Responding to slowing demand for chemicals in a swathe of industries including the automotive and electronics sectors, BASF (Ludwigshafen, Germany) is cutting 6,000 jobs worldwide, Bloomberg reported today.
The reduction in the workforce will be implemented globally through 2021 and is expected to produce €300 million ($341 million) in savings, according to a statement released by BASF. The company expects the move to contribute €2 billion ($2.2 billion) to earnings beginning at the end of 2021.
The reduction of the labor force "results from the organizational simplification and from efficiency gains in administration and services as well as in the operating divisions," said BASF in its statement. "In addition, central structures are being streamlined in the context of the announced portfolio changes. BASF will continue to need additional employees in fields like production or digitalization, depending on future growth rates," said the company.
Noting that the slimming of the workforce is part of a broader program to "live a new BASF" that operates more effectively and efficiently, Dr. Martin Brudermüller, Chairman of the Board of Executive Directors, stressed that customer-focused operating divisions, service units and regions as well as a lean Corporate Center are the cornerstones of BASF’s new organization. The Corporate Center will consist of fewer than 1,000 employees and will support BASF’s Board of Executive Directors in steering the company as a whole, said the statement, while approximately 29,000 employees will work in cross-functional service units. Global Engineering Services and Global Digital Services will offer their services either to individual sites or globally for business units of the BASF Group, said the company. Global Procurement will make purchasing even more effective. Global Business Services will be newly established and will form a worldwide network of about 8,000 employees providing end-to-end services.
The first changes will take effect on Jan. 1, 2020, said BASF.
In light of this restructuring, BASF added that management and employee representatives have jointly decided to move forward the start of negotiations on a new site agreement in Ludwigshafen. The current site agreement is valid until the end of December 2020, and the company said that its goal is to sign a new agreement in the first half of 2020.
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