BASF moves reflect global chemical manufacturing shift

Ciba.jpg

Nowhere is the global tectonic shift in chemical manufacturing more apparent than in the largest chemical company’s latest restructuring and expansion moves.

Germany’s BASF, which acquired Swiss specialty chemical giant Ciba for $5.1bn in April, laid out its massive restructuring plan last week. The bottom line – 23 out of 55 acquired production sites will be closed or sold, while the remaining sites will be “optimized” or restructured.

About 3,700 jobs will be cut, and the company will aim to achieve annual cost synergies of €400m by 2012.

The former Ciba sites are concentrated in Switzerland and elsewhere in Europe, with some plants in North America and Asia.

But also last week, BASF announced that the Chinese government has given the go-ahead for the company’s $1.4bn expansion of its BASF-YPC joint venture site in Nanjing with state-operated energy and chemicals firm Sinopec.

The investment includes an expansion of the existing steam cracker and three existing plants, and the construction of 10 new chemical plants. The expansion will produce specialty chemicals for the Chinese market in areas such as construction, electronics, pharmaceutical, automotive and chemical manufacturing.

The trend reflects some of feedback from our very first ICIS Chemical Business US Advisory Board meeting held in New York on June 30.

Comprised of industry senior executives and analysts, the group took note of our weekly New Projects section listing all the projects announced for a week – in particular, how few were in North America and Europe.

Among the 12 new projects announced for the seven days of June 16-22, five were in Asia and two in the Middle East. Five were in Europe and the US, but among that latter group, two were storage facilities.

One week does not a trend make, but we suspect that new project announcements in Asia, the Middle East and Latin America well outpace those in the traditional manufacturing bases of the US and Western Europe.

But new projects only tell part of the story. The board indicated that they would also like to see a list of plant shutdowns and where these were taking place as well. We hear you – please stay tuned!

 

Photo credit: Ciba

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