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Kimberly-Clark’s Venezuela Closing Broke Law, Maduro Says

Updated on
  • Consumer-products maker said impossible to continue business
  • President Maduro says company violated laws by closing plant

Kimberly-Clark Corp., the consumer-products giant that owns Kleenex and Huggies, violated Venezuela’s laws by suspending its operations in the South American country, President Nicolas Maduro said.

“Forty-eight hours ago, without notice, a U.S. company called Kimberly-Clark, violating national laws and the constitution, fired almost 1,000 workers from its production plant, closed the door and left the country,” Maduro said on state television. He added that the government would support the workers now in control of the plant.

Kimberly-Clark said it would shutter its Venezuela operations after years of grappling with soaring inflation and a shortage of hard currency and raw materials.

The South American nation’s deteriorating economic situation had made “it impossible to continue our business at this time,” the company said in a statement Saturday.

The decision is likely to add to shortages that have gripped Venezuela for the past few years after the ruling socialists capped the price on many consumer basics below production costs. Desperate shoppers now routinely spend long hours in front of stores to purchase essential products ranging from toilet paper to rice. At the same time, companies face hefty losses on price-controlled goods, while the products are often flipped on the black market for many times their sticker price.

Venezuela’s move to reactivate Kimberly-Clark’s facilities on behalf of its workers follows a similar takeover in 2014 when Clorox Co. announced it was closing its doors.

Speaking on state television, Labor Minister Oswaldo Vera said the plant in Aragua state would immediately be occupied. “A company that closes is a company that will occupied by it’s workers."

Shortages have worsened in the past few weeks in Venezuela after a decade of economic mismanagement was coupled with a crash in the price of oil -- Venezuela’s only significant source of income.

(Updates with Maduro comments starting in first paragraph.)
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