German chemicals giant reveals plans to cut jobs and plants following its acquisition of Ciba

Global chemicals firm BASF has announced plans to axe 3700 jobs and left the future of 23 production sites in doubt following its acquisition of Swiss firm Ciba in April this year.

Ciba agreed to the SF6.1 billion (£3 billion) takeover in September 2008, and BASF was quick to stress the need for speedy restructuring to streamline the combined company following the completion of the deal in April 2009.

The extensive restructuring announced by BASF includes 3700 job cuts by 2013 (most by the end of 2010), and left a cloud hovering over 23 out of 55 former Ciba production sites with decisions regarding the possibility of their sale, closure or restructuring due to be announced by the end of the first quarter of 2010. The remaining 32 production plants will be restructured or brought in line with BASF’s existing network of sites. Thirty-six of 70 former Ciba research, sales and administration sites are also likely to be consolidated by the end of 2010.

BASF chairman Jürgen Hambrecht admitted that the development was ’not good news for some of our employees’ but insisted that the move was necessary for the combined businesses to emerge successful.

BASF has not escaped the current global financial turmoil unscathed, and in April presented first quarter results showing a 23 per cent drop in sales compared to Q1 last year. Persistently weak demand for the firm’s products prompted cost reduction and efficiency measures, including restructuring, closing and selling off sites and cutting staff - at least 2000 positions were already due to be cut by the end of 2009.

In May BASF also introduced short-time work for around 1000 employees at 20 sites, cutting working time by 20 to 100 per cent for up to four months depending on demand for BASF products. At the time of the announcement, 5200 employees at 19 locations (including former Ciba sites) were already working short-time. 

The May announcement also came with a warning that further steps may still be taken if business does not pick up in the second half of the year.

BASF expects the post-Ciba acquisition restructuring to save it €300 million (£259 million) by the end of 2010, but integrating the two companies is likely to involve costs of €150 million during 2009 and total €550 million altogether.

Anna Lewcock