BASF announced yesterday that it is taking measures to avoid the creation of overcapacities as a result of a massive decline in demand. According to the company, sales volumes are being negatively impacted by increased reduction of inventory by customers and a lack of credit in customer industries.
The company is temporarily shutting down approximately 80 plants worldwide. In addition, BASF is reducing production at approximately 100 plants, a move that was already announced for polystyrene and caprolactam.
“We already drew attention to the difficult economic situation at the end of October,” remarked Jürgen Hambrecht, chairman of the board of BASF SE. “Since then, customer demand in key markets has declined significantly. In particular, customers in the automotive industry have canceled orders at short notice.”
“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 Dr. Hambrecht.
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, the measures are expected to affect approximately 5000 employees.
“We are responding flexibly to market developments and are acting quickly,” explained Dr. Hambrecht. “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.”