BASF Lay Offs: Company will Eliminate 2,600 Jobs Due to Ongoing Germany’s Energy Crisis: Recession Impact Goes On

As Europe’s largest economy prepares for a recession triggered by the energy crisis that intensified following Russia’s full-scale invasion of Ukraine a year ago, the German chemicals company BASF has announced that it will cut 2,600 jobs. According to BASF’s statement, the year was “dominated by the consequences of the war in Ukraine and in particular by increased raw material and energy prices.” In 2022, it incurred global additional energy costs totaling €3.2 billion (£2.8 billion). With 157 years at its Ludwigshafen site on the Rhine near Frankfurt, BASF is the largest chemicals group in the world and one of the mainstays of German industry. It makes chemicals that are used to make a plethora of products worldwide, including fertilizers, plastics, automobiles, and pharmaceuticals. Read More News at Industrial Front.

BASF Lay Offs Employees Due to Ongoing Germany Crisis

However, its dependence on Russian-piped gas has had a particularly negative impact, and it has previously announced a €7.3 billion write-down on expropriated Russian plants. It stated that it would relocate some production away from Germany and shut down one of two ammonia plants as well as two plastic chemicals plants.

After decades of primarily relying on Russian gas, European industry scrambled to find alternative energy sources following the invasion of Ukraine, which began on February 24, 2022. As a result, prices for energy went up a lot. The crisis has hurt the economy of Germany. According to data that the Federal Statistics Office of Germany released on Friday, the country’s GDP decreased by 0.4 percent in the final three months of 2022. The office stated, “Towards the end of the year, the German economy was negatively impacted by ongoing large price increases and the ongoing energy crisis.”

In 2022, BASF suffered a net loss of €627 million as material costs rose and product demand declined. Overall sales increased by 11% to €87.3 billion as a result of higher prices reflecting the company’s increased costs cushioning some of the blow. The business stated: The war in Ukraine, high energy and raw material costs in Europe, rising prices and interest rates, inflation, and the spread of the coronavirus pandemic will continue to cause a great deal of uncertainty in 2023. Global demand will be impacted negatively by each of these factors.

BASF CEO over Lay Offs

According to BASF CEO Martin Brudermüller, “Europe’s competitiveness is increasingly suffering from overregulation, slow and bureaucratic permitting processes, and particularly, high costs for most production input factors.” All of this has already slowed Europe’s market growth in comparison to that of other regions. Europe’s profitability and competitiveness are currently further hampered by high energy costs.

In April 2022, Brudermüller suggested that switching to Russian gas could “destroy our entire economy.” In an interview with the Frankfurter Allgemeine Zeitung, he stated, “It is a fact that Russian gas supplies have so far been the foundation for our industry’s competitiveness.”