BASF'S Global Production Cut To Cope With Shrinking Demand
To avoid overcapacity caused by a sharp contraction in demand, Basf Inc announced last week that it would temporarily shut down about 80 devices around the world and cut about 100 devices. This will reduce its total capacity by 20%~25%. In order to cooperate with this shutdown, BASF will carry out regular maintenance work in advance.
BASF has previously announced reductions in production of polystyrene and caprolactam. "At the end of 10, we noticed the grim situation of the economy. Customer demand in important markets has begun to decrease significantly, especially for some users in the automotive industry. Dr. He Binjie, executive chairman of BASF executive board, said.
In addition, sales have also been adversely affected by the reduction of inventory and the lack of credit in the customer industry. Dr He Binjie said that in this case, BASF's pre tax earnings (EBIT) excluding special projects in 2008 would not be able to maintain a high level last year. Next year's development trend is hard to predict, and BASF is already preparing for difficult times.
At present, BASF has begun to implement production reduction measures, is expected to continue until next January. The business adjustment is mainly related to the supply of products to the automotive, construction and textile industries.
The main products affected include ammonia, styrene, polyamide, and other raw materials for production engineering plastics, coatings and fiber fabrics. The 6 integrated production bases and other production bases in Europe, Asia and North America will also be affected. Shutting down devices will affect about 20000 BASF employees worldwide.
"We are flexibly responding to market changes and taking prompt measures." Dr. He Binjie said BASF will complete the merger and consolidation of Ciba business according to the plan to further optimize its business. "We still have confidence in looking forward to the future. BASF's product portfolio optimization, stable financial situation, and the best working team will help us overcome difficulties. "
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