Battered BASF Chemicals Giant to Cut Production in 180 Plants
Chemicals giant BASF has not escaped the global economic slump. It has suffered a massive decline in demand for its products, particularly from the automotive industry. On Wednesday it said it was closing down 80 plants temporarily and cutting production in 100 others.
The world's biggest chemicals firm has become the latest company to feel the pinch of the global economic crisis. Germany's BASF announced on Wednesday that it was taking the drastic measure of temporarily closing 80 plants worldwide due to slumping demand. It intends to cut production in another 100 factories.
BASF is facing tough times as a result of the global economic downturn.
The chemicals giant abandoned any plans to match last year's profit, saying that it has seen a "massive decline" in demand for its products. Company CEO Jürgen Hambrecht said that the company was suffering from a slump in consumer demand in the key markets forcing the company to cut its profit forecast for the second time in two months. "In particular, customers in the automotive industry have cancelled orders at short notice," he said.
Last year BASF's pretax profit was 7.6 billion ($9.5 billion) on sales of 57.9 billion ($73 billion.) The company saw its third-quarter earnings slump 38 percent from 1.2 billion in 2007 to 758 million in 2008.
The shutdowns will affect plants providing chemical products for the automotive, construction and textile industries in Europe, Asia and North America. In Ludwigshafen, where 5,000 of the company's 20,000 employees work, BASF has come to an agreement with the works council to take advantage of flexi time and vacations.
"We are responding flexibly to market developments and are acting quickly," Hambrecht said in a statement, adding that it was difficult to see how the coming year would develop and that BASF was preparing for "tough times."
After the announcement shares in the company plunged by nearly 16.8 percent to 21.15 in afternoon trading, making it the worst performer on the German stock index, the DAX, on Wednesday.
smd -- with wire reports