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Volume 87 Issue 28 | p. 6 | News of The Week
Issue Date: July 13, 2009

BASF To Cut Jobs

Layoffs of 3,700 workers are part of plan to integrate Ciba
Department: Business
Keywords: BASF, Ciba, job cuts
Hambrecht
Credit: BASF
8728news1Hambrecht
 
Hambrecht
Credit: BASF

Germany's BASF plans to eliminate as many as 3,700 jobs by 2013 as it moves to integrate Ciba, the Swiss specialty chemical company it acquired in April for $5 billion. At the end of 2008, Ciba had 12,500 employees and BASF had 97,000.

A BASF spokeswoman tells C&EN that 2,700 of those jobs will come from Ciba and the remaining 500 will come from BASF. More than a quarter of the cuts will be in North and South America.

In all, the latest round of reductions brings the number of job cuts BASF has announced this year to 5,700. In late April, the firm said it would eliminate 2,000 BASF jobs via plant closures and sales by the end of this year.

As part of the integration of Ciba now getting under way, BASF says it will take action on 23 of 55 former Ciba production sites. It will decide by March 2010 whether to restructure, sell, or close them. The firm does plan to integrate the 32 remaining Ciba production sites into its global network. In addition, BASF says it will consolidate 36 of 70 Ciba sales offices and research sites with existing BASF facilities.

The German firm projects that costs to integrate Ciba will come to nearly $210 million by the end of this year and $765 million by 2012. But BASF expects the consolidation to result in annual savings of about $420 million by the end of 2010 and more than $550 million annually by 2012.

"This is, unfortunately, not good news for some of our employees," BASF Chairman Jürgen Hambrecht says. "But the combined businesses can be successful in the long term only if we optimize them and exploit the full potential for synergies."

The timing of BASF's purchase of Ciba as the economy went sour "made Ciba an expensive prize," says Stephan Kippe, a chemical analyst at Commerzbank.He adds that the cost is not the most important factor because BASF is planning for the long term.

BASF is one of the most efficient chemical players in Europe and even made a profit under the trying conditions of the first quarter of this year, Kippe notes. But "they live in the same world as everyone else," he points out. As the slowdown drags on, Kippe suggests, BASF, along with other chemical makers, may have to cut additional jobs to better balance capacity with now-slack demand from automotive and housing customers.

 
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