Germany – BASF: The “giant” of the heavy chemical industry is at risk due to the energy crisis

For months now, the figures have been extremely worrying for the German chemical industry, which together with the metal, mechanical engineering and automotive sectors form the hard core of German industry. A long time alarm bell BASF also strikesGermany’s largest chemical industry, which, due to the energy crisis that is directly affecting it, is already implementing an extensive program of cuts, while it has already announced plans to relocate part of its production to China, like other German companies.

The cost of maintenance and operation of its units in Germany is now prohibitive. According to the ZDF network its historic, central factory in Ludwigshafen needs 37 terawatt hours of energy annually, more than the whole of Switzerland.

The “giant of the chemical industry”, as it is often called, must save 500 million euros this year in order not to find itself in a financial deadlock and therefore layoffs are imminent as part of a wider restructuring plan. “The unit in Ludwigshafen has been in existence for over 150 years. Lately, we have been managing many crises together with our employees. We will also manage this crisis,” says Melanie Maas Brüner from BASF’s Board of Directors.

Is Germany in danger as an industrial country?

At the same time, the leading German economist Clemens Fist from the Ifo Institute in Munich estimates on the same network that heavy German industry alone cannot solve the problems arising from the energy crisis. Political intervention is needed.

“The need is urgent for answers about searching for competitive gas, electricity and RES prices. This is the only way to ensure the future of Germany as an industrial country,” he says.

But in addition to the exorbitant energy costs, the chemical industry is now also faced with the extremely high prices of raw materials due to inflationary revaluations. Also according to the economic newspaper Handelsblatt the business picture of the German chemical industry deteriorated significantly in October, due to a 19.9% ​​drop in demand.

Finally, according to the Federal Statistical Office, German chemical products worth more than 138 billion euros were sold abroad in 2021. This corresponds to a percentage of around 10% of all German exports, which demonstrates the pivotal importance of the sector as a whole for the German economy.

DW – Dimitra Kyranoudis, Berlin

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