BASF to cut 6,000 jobs to drive down costs amid slowdown



>>Notable layoffs in Houston in 2019 less A man walks past tanks of German chemicals giant BASF at the company's headquarters in Ludwigshafen, western Germany, on February 26, 2019. BASF, which has a large presence in the Houston area, said it will cut 6,000 jobs globally. A man walks past tanks of German chemicals giant BASF at the company's headquarters in Ludwigshafen, western Germany, on February 26, 2019. BASF, which has a large presence in the Houston area, said it will cut ... more Photo: Uwe Anspach, AFP/Getty Images Photo: Uwe Anspach, AFP/Getty Images Image 1 of / 32 Caption Close BASF to cut 6,000 jobs to drive down costs amid slowdown 1 / 32 Back to Gallery

The German chemical giant BASF plans to cut 6,000 jobs worldwide in the face of a slowdown in demand for chemicals, unveiling the headcount reduction on the same day the Ford Motor Co. said it would eliminate a fifth of its workforce in Europe.

BASF's reduction of about 5 percent of the payroll will generate savings of $341 million, BASF said in a statement on Thursday. The shares gained 1.8 percent to 63.25 euros as of about 5 p.m. in Frankfurt.

BASF is the world's largest petrochemical company and it has a sizable presence in the Houston region, including the Freeport and Beaumont areas.

The overhaul at BASF came on the heals of Ford's announcement of job cuts aimed at tackling falling sales in the region and weak profitability. The moves underscore a drop in June of Euro-area economic confidence to its lowest level since 2016 as deepening trade tensions and a more cautious outlook for the global economy weigh on business and consumer sentiment.

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The plan for cost savings at BASF also come at a time when demand for chemicals is falling at a range of industries from cars to electronics. Earnings at chemical producers including HB Fuller and Houston-based LyondellBasell have already revealed weaknesses in sectors like coatings and plastics.

The BASF job cuts are part of Chief Executive Officer Martin Brudermueller's plan to boost earnings by more than $2 billion through a simplification of the world's biggest chemicals company. He also plans to sell more higher-margin products rather than simply delivering barrels of basic chemicals.

BASF employs about 2,000 people in the Greater Houston area, including nearly 1,000 in Freeport, almost 500 in Beaumont and Port Arthur, 350 at its regional headquarters in Houston's Energy Corridor, and nearly another 200 people at its smaller petrochemical plants in Houston and Pasadena.

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BASF has more than 17,000 employees in North America and nearly 120,000 people worldwide.

It's unclear how many Houston area jobs might be cut.

"We don't have details of how this will fully roll out in the region," said BASF spokeswoman Donna Jakubowski, noting that the reorganization is early in the decision-making process.

Talks on a labor deal at BASF's Ludwigshafen site will get underway earlier than planned, the company said, indicating that some of the jobs could be lost at the heart of its sprawling global production system.

German engineering giant Siemens AG is also eliminating jobs in the country at its power division, having undertaken months of negotiations with labor unions to hammer out a deal.

Jordan Blum of the Houston Chronicle contributed to this report.

©2019 Bloomberg L.P.

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