Drop in Global Auto Demand Triggers 25% Cut in BASF Capacity

21 November 2008

C&EN. BASF, the world’s largest chemical firm, says it is temporarily shutting down 80 plants worldwide due to decreased demand from automakers and other customers.

Chemical demand has plummeted since October, BASF Chairman Jürgen Hambrecht says. Textile and construction customers have cut back orders, but “in particular, customers in the automotive industry have canceled orders at short notice.” The firm is also slashing production at an additional 100 plants worldwide at least through January 2009 and perhaps longer. Together, the cuts affect 20,000 employees, and earnings will slip as BASF prepares for tough times, Hambrecht says.

BASF’s cuts, representing 25% of the firm’s industrial capacity, are “unprecedented in recent memory,” says P. J. Juvekar, a stock analyst at Citigroup. Chemical companies such as Dow Chemical, PPG Industries, DuPont, Celanese, and Huntsman Corp. are also likely to suffer from the auto industry’s woes, he says. DuPont acknowledges that it gets 16% of sales from the auto industry, and Dow says it gets about 10% of sales from the sector.