GM plans Opel spin-off

By Christiaan Hetzner

RUESSELSHEIM, Germany (Reuters) - The European unit of U.S. carmaker General Motors said it planned to spin off its German arm Opel and needed 3.3 billion euros (2.93 billion pounds) in state aid to avert job cuts and site closures.

Following weeks of speculation about Opel's fate, GM Europe President Carl-Peter Forster told a news conference the German carmaker would be split off into a separate unit to be majority owned by its struggling U.S. parent.

Under the plan, outside investors would take a stake of more than a quarter, bringing an end to Opel's 80 years as a wholly owned unit of GM. Opel's UK affiliate Vauxhall would be part of the spun-off unit.

"There are still no decisions about plant closures or forced layoffs," Forster said. He added, however, that GM would be willing to sell a production site if that would help reduce overcapacity while securing jobs.

Like other carmakers around the world, Opel is trying to cope with a sharp drop in demand as consumers retrench due to the global financial crisis and sharp economic downturn.

Thursday, some 15,000 Opel workers demonstrated against job cuts in Ruesselsheim, the headquarters of the company which traces its roots in Germany back to the 19th century.

Opel chief Hans Demant said he was confident the company could rely on voluntary redundancies to help reduce structural costs by $1.2 billion (836 million pounds) and avoid shutting factories such as an ageing plant in Bochum, western Germany.

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