BASF trims down at Ludwigshafen

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German chemical giant BASF is to shed about 3,600 jobs at its main
Ludwigshafen plant over the next three years as part of efforts
ensure the site's competitiveness.

The cuts, which BASF says will be achieved without enforced redundancies, represent about 10 per cent of work force at the plant, which is the world's largest chemical manufacturing site.

In a statement, BASF said it had reached an agreement with employee representatives that foresees a target number of about 32,000 employees at the Ludwigshafen site by the end of 2007. It had around 35,600 employees at Ludwigshafen at the end of September, and worldwide it employs about 85,100 people.

"This target value, and the avoidance of enforced redundancies, will continue to apply until 2010,"​ BASF said in a statement.

Deputy chief executive Eggert Voscherau said that up to 2009, BASF plans to invest a total of €6 billion in capital expenditures, modernisation and plant maintenance at the Ludwigshafen site. This corresponds to an average of €1.2 billion per year. In addition, €700 million will be spent on research and development of modern processes and innovative products.

Like its rivals in the European chemicals sector, BASF has been hit by overcapacities, high raw material costs as oil prices escalate, and exchange rate factors that have hit profits. However, after a series of restructuring initiatives, the company returned to financial form in the third quarter of 2004, reporting net profit nearly triple the amount in the same period of 2003 at €337 million. This reflected an increase in sales, as well as price hikes.

Most recently, BASF raised the prices of monocarboxylic acids (propionic, formic and 2-ethylhexanoic acid) and has also hiked prices of chemicals and raw materials used in packaging, textiles, the leather industry, colorants and resins, amongst others.

Voscherau said the company has already reduced its head count at Ludwigshafen from 58,000 since 1990, and launched a major effort to reduce the site's costs two years ago. That project is scheduled to reduce costs at Ludwigshafen permanently by €450 million by mid-2005, and savings of €350 million have been identified to date.

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