BASF preparing for tough times
20/11/2008
BASF is taking measures “to avoid the creation of overcapacities” as a result of what it has called “a massive decline in demand” for its chemical products.
The company is temporarily shutting down around 80 plants worldwide. In addition, it is reducing production at around 100 other plants.
Dr Jürgen Hambrecht, chairman of the board of executive directors of BASF, said on announcing the measures: “We already drew attention to the difficult economic situation at the end of October. Since then, customer demand in key markets has declined significantly. In particular, customers in the automotive industry have cancelled orders at short notice.”
Across the board, the company said its sales volumes were being “negatively impacted” by increased reduction of inventory by customers and a lack of credit available to companies in some industries.
“In 2008, BASF will therefore not achieve the previous year’s excellent earnings figures,” Dr Hambrecht added. “How the coming year will develop is difficult to foresee. BASF is preparing for tough times. We are responding flexibly to market developments and are acting quickly. BASF will now focus even more closely on cost and budget discipline, and will use opportunities arising from the crisis. We will also proceed swiftly with the planned acquisition and integration of Ciba to further optimise our business.”
Worldwide, approximately 20,000 employees will be affected by the production cuts. The company has said flexible working time arrangements will be used wherever possible. Around 25% of the workers affected are based at the company’s main site in Ludwigshafen, Germany. Reduced capacities are expected to last until January 2009 for individual plants, but could go on longer if demand fails to pick up.
BASF has said it will continue to follow market developments closely and will adjust production planning accordingly. “We are realistic, but we are nevertheless confident when we look to the future,” said Dr Hambrecht. “We have made BASF more resilient in the past years. The strength of our better balanced portfolio is clear in the current difficult situation. We are solidly financed, and we have the best team on board to navigate the route ahead successfully.”
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