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BASF – The Chemical CompanyShaping the future in the crisis
11th Plenary Meeting of the Sector Social Dialogue Committee of the European Chemical Industry
4th May 2010
Mathias Schöttke
HR Governance BASF SE, Ludwigshafen
BASF SE - Mathias Schöttke Shaping the future in the crisis 2
Agenda
1. BASF at a glance
2. Impacts of the crisis
3. Measures in tough times
4. Conclusion
BASF SE - Mathias Schöttke Shaping the future in the crisis 3
Agenda
1. BASF at a glance
2. Impacts of the crisis
3. Measures in tough times
4. Conclusion
BASF SE - Mathias Schöttke Shaping the future in the crisis 4
BASF – The Chemical CompanyThe world´s leading chemical company
� Chemistry is about every aspect of life.
� We are connected to deliverintelligent and sustainable solutions.
� Sales 2009: €50,693 mill.
� EBIT 2009: €3,677 mill.
� Employees (December 31, 2009): 104,779
� About 1,300 new patents filed
� 6 Verbund sites and about 380 production sites
BASF SE - Mathias Schöttke Shaping the future in the crisis 5
BASF Segments focusing on six different areas
Ch
emic
als
Pla
stic
s
PerformancePolymers
Polyurethanes
Crop Protection Oil & Gas
Per
form
ance
Pro
du
cts
Paper Chemicals
Dispersions& Pigments
Care Chemicals
PerformanceChemicals
Inorganics
Petrochemicals
IntermediatesF
un
ctio
nal
So
luti
on
s
ConstructionChemicals
Coatings
Catalysts
Ag
ricu
ltu
ral
So
luti
on
s
Oil
& G
as
BASF SE - Mathias Schöttke Shaping the future in the crisis 6
Europe – BASF’s home market with two Verbund sites
� Sales 2009:€28.5 billionby location of customer
� Employees:67,621as of December 31, 2009
� Regional facts: � BASF’s home market� Ludwigshafen –
site of the company’s global headquarters
� Verbund sites in Ludwigshafen, Germany and Antwerp, Belgium
Verbund site
ANTWERPLUDWIGSHAFEN
Selectedproduction site
Regional Headquarter
BASF SE - Mathias Schöttke Shaping the future in the crisis 7
Agenda
1. BASF at a glance
2. Impacts of the crisis
3. Measures in tough times
4. Conclusion
BASF SE - Mathias Schöttke Shaping the future in the crisis 8
The crash of the industrial production
80
90
100
110
120
130
2007 2008 2009 2010 2011 2012 2013 2014 2015
Industry production 2007 = 100Source: internal
Western Europe
North America
World Emerging Countriesin Asia
BASF SE - Mathias Schöttke Shaping the future in the crisis 9
Some figures illustrating the situation in 2009
BASF SE - Mathias Schöttke Shaping the future in the crisis 10
Agenda
1. BASF at a glance
2. Impacts of the crisis
3. Measures in tough times
4. Conclusion
BASF SE - Mathias Schöttke Shaping the future in the crisis 11
Crisis management and long term issues rely on strong labor relations
� Balancing crisis management and long term issues
� Enhancing strong labor relations
Long term issues
Crisis ManagementLabor relations
SustainabilityTrust
ReliabilityMotivation
BASF SE - Mathias Schöttke Shaping the future in the crisis 12
Gradual crisis management as part of our approach
Our approach: Gradual crisis management
Short-time work / Site Closures
Temporary personnel transfersTemporary transfer of employees in Antwerp and LudwigshafenQualification of employees
Flexible use of HR-instrumentsReduction of time accounts and annual leaveReduction of leased workers, contractors and employees with limited contract
Strict cost disciplineReduction in costs for catering, travelling, events etc.Reduction in provisions for residual leave and time accounts etc.
Adjust capacitiesPlant cutback and shutdownsReduction of stock levels
Reduce costs
Increase efficiency
Save employment
BASF SE - Mathias Schöttke Shaping the future in the crisis 13
�Reduction in costs for catering�Strict use of internal service providers�Reduction in expenditures on events �Reduction in expenditures on foregoing business trips
Personnel Measures
�Reduction in number of leased workers, contractors and employees with limited contract�Flexible use of working-time instruments (e.g. annual leave 2009, overtime) �Reduction of external hiring�Personnel transfers
Crisis Management at BASF SE in Ludwigshafen
Efficiency Measures
�Reduction in expenditures
�Reduction in provisions
�No losses of permanent jobs
�Short-time work
BASF SE - Mathias Schöttke Shaping the future in the crisis 14
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mio
. €
2008
2009
BASF SE Ludwigshafen37% lower expenditures on business trips in 2009
BASF SE - Mathias Schöttke Shaping the future in the crisis 15
BASF SE Ludwigshafen50% reduction in leased workers in 2009
Jan08
Mrz08
Mai08
Jul08
Sep08
Nov08
Jan09
Mrz09
Mai09
Jul09
Sep09
Nov09
Nu
mb
er o
f le
ased
wo
rker
s
Mar08
May08
Mar09
May09
BASF SE - Mathias Schöttke Shaping the future in the crisis 16
2007 2008 2009
20 % of total leave 19 % of total leave 4 % of total leave
Mio
. €BASF SE Ludwigshafen80% less provisions for residual leave in 2009
BASF SE - Mathias Schöttke Shaping the future in the crisis 17
BASF SE Ludwigshafen600 personnel transfers at the Verbund Site in 2009
� 600 employees transferred in Ludwigshafen
� 160 production plants belonging to one legal entity
� Verbund Coordination Committee as decision-making body
BASF SE - Mathias Schöttke Shaping the future in the crisis 18
2117
3009
4424
2759
1220
97
3663
6696116
22132145
5782
1134
29301030
2127
2568
2066
3084
3662
4034
2673
1965
283
636
197
0
1000
2000
3000
4000
5000
6000
Feb March April May June July Aug Sept Okt Nov Dec Jan Feb
Europe, incl.Ciba
thereof Germany,incl. Ciba
thereof BASFSE
20102009
BASF Group in Europe Nearly 6000 employees in short-time work in 2009 / 2010
BASF SE - Mathias Schöttke Shaping the future in the crisis 19
Agenda
1. BASF at a glance
2. Impacts of the crisis
3. Measures in tough times
4. Conclusion
BASF SE - Mathias Schöttke Shaping the future in the crisis 20
Shaping the future in the crisis
� Measures to adjust capacities and increase efficiency are crucial to tackle economical crisis and have been implemented successfully at BASF.
