German chemical major BASF will cut
3700 jobs by 2013, in the wake of
the Ciba acquisition, the majority of
which will go by the end of 2010.
In addition, 23 of the 55 Ciba
production sites could be sold or
closed, and 36 of the 70 Ciba research
sites and sales and administrative
offices will be consolidated. The Ciba
integration will eventually cost BASF
€550m, with €150m relating to 2009
activities. But BASF hopes to benefit
from synergies of €400m/year from
2012, with savings of €300m by the
end of 2010.
The restructuring will make BASF a
world leader in, among other things,
coatings and paints, paper chemicals
and water treatment chemicals.
‘This is unfortunately not good
news for some of our employees,’ said
BASF chairman Jürgen Hambrecht.
‘But, the combined businesses can
be successful in the long term only
if we optimise them and exploit the
full potential for synergies. I promise
all our employees that we will keep
the period of uncertainty as short as
possible and will make decisions in a
fair and transparent way.’
The numbers may seem big, says
Constantine Biller, a chemical analyst
at Clearwater Corporate Finance, but
the synergies vastly outweigh the
costs. BASF is ‘as expert as anyone’ in
terms of ‘eliminating surplus capacity
and fringe activities,’ following a
major acquisition. ‘It is interesting to
see BASF doing all it can to stay in
Switzerland,’ he adds, commenting
on the decision to maintain the
strong presence Ciba has in the
Basel region, albeit under a different
name. ‘It shows this isn’t a slashand-
burn job.’
The other big players are engaged
in similar processes. Dow, for example,
is planning to cut 3500 jobs and close
10-15 sites following its acquisition
of Rohm and Haas. However, key
commentators have indicated that,
with inventories now nearing more
appropriate levels, executives could
soon begin to slow production job
losses. In addition, skilled production
workers and R&D staff will probably
be prized by companies hoping to win
government stimulus money.
Recent figures show that the
chemical industry has been hit hard by
recession. Preliminary US Department
of Labour figures indicate that in June
it employed 40,000 fewer people than
it did a year ago, a decrease of 4.8%.
The Ciba coatings effects
businesses will be integrated into
BASF’s dispersions and pigments
division, which is organised as regional
business units. The majority of Ciba’s
water treatment activities will be
integrated into BASF’s performance
chemicals division, and a new
strategy for the business is expected
in 2010. Ciba’s home and personal
care business will be absorbed into
the existing structure of BASF’s care
chemicals division. Plans for BASF’s
new paper chemicals division and
Ciba’s plastic additives business
have already been announced
(C&I 2009, 12, 13).
BASF has also reorganised its
petrochemical division, reducing
the former six business units to
four. New business unit Basic
Petrochemicals Europe has taken
over the businesses for cracker
products, industrial gases and
alkylene oxides and glycols in Europe,
while acrylics, alcohols, solvents and
plasticisers have been consolidated
into another new business unit,
Industrial Petrochemicals Europe.
All the petrochemicals businesses in
North America and Asia Pacific have
been consolidated into two regional
business units: Petrochemicals North
America and Asia Pacific.
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