The German company said global demand for chemical products fell more sharply than had been expected back in November.
Business is down sharply
Not only was demand sluggish in the run up to Christmas but business has failed to pick up in the first half of January as consumers continue to reduce their stocks.
“The situation remains tough and difficult to predict,” said BASF chairman Jurgen Hambrecht. “We do not expect the economic environment to improve in the coming months.”
Adapting to the conditions, BASF has been forced to cut average production capacity to less than 75 per cent. Only demand for crop protection products and for food products has remained high.
BASF has also begun to reduce working hours and transfer employees away from some of the worst affected plants, such as those serving the struggling automotive industry.
In February, 1,500 employees at BASF’s coatings site in Munster, Germany, will face ‘short-time working’ which is an instrument in Germany to allow companies to avoid redundancies by reducing working hours.
Job losses and plant closures
Nevertheless, the company will be cutting jobs. It has announced plant closures in America and Asia which will result in the loss of 200 jobs and further reductions may be necessary.
“We will maintain strict discipline with regards to costs and expenditures,” said Hambrecht. “And we will accelerate the implementation of our existing global restructuring and efficiency programmes.”