28 February 2023 Tuesday
BASF Company in Germany to Lay Off 2600 People
BASF, Germany's largest chemical company, announced that it would lay off 2,600 employees due to problems with access to Russian gas. This figure corresponds to two percent of the company's total workforce. The company also ended its EUR 3 billion share buyback earlier than planned. In the statement, it was announced that the company will close two ammonia plants as well as the fertilizer plants associated with these plants. This will result in 700 job cuts at the company's main plant in Ludwigshafen, Germany.
Although BASF's natural gas cost consumption fell by 35 percent, it increased by EUR 2.2 billion in 2022 compared to 2021. The company said earlier that it is targeting a EUR 500 million annual cost cut as it does not expect natural gas prices to return to pre-Ukraine-Russian war levels.
Although natural gas prices in Germany have fallen, they are still above the levels that Germany's energy-intensive industries are used to, and higher than rival industrial regions in the US and Asia.
The German economy, Europe's largest economy, had a mild winter with full natural gas storage tanks, and although switching to liquefied natural gas eliminated the threat of rationing for gas from the Russian pipeline, these moves increased costs in the sectors.
BASF, through its subsidiary, has funded the construction of both Nord Stream gas pipelines, with the cut ties in January costing the company, which is in joint ventures with Gazprom and other Russian companies, in losses of EUR 7.3 billion.
This persistent increase in natural gas prices in Germany brought the risk that many jobs and investments in the country would shift to other countries. Nearly half of German chemical companies plan to reduce their investments in the country this year due to energy costs, according to a survey conducted in late January by the VCI chemical association in Germany.
The gas consumed by the gas-intensive German chemical industry was about 15 percent of the total annual fuel consumption of the entire country before the Ukraine-Russia war.
Source: https://www.bloomberght.com/alman-kimya-devi-2600-kisiyi-isten-cikaracak-2325885
