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BASF implements shorter working time and shuts down Korean plant
With no sign of a turn around in the near future, chemicals giant BASF has laid out concrete measures to overcome the slowdown. Last November, BASF slashed its capacity and implemented flexible working arrangements and said that this situation would last until January or beyond if the period of weak demand continued. Recently, it announced that its flexible working arrangements can no longer cope with the slowdown and that it would introduce short-time working at some of its sites. In Germany, short-time working (working less or not at all for a maximum period of 18 months) is used by companies to avoid redundancies in difficult economic situations with the loss of earnings compensated in part by short-time working benefits paid by the Federal Employment Agency.

According to BASF Chairman Dr Jürgen Hambrecht, "The situation remains tough and difficult to predict. We do not expect the economic environment to improve in the coming months." Demand for BASF’s products has declined significantly since December 2008 and has not picked up in the first half of January with customers continuing to de-stock. On average, the capacity utilisation rate within the group is currently less than 75%. Only demand for crop protection products and products for the food industry remains high.

To be introduced in February, the short-time working applies to its sites that manufacture products for the automotive industry. It will affect approximately 1,500 employees at its coatings site in Münster, Germany, and 180 employees in Schwarzheide, Germany. Working hours have already been reduced for about 150 employees at two smaller coatings sites in Italy. BASF says it cannot rule out the introduction of short-time working at further sites. For instance, in Ludwigshafen and Antwerp, flexible working arrangements are still in place and it will consider short-time working in Ludwigshafen, if necessary.

But BASF is also looking at plant closures and it has shut down a coatings site in New Jersey, US, and a production plant for precursors for plastics in South Korea. Both these closures will result in a reduction of 200 jobs. Furthermore, the company says more job reductions may be necessary, depending on the economic conditions.

The South Korean facility for 1.4-butanediol (BDO) and tetrahydrofuran (THF) in Ulsan has been temporarily shut since August 2008. BASF currently employs 940 people in South Korea at its six production sites and has three facilities in Ulsan and one each in Yeosu, Gunsan and Ansan. But its PolyTHF plant in Ulsan will continue to operate with feedstock from the network, including its THF plant in Caojing, China, which is operating with a new BASF-owned technology. Using THF as a major feedstock, the Ulsan PolyTHF plant provides standard PolyTHF grades for high quality spandex fibres. The plant, inaugurated in 1998, is also a production hub for speciality PolyTHF grades for adhesives, coatings and thermoplastic elastomers.

BASF has THF plants in Ludwigshafen (Germany), Geismar (US), Caojing (China) and Kuantan (Malaysia). With BDO produced at these plants and at BASF’s Chiba (Japan) site, the total global capacity amounts to 535,000 tonnes/year. In addition to Ulsan, BASF produces PolyTHF in Ludwigshafen, Geismar and Caojing with an annual capacity of 185,000 tonnes.