BASF to Close 80 Sites

BASF takes drastic action and shuts 80 plants (Update)

By David Eldridge, posted 19 November 2008

BASF is shutting 80 plants worldwide and reducing production at 100 more facilities in a huge effort to address the decline in demand for its polymer and chemical products.

The German giant announced that 20,000 of its 95,000 employees would be affected by the production cuts.

Plastic-related cuts include:

* Temporary shutdown of low density polyethylene and ethylene glycol feedstock production in Nanjing, China.

* Temporary shutdown of toluene diisocyanate (TDI), a polyurethane feedstock, in Freeport, Texas; and Geismar, Louisiana.

* Reduced capacity for nylon resin and nylon feedstock caprolacatam in Port Arthur, Texas; and Basant, Belgium.

* Reduced capacity for caprolactam in Ludwigshafen, Germany.

* Reduced capacity for ABS resin and PU feedstock methyl diisocyanate (MDI) in Basant.

Temporary shutdowns are expected to last until at least January 2009. BASF earlier this month had announced temporary shutdowns of caprolactam production in Geismar and in Freeport, Texas.

Flexible working time arrangements will be used wherever possible, it said, adding that 5,000 of the affected employees work at its Ludwigshafen complex in Germany.

“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 at BASF. “In particular, customers in the automotive industry have canceled orders at short notice.”

The company said it has already started to implement the cuts and where capacities are being reduced at individual plants, these are expected to last until January.

“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,” it said.

The business units that are primarily affected are those that supply the automotive, construction and textile industries. These include the ammonia, styrene and polyamide businesses which manufacture precursors for engineering plastics, coatings and fibres.

BASF´s move follows similar cutbacks by other polymer producers this month, including LyondellBasell and Ineos, which have also blamed a sudden fall in demand for their products.

Hambrecht said: “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 optimize our business.”

* Plastics News senior reporter Frank Esposito contributed to this report.