BASF Reduces Production Worldwide
Year:2008 ISSUE:34
COLUMN:M & A, BUSINESS & TRADE
Click:185    DateTime:Dec.03,2008
BASF Reduces Production Worldwide      

BASF announced on November 20th the group is taking measures to avoid the creation of overcapacities as a result of a massive decline in demand. The company is temporarily shutting down around 80 plants worldwide. In addition, BASF is reducing production at approximately 100 plants. This was already announced for polystyrene and caprolactam. Scheduled maintenance work is being brought forward.
   Since the end of October, customer demand in key markets has declined significantly. In particular, customers in the automotive industry have canceled orders at short notice, according to Dr. Juergen Hambrecht, Chairman of the Board of Executive Directors of BASF SE.
   In addition, sales volumes are being negatively impacted by increased reduction of inventory by customers and a lack of credit in customer industries.
   Worldwide, approximately 20 000 employees will be affected by the production cuts. Flexible working time arrangements will be used wherever possible.
   At the company's main site in Ludwigshafen, Germany, BASF SE has signed an agreement with the works council under which the measures will be implemented through the flexible use of working time arrangements such as overtime and vacation. According to current plans, the measures are expected to affect approximately 5 000 employees in Ludwigshafen.
   The adjustments are primarily being carried out in units that supply the automotive, construction and textile industries. Value chains affected include ammonia, styrene and polyamide, which manufacture precursors for engineering plastics, coatings and fibers. The shutdowns will be coordinated throughout BASF's global production Verbund and will involve all six Verbund sites in Europe, Asia and North America, as well as other sites. Implementation of most of the measures has already started; reduced capacities are expected to last until January 2009 for individual plants. Should the period of weak demand continue and if all other flexible working time models have been exhausted, the company cannot rule out the need for short-time working at individual sites worldwide.
   BASF will continue to follow market developments very closely and will adjust production planning accordingly.