The energy crisis and inflation are posing great challenges even to the biggest companies. The world's largest chemical company is about to make a painful decision in Europe.

The world’s largest chemical company BASF has announced that it is planning to cut 2600 jobs worldwide. Around 700 more production jobs will be affected at the company’s site in Ludwigshafen, Germany, the group added. The company will attempt to employ those workers in its other plants, but the majority of the employees will still have to be laid off.

BASF announced an austerity program last year due to the skyrocketing energy prices and the slowing economy in Europe. The company is planning to cut its non-production expenses by 500 million euros annually starting in 2024, half of that in the main plant in Ludwigshafen. As the largest industrial gas consumer in Germany, BASF was hit hard by rising energy and raw material costs last year.

The austerity measures are focusing on the service, corporate and research departments. „Europe’s competitiveness is increasingly suffering from overregulation, slow and bureaucratic permitting processes, and in particular, high costs for most production input factors,” said Martin Brudermuller, the BASF chief executive.

The growing burden of red tape „has been hampering market growth in Europe in comparison to other regions. High energy prices are now putting an additional burden on profitability and competitiveness in Europe.”

In tandem with the cost reduction program, BASF is also preparing for structural measures. At its main location in Ludwigshafen, several plants will be closed, including the caprolactam plant, one of the two ammonia plants and associated fertiliser facilities, as well as the plastic plant that only started operating in 2015.

The measures will be implemented gradually by the end of 2026 and are expected to reduce fixed costs by more than 200 million euros annually.