BASF has saved 350 million euros ($456.4 million) in costs at its Ludwigshafen site under a plan to secure the future of its main production site, the chemicals giant said on Tuesday. Under a deal agreed between management and workers, costs will be cut by 450 million euros by the middle of 2005 and the number of employees at the site reduced by 3,300 to 32,000 by the end of 2007.
Jobs would be cut through voluntary redundancies, early retirement and natural attrition. Forced redundancies have been ruled out until 2010, a spokesman for the world's biggest chemicals group by sales said.
The agreement comes at a sensitive time for Germany's economy, which is hamstrung by low productivity, high costs and rigid labour laws. BASF is closely watched for any sign that it is losing interest in manufacturing in Germany.
Other top German firms such as Siemens AG, DaimlerChrysler AG and Volkswagen AG have recently struck cost-cutting deals with employees to protect their jobs in Europe's biggest economy.
"Based on the demographic development and the saturation of our society with industrial products, there will be no growth in Europe that will require new capacity generating new jobs," board member Eggert Voscherau told a news conference.
The Ludwigshafen site, one of the biggest chemicals manufacturing locations in the world, already has nearly 23,000 fewer employees than in 1990.
Of the 3,300 job reductions, 700-800 jobs will be moved to BASF Job-market, a firm that hires staff on short-term contracts.
About 1,200 staff have agreed to leave early voluntarily, while agreements with the remaining staff will be signed over the next three years, Voscherau said.
In addition, 700 million euros per year would be spent on research and development of new processes and products.
The investments will include a new power plant that will start operations in April next year, supplying both power and steam.
BASF is in the middle of a chemical-sector upswing. Third quarter operating profits rose more than 2.5 times, thanks to strong sales of plastics and chemicals, with high oil prices helping its oil and gas unit.
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