German chemical company BASF cuts more production; global output down more than 25 percent German chemical company BASF SE said Wednesday that because order levels remain weak it will further reduce production, which it said has so far been slashed by over 25 percent worldwide.
The Ludwigshafen-based company, the world's largest chemical company by sales, said it would shut down a so-called "steam cracker" at Ludwigshafen in April for at least three months. Steam crackers produce molecular reactions through pressure and are used for the production of many products in the chemical and energy sectors. The company said now a total of five production lines are currently idled at its Ludwigshafen Verbund site.
"Demand from key internal customers ... has unfortunately remained low over the past weeks," said Albert Heuser, president of BASF's petrochemicals division.
"We do not expect any improvement in the foreseeable future, for example for production lines that serve the automotive industry. We are therefore tailoring production to reflect demand and to reduce costs," Heuser said. BASF said in November it would shut some 80 plants worldwide and reduce production at 100 more, cutting at least 1,500 jobs worldwide, as the global economic crisis has cut into the demand for chemicals.
The company said at the time that production cutbacks would affect plants including Freeport, Texas; Geismar, Louisiana; Ludwigshafen, Germany; Antwerp, Belgium; Nanjing, China; and Kuantan, Malaysia. BASF said Wednesday the employees from the steam cracker can be transferred to other production plants at the site for the time being.
Since first implementing capacity reductions in November, BASF has been using flexible working time arrangements wherever possible, which also includes transferring employees between plants with varying capacity utilization rates. BASF said more than 500 employees from Ludwigshafen are working at other BASF sites.
The company said, though, that it would have to enact shorter working hours in Ludwigshafen if the situation doesn't improve soon. German companies often cut workers' hours to accommodate production to lower demand. In January, management reached a provisional agreement with employee representatives that will allow the rapid introduction of short-time working in Ludwigshafen if necessary. Shares of BASF were down 4.5 percent at euro23.75 ($32.06) in Frankfurt afternoon trading.