BASF to extend temporary plant closures beyond Ludwigshafen

13 November 2001 17:22  [Source: ICIS news]

LUDWIGSHAFEN, Germany (CNI)--Plans by BASF to close production plants temporarily in the face of weak demand are to be extended from its main complex in Ludwigshafen, near Mannheim to facilities elsewhere in Europe and the US, chairman Jurgen Strube said here on Tuesday.

He told journalists at the company's autumn (Q3/4) press conference that closures at Ludwigshafen would be accompanied by temporary shutdowns at other European sites, including Antwerp in Belgium, and to production units in the US. He did not identify or quantify the plants.

A spokeswoman for the German chemicals giant told CNI that details would be announced after the company has discussed the plans with employees. She said the duration of these additional closures would cover the same three week period from mid December planned for plants at Ludwigshafen.

Yesterday (Monday) BASF said it would shut temporarily some 60 of its 250 plants at Ludwigshafen. The closures will affect about 10 000 of BASF's 40 000 Ludwigshafen employees.

BASF was unable to say how many employees outside Ludwigshafen would be affected by the additional plant closures.

In reference to the Ludwigshafen shutdowns, Strube said the plants to be affected would be chosen to reduce stock build-up across the range of 8000 products made at the 'verbund' site.

Strube said capacity utilisation at Ludwigshafen was around 68%. He added that at this level "BASF cannot obtain the desired returns … we would run into losses given the unfavourable margins".

BASF announced a huge fall in underlying third quarter profits today but Strube insisted that the group would remain in the black during Q4.

He admitted that Q4 and the first three months of next year would be difficult, with the outlook for earnings "really bleak". BASF is not making any predictions for earnings next year given the uncertainty in the economic situation.

However, on investment in Ludwigshafen, Strube said that next year it would take a higher proportion of the planned capital at around 25% of group spend, up from 20% this year. This will, he commented, increase the effectiveness of the site, which BASF wants to strengthen. "A lot of our closures are at smaller independent sites ... we want to build up capacity utilisation at bigger sites."

BASF said today it has identified another Euro50m ($45m) of potential savings from consolidation of its plants and sites. As a result, savings in 2002 will total Euro240m. The company also said that provisions this year for cost-saving measures (including temporary and permanent plant closures) would total Euro850m. In the first half it recorded one-time costs of Euro620m for these measures.

(Additional reporting from London by Neil Sinclair of CNI.)

By: John Baker
+44 20 8652 3214

< previous article(VIDEO – ICIS news Americas Lunchtime Bulletin 2 November 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly