BASF cuts 3,700 jobs

The German chemical giant BASF announced on Monday 3,700 job cuts by 2013 under a deep restructuring plan that follows its takeover of the Swiss group Ciba.

“The restructuring plans include a reduction of approximately 3,700 positions by 2013, most of which will be eliminated by the end of 2010,” a BASF statement said.

Of the cuts announced on Monday, 500 were planned at BASF and 3,200 at Ciba, more than one fourth of its workforce, a BASF spokesman told AFP. Ciba employs 12,500 people worldwide, according to its Internet site, while BASF staff totaled around 97,000 at the end of 2008.

The chemicals sector has been hit hard by the global economic downturn, and BASF warned in late April of painful choices to come. The German group was mulling the reorganisation, sale or closure of 23 of Ciba’s 55 former production sites, and planned to make a decision by early 2010, it said.

“In certain areas, Ciba can be better organised,” the spokesman added. BASF, which acquired Ciba in April for €3.8 billion, hopes to save €300 million by the end of next year and has estimated the benefits of the acquisition at around €400 million a year starting in 2012.

It put the cost of integrating Ciba into its operations at €550 million, of which €150 million would be booked this year. In April, BASF said it would get rid of at least 2,000 posts by the end of the year.

Several activities were to be maintained around Ciba’s base in Basel however, including BASF’s new paper chemicals division and a research centre, the statement said.

A strategy for Ciba’s water treatment business would be developed by next year, it added.

Chairman Juergen Hambrecht said the combined BASF and Ciba businesses “can be successful in the long term only if we optimise them and exploit the full potential for synergies.”

Talks with workers’ representatives were underway, and Hambrecht pledged to make job cuts “in a fair and transparent way.”

BASF is a global leader in the chemical sector, including plastics and agricultural products, and is also active in the exploration and sale of oil and gas.

BASF shares added 0.18 percent to €27.71 in afternoon trading in Frankfurt, while the DAX index of German blue-chips was 1.38 percent lower overall.

“It was not a huge surprise,” Merck Finck analyst Carsten Kunold told Dow Jones Newswires. He added that the integration costs were roughly in line with estimates.

BASF has already set about restructuring its own units, and said in late June that it would shut down a plastics plant in southern Germany because of weak demand.

The resulting decrease of about 15 percent in polystyrene output capacity was not expected to lead to job cuts, however.

Around 4,800 BASF workers have also been affected by technical layoffs, including nearly 4,000 in Germany, a BASF spokeswoman said.

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