Profits up... and branching out
15 Jan 2000
'The weather is not so good,' commented BASF chairman Jurgen Strube on a typically sodden November day in Ludwigshafen, 'but if you look in our direction, the sun is blazing through the clouds.' Seeming almost surprised to be so cheerful, the poetic Strube announced buoyant third-quarter results for his company along with an ambitious plan to cut staffing by helping employees start new businesses.
While other companies have seen their results falter over the period (ICI's profits were unchanged from the previous year), BASF saw pre-tax profits burgeoning by 27 per cent, to DM1.3 billion, on sales up 15 per cent to DM13.7 billion.
About two-thirds of the sales growth came from extra business, said Strube, notably from plastics, fibres and chemicals in Europe; the remainder was from the weakness of the deutschmark. Margins came under pressure from increasing raw materials prices, with the styrene polymers and engineering plastics businesses suffering worst. However, health and nutrition an increasingly important sector chemicals and oil and gas all turned in strong earnings performances.
But employment levels were also on Strube's mind. The company wants to cut 1500-3600 jobs at the giant Ludwigshafen site; but an agreement with workers' representatives guarantees no compulsory redundancies and generous provision for trainees.
The company has already brought in flexible working hours and part-time working for older employees, which Strube says allows them a chance to pass their expertise on. But the most unorthodox move is a new foray into venture capitalism. BASF is offering to lend employees up to DM100000 at low interest for them to start up their own businesses, and will even help out with administration. 'We have a moral commitment to society,' Strube explained.
