Leadership & People

BASF to Shutter 80 Plants as Demand Shrinks

BASF is temporarily shutting down about 80 plants worldwide and reducing production at approximately 100 plants as it responds a "massive decline in demand in key industries." The moves will account for 20%-25% of the company's overall capacity. It says that last year's earnings level will not be achieved in 2008. The company previously announced that it was reducing production at its polystyrene and caprolactam manufacturing facilities. BASF is bringing forward scheduled maintenance work to coincide with the cutbacks.

The adjustments affect units that supply the automotive, construction, and textile industries. Value chains affected include ammonia, styrene, and nylon, which manufacture precursors for engineering plastics, coatings, and fibers. The shutdowns will affect six of BASF's integrated sites in Europe, Asia, and North America, as well as other sites. Implementation of most of the measures has already started and they are expected to last until January 2009 for individual plants, the company says. It says it cannot rule out the need for short-time working at individual sites worldwide if the weak demand continues.

Customer demand in key markets has declined significantly, says Juergen Hambrecht, CEO. "In particular, customers in the automotive industry have canceled orders at short notice," he says. Sales volumes are also being negatively impacted by increased reduction of inventory by customers and a lack of credit in customer industries, the company says. BASF will not achieve last year's "excellent Ebit before special items," and it is "preparing for rough times," Hambrecht says.

Worldwide, about 20,000 of BASF's employees will be affected by the cuts, including 5,000 at Ludwigshafen, and flexible working time arrangments will be used wherever possible, the company says.  "We are responding flexibly to market developments and are acting quickly," Hambrecht says. BASF will focus even more closely on cost and budget discipline and will use opportunities arising from the crisis," he says. The company intends to "proceed swiftly" with the planned acquisition and integration of Ciba Specialty Chemicals to optimize its business further.

The adjustments include temporary closure of BASF's No. 1 Ludwigshafen steam cracker, and reduced output at its Nanjing, China and Antwerp crackers. The company will temporarily shutter its Ludwigshafen and Antwerp ammonia plants, and idle cyclohexane, styrene, and plastic polymerization and compounding units at Ludwigshafen. It will idle toluene diisocyanate plants at Freeport, TX and Geismar, LA; ethylene glycol and low-density polyethylene units at Nanjing; and butanediol and plasticizers capacity at Kuantan, Malaysia.

BASF will reduce output at its Antwerp, Freeport, Geismar, and Ludwigshafen caprolactam plants, and at its Antwerp, Freeport, and Geismar nylon units. The company will also reduce production of acetylene and methanol at Ludwigshafen; acrylonitrile butadiene styrene, methylene di-para-phenylene isocyanate, and nitric acid at Antwerp; and oxo-alcohols at Kuantan.

Source: Chemical Week