Chemical Giant BASF Will Fire 6,000 Employees
Germany-based chemical giant BASF announced Thursday that is streamlining its administration while sharpening and simplifying roles, procedures and processes. The end result is that 6,000 employees will lose their jobs by the end of 2021 and the company will realize €300 million (about $341 million) in annual savings on its way to €2 billion in profits in the same year.
According to BASF’s announcement, the lost jobs are the result of “organizational simplification and from efficiency gains in administration and services as well as in the operating divisions. In addition, central structures are being streamlined in the context of the announced portfolio changes.” BASF currently employs about 122,000 people worldwide.
In 2017, the company paid €5.9 billion for the seeds and non-selective herbicide businesses of Bayer, which needed to divest the divisions in order to gain approval for its $63 billion acquisition of Monsanto. In 2018, BASF paid €1.7 billion for additional seeds and crop protection businesses of Bayer. Also in 2018, BASF merged its Wintershall oil and gas exploration and production business in a joint venture with the oil and gas business of German firm LetterOne into a firm called Wintershall DEA, which could be valued at €15 to €20 billion. The partners expect the new firm to hold an initial public offering late next year.
After paying some €7.6 billion ($8.6 billion), it only makes sense that BASF moves to rationalize its new businesses. One way to do that is to centralize common functions like engineering services and what the company calls global digital services, including such functions as purchasing, human resources and supply chain. The role of the company’s local offices is “being sharpened … [to] support the growth of business units with local proximity to customers.”
Exactly what that means beyond firing 6,000 workers is not terribly clear.
BASF shares traded up about 1.7% in Frankfurt at €63.20. In U.S. over-the-counter trading American depositary receipts traded up about 2.4% at $18.02. Four American depositary receipts are equal to one ordinary share.