BASF, the world’s leading chemical company, will temporarily shut down 80 plants worldwide and reduce production at about 100 others, to avoid overcapacities as a result of what it calls “a massive decline in demand.”
The company already announced similar plans for polystyrene and caprolactam. Scheduled maintenance work is being brought forward.
“We already drew attention to the difficult economic situation at the end of October. Since then, customer demand in key markets has declined significantly,” said Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF SE. “In particular, customers in the automotive industry have canceled orders at short notice.”
In addition, sales volumes are being negatively impacted by increased reduction of inventory by customers and a lack of credit in customer industries.
“In 2008, BASF will therefore not achieve the previous year’s excellent EBIT before special items. How the coming year will develop is difficult to foresee. BASF is preparing for tough times,” said Hambrecht.
Worldwide, about 20,000 of the company’s more than 95,000 employees will be affected by the production cuts. Flexible working time arrangements will be used wherever possible.
Hambrecht said the company would “proceed swiftly with the planned acquisition and integration of Ciba to further optimize our business.”
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.
Implementation of most of the measures has already started; reduced capacities are expected to last until January 2009 for individual plants.
BASF will continue to follow market developments closely and adjust production planning accordingly, Hambrecht said.
“We are realistic, but we are nevertheless confident when we look to the future,” he said.“We have made BASF more resilient in the past years. The strength of our better balanced portfolio makes itself apparent in the current difficult situation. We are solidly financed, and we have the best team on board to navigate the route ahead successfully.”