� However, short-term measures must be in balance with a continuous and long-term oriented improvement of the structures in a company, such as flexible HR-instruments.
� Both – long term topics as well as short term measures in times of crisis – rely on strong labor relations which must be built up and fostered in the long run.
BASF SE - Mathias Schöttke Shaping the future in the crisis 21
Thank you for your attention
BASF SE - Mathias Schöttke Shaping the future in the crisis 22
Back Up
BASF SE - Mathias Schöttke Shaping the future in the crisis 23
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Mio
. €
2008
2009
BASF SE LudwigshafenReduction in expenditures on foregoing business trips
60
40
20
BASF SE - Mathias Schöttke Shaping the future in the crisis 24
BASF SE LudwigshafenReduction in overtime work
0
50.000
100.000
150.000
200.000
250.000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Ho
urs
2008
2009
BASF SE - Mathias Schöttke Shaping the future in the crisis 25
432
562
700
210
365 340
667
0
100
200
300
400
500
600
700
800
Jan08
Mrz08
Mai08
Jul08
Sep08
Nov08
Jan09
Mrz09
Mai09
Jul09
Sep09
Nov09
Jan10
Mrz10
Mai10
An
zah
l Mit
arb
eite
r
IST- BJG *
IST- Leasing
* BASF Jobmarkt GmbH – Befristet Beschäftigte (BASF SE)
Entwicklung BJG & Leasing Monatsstände (Stand: 31.03.2010)
BASF SE - Mathias Schöttke Shaping the future in the crisis 26
0
10
20
30
40
50
60
2007 2008 2009
198.560 days= 20 % of total leave
187.216 days= 19 % of total leave
38.274 days= 4 % of total leave
Mio. €
BASF SE LudwigshafenReduction in provisions for residual leave
45,8 46,9
9,4
BASF SE - Mathias Schöttke Shaping the future in the crisis 27
0
40
80
120
160
200
240
280
320
27.1.
099.
2.09
24.2.
099.
3.09
30.3.
0915
.4.09
27.4.
0911
.5.09
25.5.
098.
6.09
22.6.
096.
7.09
20.7.
093.
8.09
31.8.
0928
.9.09
26.10
.09
14.12
.09
22.2.
10
Total number ofemployees to transfer
To transfer
Transfered
Return to homedivision
BASF SE LudwigshafenPersonnel transfers across divisions
BASF SE - Mathias Schöttke Shaping the future in the crisis 28
Effects of the crisis for BASFReduction of unsolicited applications at BASF SE
0
200
400
600
800
1000
01/20
0802
/2008
03/20
0804
/2008
05/20
0806
/2008
07/20
0808
/2008
09/20
0810
/2008
11/20
0812
/2008
01/20
0902
/2009
03/20
0904
/2009
05/20
0906
/2009
07/20
0908
/2009
09/20
0910
/2009
11/20
09
- 55%
BASF SE - Mathias Schöttke Shaping the future in the crisis 29
Our six values
� Sustainable Profitable Performance
� Innovation for the Success of Our Customers
� Safety, Health and Environmental Responsibility
� Personal and Professional Competence
� Mutual Respect and Open Dialogue
� Integrity
BASF SE - Mathias Schöttke Shaping the future in the crisis 30
Strong start to 2010
� Business recovery continues
� Considerably higher sales and earnings in the industrial business
� Sustainable increase in earnings in Performance Products
� Full year 2010: Sales growth and significantly improved earnings
BASF SE - Mathias Schöttke Shaping the future in the crisis 31
Sales and earnings: BASF Group 1st quarter 2010
� Sales rise by 26% to €15.5 billion
� Strong increase in sales volumes in almost all segments while prices generally lie marginally below the level of the first quarter of the previous year
EBIT before special items million €
12,219
15,454
1st quarter
Sales million €
� Earnings improve substantially by 98% to €1.9 billion
� Significantly higher earnings in almost all divisions
� Earnings in the Oil & Gas segment negatively impacted by lower natural gas prices
+ 26.5%
985
1,954
1st quarter
+ 98.4%
20102009
1st quarter 1st quarter
BASF SE - Mathias Schöttke Shaping the future in the crisis 32
6.9
4.9
1.5
4th quarter full year
62.3
14.3
50.7
13.2
4th quarter full year
20082009
20082009
Effects of the crisis for BASFReduction of sales and earnings
(-7.9%)
(-18.6%)
(+181.2%)
(-29.2%)
0.5
� Decline in earnings due to weak demand� High one-time expenses for Ciba integration
� Sales decline significantly� Lower prices and volumes due to crisis in key
customer industries
Salesbillion €
EBIT before special itemsbillion €