BASF CEO Hambrecht says crisis not yet over

01 July 2009 21:54  [Source: ICIS news]

TORONTO (ICIS news)--BASF CEO Jurgen Hambrecht said that the economic crisis is not yet at its end and warned of pre-mature optimism in an interview with Germany’s Sueddeutsche Zeitung on Wednesday.

“I am not a pessimist, but a realist. … What I see is: There is no marked improvement in the economy,” Hambrecht told the paper, speaking in German.

"I believe that the crisis will last a while longer," the head of the world's largest chemical company said.

Even if the economy had already reached its bottom, that would not justify pre-mature predictions of a recovery, he said.

A spokesman at BASF's headquarters in Ludwigshafen in Germany confirmed Hambrecht’s comments to ICIS news.

For the chemicals industry, the downturn had a “dramatic impact”, with some sectors recording a collapse in sales of 30-40%, Hambrecht said.

If the crisis continued, there would be industry-wide restructuring, with impacts on employment, he said.

However, BASF stood by its agreement with workers to avoid job cuts at its base in Ludwigshafen. Workers affected by the closure of an 80,000 tonne/year polystyrene (PS) plant there would be redeployed within the company, he said.

Still, BASF was a global company and would not differentiate between workers in Germany and those at its production sites in others regions as it was coping amid the downturn, he said.

As for BASF’s series of acquisitions – including Engelhard, the Evonik Degussa construction chemicals business, and the recent purchase of Swiss specialty chemicals producer Ciba – the deals remained the right strategy, Hambrecht said.

BASF was focussing on more innovation, including bio and gene technology, for growth, he said.

However, Hambrecht was critical of Europe’s resistance to genetically modified technologies.

Pointing to BASF’s difficulties in getting approvals for its genetically-modified Amflora potato, Hambrecht said that the development of such products may need to be shifted from Germany and Europe to North America and other regions.

Hambrecht also reiterated his criticisms of banks.

While BASF, for its part, had no financial difficulties, many of its customers, especially smaller and medium-sized firms, had a very hard time getting bank loans and credits, he said.

Asked about government intervention, Hambrecht said it would make sense to help some firms with credits, without the government taking stakes in those firms.

But it would be worrying if, in the wake of government intervention, Germany should move towards a “controlled market economy,” he added.

As for Chancellor Angela Merkel’s promise, made in the run-up to federal elections on 27 September, to cut taxes, Hambrecht said he favoured tax cuts.

He also urged a review of tax rules that restrict the amounts of interest expenses companies can deduct for tax purposes.

For more on BASF visit ICIS company intelligence
Read Paul Hodges' Chemicals and the Economy blog
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By: Stefan Baumgarten
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