSA has tried to appease the service companies by paying old bills with bonds and promissory notes.

Schlumberger announced last year that it would reduce its presence in Venezuela because PDVSA was $1.2 billion in arrears. Halliburton was owed $756 million as of last spring, according to Oilprice.com, a trade publication.

Venezuelan oil executives said that PDVSA’s partners were now making marginal profits or losing money outright. These executives said that when the price of oil was over $100 a barrel, money could still be made despite the mismanagement of PDVSA and the revolving door of state-run company officials they had to work with. But now taxes and royalties are killing profits, and making long-term investment unviable.

“Everybody is waiting for a change of government, and hopefully they will recoup some of their accounts payable due to them,” said Jorge R. Piñon, former president of Amoco Oil in Latin America. “They cannot afford to leave because they are deeply invested in the country. They don’t want to pack up and then have to repack their boxes and go back to Caracas.”

The worsening political and economic situation has left many foreign companies debating whether to stay or to go.

A third option is known as “deconsolidation.” Under United States accounting laws, a company may assign market value to a subsidiary’s assets and afterward consider it an investment rather than a separate operation. The move allows multinational corporations to take one-time charges, but remain in Venezuela.

Many companies have deconsolidated their Venezuelan operations in the past two years, including the tire-maker Goodyear, which took a $646 million charge for its Venezuelan business last year. Bridgestone and Pirelli announced similar measures, with Bridgestone writing off $360 million and Pirelli $614 million.

Pepsi, citing the breakdown of the country’s foreign-exchange market, took a $1.4 billion write-off for its Venezuela business in 2015. Procter & Gamble took a $2.1 billion write-off in 2015 for its Venezuelan operations.

The move against G.M. comes as Venezuela’s auto industry has nearly ground to a halt amid the political instability, currency issues and economic failure that have led to the violent protests across the nation.

Last year, automakers sold only about 3,200 new vehicles compared with more than 17,000 in 2015, with plants closing for months at a time because of a lack of demand.

Five years ago, automakers made more than 100,000 cars and trucks in Venezuela, according to the research firm Wards Auto. But production has declined steadily since then, primarily because of currency issues that have choked off the flow of parts into the country. Last year, automakers made only 4,900 vehicles, including heavy-duty pickups, down from 31,000 the previous year.

The G.M. plant, on the central coast in the state of Carabobo, had not been producing cars for an extended period of time, said a company spokeswoman, Dayna Hart.

Other automakers, including Ford and Toyota, have closed plants for several months because of the low demand and an inability to get necessary parts.

Two years ago, Ford took an $800 million pretax charge to cover accounting changes for its Venezuelan operations.

In a statement, G.M.’s Venezuelan division said it was ceasing operations in the country after its plant was “unexpectedly taken by the public authorities, preventing normal operations.” It said the government had taken other company assets, including vehicles, from the plant.

Venezuelan news reports said the seizure stemmed from a lawsuit that dated to the early 2000s with a company in the western city of Maracaibo. But a spokesman for G.M.’s Venezuelan subsidiary said the plant had been shut down for the past 42 days as a result of a takeover by members of one of its unions.

The spokesman said that G.M. had asked the government for help taking back the plant, but that the government had taken over the factory itself instead. Union members can now enter, he said, but not managers.

“G.M. strongly rejects the arbitrary measures taken by the authorities and will vigorously take all legal actions to defend its rights,” the company said in a statement.