Ludwigshafen , Germany - BASF has announced that its global business declined significantly in December 2008, pointing out that it saw no increase in demand for chemical products in the first half of January and adding that customers are continuing to destock.
BASF's chairman, Dr Jürgen Hambrecht, commented in a 19 Jan statement that he currently sees no signs of a turnaround: "The situation remains tough and difficult to predict. We do not expect the economic environment to improve in the coming months."
The current decline in business is greater than expected in November and will negatively impact earnings, the chemical giant added.
Following BASF's reduced capacity utilisation at its six integrated or 'Verbund' sites worldwide in mid-November, utilisation within the group is currently less than 75 percent. Only in products for crop-protection and for the food industry does demand remain high, said BASF.
BASF went on to say that the flexible working time arrangements used so far at these sites -- reduction of overtime and holiday accounts -- "are no longer sufficient to absorb the effects of production cuts everywhere. This applies primarily to sites that manufacture products for the automotive industry."
Hence BASF will start short-time working in February for about 1500 employees at BASF Coatings' site in Münster, Germany, and for 180 employees in Schwarzheide, Germany. Working hours have already been cut for about 150 employees at two smaller coatings sites in Italy, BASF said.
BASF said it cannot rule out using short-time working at further sites, although at Ludwigshafen and Antwerp, two major BASF sites, it is being avoided currently, thanks to flexible manpower planning. The company can introduce short-time working in Ludwigshafen rapidly, if necessary.
BASF notes that, in Germany, companies can use short-time working to avoid redundancies in difficult economic situations. In short-time work, employees work fewer hours or not at all, for a maximum of 18 months, with loss of earnings in part compensated by benefits from the Federal Employment Agency.
"We will maintain strict discipline with regard to costs and expenditures. And we will accelerate the implementation of our existing global restructuring and efficiency programs," said Hambrecht.
BASF has already announced plant closures in North America and Asia, include a BASF coatings site in New Jersey and a plant for precursors for plastics in Korea, result in loss of almost 200 jobs. Further job reductions may be necessary, depending on how economic conditions develop, BASF concluded.