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Interview with Dr. Jürgen Hambrecht, Chairman of BASF

Interview with Dr. Jürgen Hambrecht, Chairman of BASF
We publish an interview with Dr. Jürgen Hambrecht, Chairman of BASF. In this interview, BASF's CEO Jürgen Hambrecht discusses problems and solutions for the economic crisis. BASF is the world´s leading chemical company.

A year ago you were much more optimistic, although the problems of the financial sector were already generally known.
Dr. Jürgen Hambrecht: - I must confess, the scale of the downturn has taken me by surprise too. When I started at BASF in 1976, that was called a crisis year at the time. Since then, we have survived several crises: in 1992/3, after the German reunification boom ran out of steam, in 1997 in Asia, and in 2001 after the attacks on the United States. But in over 30 years with BASF, I’ve never seen such problems appear at the same time in America, Asia and Europe.

You’re now thinking about closing plants permanently and you’re cutting jobs in the United States and South Korea. How many of your 95,000 employees are you going to lay off altogether?
We will have to get rid of less efficient plants in Europe, America and even Asia. Under normal circumstances, these plants would have been replaced by new investments over the course of time. Now, we’re closing a lot of plants earlier than planned. I can’t say where and how many jobs will be lost; we’re still in a crisis. Because our company operates globally, we unfortunately can’t offer everyone who is no longer needed in one location a job somewhere else in the world.

Dr. Jürgen Hambrecht, Chairman of BASF

In Germany, there’s the option of short-time working for a maximum of 18 months. Is this enough to avoid redundancies?
In the chemical industry, this option unfortunately has only limited use. In plants which don’t work around the clock and are started up and shut down several times a day, you could operate a four-day week if necessary. But a cracker …

In other words, a plant like the one here in Ludwigshafen where you break crude petroleum down into its constituents …
A cracker like this can’t be simply turned on and off. It has to run around the clock, seven days a week. Short-time working just isn’t an option here. This is why we may have to take more drastic measures.

Are you planning to cut German jobs?
I’m at the head of a transnational company, and I’m responsible for all our employees. Our employees in China or anywhere else are just as important to me as those in Germany.

In your Ludwigshafen plant, the biggest chemical site in the world, you can’t lay anyone off before the end of 2010. Do you regret having made this promise in the job security agreement for the site?
No, quite the reverse. Even agreements like this include clauses for emergencies. If these occur, you sit down together and try to find a reasonable solution together. The dialogue with our employees is constructive and ongoing. We’ll be talking about a possible follow-up agreement in the near future.

An investment in keeping your people happy?
It’s not a matter of keeping people happy, it’s about a shared goal: the success of our company. And if we’re working on drafting a new agreement, we will make sure that it reflects all the needs that we see in the future.

What are you talking about here? Early retirement clauses as in the past, or a reduction in working hours, like the one Bayer has just implemented?
It’s too early for details. But we’re proud of the flexibility and team spirit of our employees. In Ludwigshafen and Antwerp, people are currently moving from less busy plants to other plants, so that their colleagues there can clear their working time accounts.

What do you think about the German government’s measures?
The economic package was right, there’s no question about that. If the real economy is threatening to collapse completely, you have to do something. I think it’s good too that the government didn’t use all the options at its disposal and is waiting to see what effect their measures will have. Afterwards, you can then fine tune. Then, I’d like to see more support for research, for example.

That would certainly be as good as money in the bank for you.
I’m thinking primarily of smaller companies, which often cut back on research when things get tight. If companies could get a tax credit for their total research spending, that would help. The same goes for interest on loans. For many, the cap on tax deductions has become a major burden.

Wouldn’t it be better to skip the dividend payment, instead of asking for tax concessions?
We promised our shareholders that we would pay a dividend at the previous year’s level even in difficult times, and we stand by this. After all, the shareholders have suffered tremendous losses.

What worries you most about the current crisis?
The growth of protectionism. The crisis has shown how much we depend on each other. Look at Asia. Most people thought that the billions of people there would stabilize the region with their demand. But when the West stumbled, growth there fell so much that we’re even feeling it here. If more and more countries put up trade barriers, this will steepen the downward spiral. This mustn’t be allowed to happen. We’ve only ever got out of a recession through exporting.


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BASF

the world’s leading chemical company; the portfolio ranges from chemicals, plastics, performance products and crop protection products to oil and gas.