Ludwigshafen, Germany — BASF SE will streamline its business to focus on six core segments in a new strategy that will also affect 20,000 employees globally.
The German chemical giant said in a Nov. 20 event that it is "creating leaner structures for services" in research and governance division and bringing employees closer to customers.
"Moreover, the remaining functional and research activities will be more efficiently organized," BASF said in a news release. "Approximately 20,000 employees worldwide will be directly or indirectly affected by this reorganization."
Hans-Ulrich Engel, chief financial officer and vice chairman, said the company expects "all these measures to result in better differentiation of the business units as well as substantial productivity gains."
The corporate structure also will allow for greater decision making authority within business units, Engel said.
"This means we will enabler more entrepreneurial freedom, but also assign clear responsibilities," he said.
The event comes about six months after Martin Brudermüller took over as BASF chairman.
BASF said it will concentrate on higher-added-value products and increase its investment in China while working to ensure its greenhouse gas emissions remain flat between 2018 and 2030 "even though we are targeting considerable annual production growth," Brudermüller said. "This means we will decouple our greenhouse gas emissions from organic growth."
Five of the six business segments outlined in the even cover two operating divisions. The Agricultural Solutions business will just focus on agriculture chemicals. The other segments are:
• Chemicals, to oversee petrochemicals and intermediates.
• Materials, covering performance materials and monomers.
• Industrial solutions, for dispersions and pigments and performance chemicals.
• Surface technologies, to cover catalysts and coatings.
• Nutrition & care, handling personal care chemicals and nutrition and health.
Brudermüller's preferred "verbund" integration of value chain, where the company owns businesses throughout the production process, is also set to play a key role in the process.
"BASF's portfolio has unique benefits because of physical as well as technological, market-related and digital verbund advantages. Value chains can only be operated truly efficiently in the verbund," BASF noted.
BASF claims that it currently sees annual cost savings of 1 billion euros ($1.39 billion) thanks to its integrated production.
The Asian market, where BASF is already very well established, will play an important role the growth strategy.
"By 2030, China's share of the market will increase to nearly 50 percent and we want to participate in this growth," Brudermüller said. "Our new verbund site in Zhanjiang in Guangdong province and the expansion of the site in Nanjing will significantly enhance our growth in this dynamic market."
