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Released March 06, 2023 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Chemicals heavyweight BASF SE (Ludwigshafen, Germany) has confirmed plans to cut 2,600 European jobs in an effort to cut costs caused by prolonged high energy prices.
The company, which employs around 110,000 people globally, will focus the cuts on its German operations, in particular in its main site at Ludwigshafen Verbund, the world's largest integrated chemical complex, where 38,000 people are employed. It said that its European gas bill rocketed by 2.2 billion euro (US$2.3 billion) in 2022, compared to 2012, thanks to Russia's war in Ukraine and its withholding of supplies to Europe. The cuts were announced as BASF presented its 2022 financials, which saw sales rise by 11.1% to 87.3 billion (US$92.2 billion) and profits fall 11.5% to 6.9 billion (US$7.3 billion). The company first revealed its European downsizing intentions last November. For additional information, see November 7, 2022, article - BASF Downsizing European Operations.
It will close its caprolactam plant, one of the two ammonia plants and associated fertilizer facilities at the site. Caprolactam is a chemical used to make fibers and plastics. High value-added products, such as standard and specialty amines and the Adblue business, will be unaffected and will continue to be supplied via the second ammonia plant at the site. BASF said that its caprolactam plant in Antwerp, Belgium, will be "sufficient to serve...market demand in Europe going forward".
It will also close its tolulene diisocyanates (TDI) plant and the precursor plants for 2,4-Dinitrotoluene and TDA in Ludwigshafen, which it claimed "have been underutilized and have not met expectations in terms of economic performance." BASF said that demand for TDI--a compound used for making flexible foam--has been very weak, especially in Europe, the Middle East and Africa and has been "significantly below expectations." The situation has been exacerbated by sharply increased energy and utility costs.
In addition a cost-savings program will be implemented in 2023 and 2024 and, on completion, is expected to generate annual cost savings of more than 500 million euro (US$528 million) in non-production areas, including services, operating and research & development (R&D) divisions and corporate. Roughly half of the cost savings will come from the Ludwigshafen site.
"Europe's competitiveness is increasingly suffering from overregulation, slow and bureaucratic permitting processes, and in particular, high costs for most production input factors," said Chief Executive Officer Martin Brudermüller. "All this has already hampered market growth in Europe in comparison with other regions. High energy prices are now putting an additional burden on profitability and competitiveness in Europe." He added: "We are doing this because we believe in the future of the Ludwigshafen site, which is now in its 158th year. We believe in the region of Europe."
BASF is focusing much of its future investment in China, where Industrial Info is tracking its plan to build a new world-scale neopentyl glycol (NPG) plant, with an annual production capacity of 80,000 metric tons per year, at its Zhanjiang Verbund site. The Verbund site in Zhanjiang is a major undertaking that has been under construction since 2019. BASF expects to invest up to 10 billion euro (US$10.6 billion) there, which will make it the company's third largest after Ludwigshafen in Germany and Antwerp in Belgium. For additional information, see October 28, 2022, article-BASF Taps China for New Chemical Plant.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The company, which employs around 110,000 people globally, will focus the cuts on its German operations, in particular in its main site at Ludwigshafen Verbund, the world's largest integrated chemical complex, where 38,000 people are employed. It said that its European gas bill rocketed by 2.2 billion euro (US$2.3 billion) in 2022, compared to 2012, thanks to Russia's war in Ukraine and its withholding of supplies to Europe. The cuts were announced as BASF presented its 2022 financials, which saw sales rise by 11.1% to 87.3 billion (US$92.2 billion) and profits fall 11.5% to 6.9 billion (US$7.3 billion). The company first revealed its European downsizing intentions last November. For additional information, see November 7, 2022, article - BASF Downsizing European Operations.
It will close its caprolactam plant, one of the two ammonia plants and associated fertilizer facilities at the site. Caprolactam is a chemical used to make fibers and plastics. High value-added products, such as standard and specialty amines and the Adblue business, will be unaffected and will continue to be supplied via the second ammonia plant at the site. BASF said that its caprolactam plant in Antwerp, Belgium, will be "sufficient to serve...market demand in Europe going forward".
It will also close its tolulene diisocyanates (TDI) plant and the precursor plants for 2,4-Dinitrotoluene and TDA in Ludwigshafen, which it claimed "have been underutilized and have not met expectations in terms of economic performance." BASF said that demand for TDI--a compound used for making flexible foam--has been very weak, especially in Europe, the Middle East and Africa and has been "significantly below expectations." The situation has been exacerbated by sharply increased energy and utility costs.
In addition a cost-savings program will be implemented in 2023 and 2024 and, on completion, is expected to generate annual cost savings of more than 500 million euro (US$528 million) in non-production areas, including services, operating and research & development (R&D) divisions and corporate. Roughly half of the cost savings will come from the Ludwigshafen site.
"Europe's competitiveness is increasingly suffering from overregulation, slow and bureaucratic permitting processes, and in particular, high costs for most production input factors," said Chief Executive Officer Martin Brudermüller. "All this has already hampered market growth in Europe in comparison with other regions. High energy prices are now putting an additional burden on profitability and competitiveness in Europe." He added: "We are doing this because we believe in the future of the Ludwigshafen site, which is now in its 158th year. We believe in the region of Europe."
BASF is focusing much of its future investment in China, where Industrial Info is tracking its plan to build a new world-scale neopentyl glycol (NPG) plant, with an annual production capacity of 80,000 metric tons per year, at its Zhanjiang Verbund site. The Verbund site in Zhanjiang is a major undertaking that has been under construction since 2019. BASF expects to invest up to 10 billion euro (US$10.6 billion) there, which will make it the company's third largest after Ludwigshafen in Germany and Antwerp in Belgium. For additional information, see October 28, 2022, article-BASF Taps China for New Chemical Plant.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
