BASF Deals With Demand Decline; Shortens Workweek; Builds New Plants

May 20, 2009
CP 50 company is rigorously and rapidly implementing programs to reduce costs, boost efficiency.

Announcing first-quarter financials, BASF, Ludwigshafen, Germany, acknowledged an extremely difficult environment — sales were 23% lower than in the first quarter of 2008.  The company responded by cutting production to reflect the decline in demand and reduced inventories. Compared with the first quarter of 2008, cash flow nearly doubled, and net debt has been reduced by around €1.5 billion (US$2.02 billion) since the beginning of the year.


It is rigorously and rapidly implementing programs to reduce costs, boost efficiency and speed up business processes. In conjunction with ongoing cost-cutting activities, the company expects this to progressively increase earnings by more than €1 billion per year as of 2012.

As part of the program, BASF introduced a shorter workweek in mid-May for about 1,000 employees in 20 production plants and associated service units at its site in Ludwigshafen, Germany. These measures mainly target production units for pigments, intermediates, petrochemicals and inorganics. Most of the 1,000 employees will start working short time in June and July; a smaller number will follow in August and September. 

The number of hours worked will be reduced by between 20% and 100% for up to four months according to the circumstances at the individual plants. Despite the cut in working hours, employees will receive a net wage of approximately 90% as a result of short-time work compensation provided by the German government and payment from the company under the terms of the collective wage agreement for the chemical industry. Rapid reintroduction of normal working hours is possible at any time, should demand for BASF products pick up.

“Capacity utilization rates at many plants have remained very low since the beginning of the year, and we do not expect any improvement over the summer months,” said Dr. Harald Schwager, member of the Board of Executive Directors , who is responsible for Human Resources and head of the company’s Ludwigshafen site. “Short-time work is an appropriate measure to temporarily bridge the decline in orders.”

Earlier this year, Dr. Jürgen Hambrecht, BASF Chairman, noted, “In times of crisis, swift and decisive action is important."  His presentation, which was delivered at the Annual Meeting of BASF on April 30, 2009, in Mannheim,Germany, mapped out a goal to "Emerge from this crisis even stronger and to increase our leading position.”

It appears that Hambrecht's vision is moving forward.

Indeed, the company recently announced it is building a new methylamines production plant at its integrated Verbund site in Geismar, La. The plant is scheduled to start operations in 2011. The methylamines will serve as raw materials for some 20 different specialty amines produced by BASF at existing facilities in Geismar.

The new methylamines plant in Geismar will create 11 new jobs. In addition, about 250 people will work on the plant during the construction phase.

“This plant will strengthen our leading position as a global supplier of standard and specialty amines," explains Dr. Beate Ehle, president of BASF’s Intermediates division. "This is extremely important for us since our customers use these derivatives as key starting materials to manufacture water treatment, gas treatment and cleaning agents, detergents as well as pharmaceuticals and crop protectants — products that provide answers to global needs and future megatrends.”

The German company also has officially opened a state-of-the art production facility for fuel cell components in Somerset, N.J.

Aimed at furthering its leadership position in the development of energy management solutions, the facility uses advanced production and automation technologies to fabricate ready-for-use high-temperature Membrane Electrode Assembly (MEA) units. In a MEA, hydrogen and air react to water, generating electrical power and heat. The proprietary and innovative BASF products are marketed under the brand name Celtec.

“BASF has made a decisive breakthrough in fuel cells with the development of the high-temperature MEA,” said Dr. Andreas Kreimeyer, research executive director and member of the Board of Executive Directors of BASF. “The aim of the world-class Somerset facility is to meet the current and greatly increasing demand from customers. Future enhancements and refinements of BASF’s proprietary MEA product in conjunction with system developments by our alternative energy partners will make fuel cell energy realistic, affordable and widely available.”

BASF is a CP 50 company. To view the BASF profile, visit: view the entireCP 50list, visit:

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