Ford May Shut Venezuela Plant on Lack of Imports (Update2)

June 17 (<a href=quote.bloomberg.com>Bloomberg) -- Ford Motor Co., the world's second- largest carmaker, may pull out of Venezuela because restrictions on buying U.S. dollars prevent the company from importing parts.

``We are concerned about our ability to produce cars in Venezuela.'' said Richard Canny, Ford's president of South American operations, in an interview in Sao Paulo.

Ford has suspended operations twice in six months at its plant in Valencia, Venezuela, which employs about 1,300 workers and makes about 1,000 cars a month. ``We will probably have to shut down the factory again in the coming weeks,'' Canny said.

Restrictions on dollar sales have cut off Ford's access to currency to buy parts to assemble cars, and threaten to stifle investment in the country, analysts said. The government limited dollar sales in January to brake a fall in international reserves when investors lost confidence in the bolivar after a two-month national strike aimed at ousting President Hugo Chavez.

``Chavez doesn't care about or understand the needs of investors, which makes it inevitable that he'll adopt policies that are detrimental to them,'' said Francisco Toro, an analyst at research company Veneconomy in Caracas.

Ford shut operations at the factory during the strike and again for several weeks in February and March because of a lack of imported parts.

The strike in December and January lowered oil production by as much as 95 percent, contributing to a 29 percent contraction in the economy in the first quarter.

Ford's rivals, including General Motors Corp., have also shuttered operations because of parts shortages.

Fiat SpA closed its Venezuelan manufacturing operations in September 1999, when a recession slashed sales by half.

The Venezuelan car market will probably contract as much as 70 percent this year to about 40,000 vehicles, General Motors Corp.'s Venezuelan unit said in April.

Venezuelan vehicle sales fell 41 percent last year to 128,623, down from 216,977 in 2001.

Car sales through May fell 69 percent to 22,061. Ford has about 15 percent of the market, according to figures from the Venezuelan automobile chamber of commerce.