Germany in crisis without Russian gas – Corriere.it

Woe to the German company Basf and its employees. The chemical giant is cutting 2,600 jobs, about 2% of its global workforce, to save on skyrocketing production costs in Europe thanks to the absence of affordable Russian gas. The giant will close a number of factories: at the headquarters in Ludwigshafen on the Rhine in southwestern Germany, the two ammonia production plants will be closed. Divisions that mainly produced caprolactam, a component used to make plastics and fibers. In closing, therefore, also the associated fertilizer units. Overall, two-thirds of the announced cuts will concern personnel in Germany with savings on business and research services.

Among the reasons behind the cut energy costs. BASF’s gas bill increased by 2.2 billion euros last year compared to 2021, even as consumption decreased by 35%. Europe’s competitiveness is increasingly suffering from over-regulation, slow and bureaucratic permitting processes and, in particular, high costs for most inputs, the CEO of Europe said in a statement. Basf, Martin Brudermueller. High energy prices are now placing an additional burden on profitability and competitiveness in Europe, he added. We must also remember that ammonia and acetylene, among the main products of BASF, are also created using the gas directly and therefore a lack thereof risks putting the entire production in crisis. Without forgetting the effects on connected supply chains: from agriculture to the automotive industry.

The company has already said it is aiming for annual cost cuts of 500 million euros, as it does not expect gas prices to fall to pre-war levels. The giant also announced the early termination of its $3.2 billion share buyback program due to the deterioration of the global economy. BASF expects an improvement in market conditions only during the second half of the year after a weak first half due to the effects of the recovery, especially in China. After the news of the cuts in Frankfurt, the stock fell sharply with a loss of 4.26%.