BASF to Restructure, Cut Jobs
Marketplace shifts and the increasing volatility of international political developments are making it harder for large chemical tankers such as BASF to navigate the choppy economic waters that forecasters say will become choppier soon.
With this in mind, the German chemical giant has announced its second “organizational realignment” under the aegis of CEO Martin Brudermüller, who took the reins from Kurt Bock a little over a year ago.
In its latest move, BASF said it is “creating the conditions for greater customer proximity, increased competitiveness and more profitable growth,” thereby “streamlining its administration, sharpening the roles of services and regions and simplifying procedures and processes.”
The underlying purpose of the realignment is to leverage synergies, reduce interfaces and enable flexibility and creativity, according to Brudermüller
The first changes will take effect on Jan. 1, 2020 and more will follow up to the end of 2021. To take account of them, management and employee representatives will pull forward negotiations on a new site agreement for the core BASF organization, which should be in place by mid-2020.
Key takeaways from the group’s Jun. 27 communication are that management expects savings of €300 million, as part of the ongoing excellence program announced last November anticipated to contribute €2 billion to earnings annually from the end of 2021, and it plans to slash 6,000 jobs worldwide up to the end of that year.
Without specifying where, BASF said most of the job cuts will come from the German workforce and result from the “organizational simplification” aimed at improving efficiency in administration and services as well as in the operating divisions.
Employee numbers will drop as businesses such as construction chemicals and pigments businesses are shed, and the group will also need to make adjustments as it integrates Solvay’s PA businesses. Parallel to this, new personnel for modernization efforts such as digitalization will be needed
How the new structure will look
Customer-focused operating divisions, service units and regions as well as a lean Corporate Center are the cornerstones of the new organization, the Ludwigshafen chemical giant said.
The Corporate Center will have less than 1,000 employees but will support the managing board in “steering the company as a whole.” Central responsibilities for strategy, finance, legal, human resources and communications will be created.
Another 29,000 employees of BASF SE will work in cross-functional service units with “global” in their title.
Global Engineering Services and Global Digital Services will look after individual sites or global business units.
In Global Procurement, Marc Ehrhardt, currently head of BASF’s Finance division, will oversee a worldwide network of about 8,000 employees providing “end-to-end services” for finance, human resources, communications and supply chain units.