German multinational BASF is sparking a heated debate about degrowth and deindustrialisation.
BASF, the largest chemical producer in the world, said on May 22 it wanted to sell its production facilities in its home country to cut back on costs and to secure its competitiveness.
It stated its intent was to “continue to invest in the preservation, modernisation and expansion of the [company HQ] Ludwigshafen site”.
In effect, it means 11 facilities will be closed including a Toluene Diisocyanate (TDI) plant that opened in 2015. TDI is a key component for the polyurethanes industry.
According to the company, the cuts in Germany amount to around €1 billion. It said €10 billion will be invested in the new BASF mega-plant in Southern China.
China is the largest sales market for such chemical materials and appeals because of relatively low production costs.
BASF recorded profits in 2023 in all its divisions except for those in Germany. It cited high energy costs, excessive bureaucracy and overregulation as the main reasons for the shortfall there.
Relatively speaking, energy prices in Germany are considerably higher than in many other places in the world.
In 2023, BASF overall earned €225 million, an improvement of €852 million compared with the prior-year’s loss of €627 million but far from the profits of €8.4 billion seen in 2019.
European plans to ban so-called forever chemicals (PFAS) have also pushed the company to turn away from Germany.
Those initiatives are causing uproar in Germany, which many industrialists have argued is being seen as increasingly less attractive as a business and investment location.
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The BASF facility in Zanjiang, Southern China is being built on an island off the coast and is scheduled to be completed in 2030.
Former company CEO Martin Brudermüller complained in an interview with Handelsblatt, shortly before his departure in April this year, about the German traffic-light coalition’s policies.
He said Germany was increasingly losing its competitiveness and educational standing.
Gabor Steingart, a leading journalist in Germany, said the country was in effect giving “a silent farewell” to its industrial standing.
“The reason for this should put politicians of all parties to shame: despite capable managers, highly qualified employees and a long industrial tradition, it is no longer possible to make a profit in Germany,” he said.
“The industrial homeland seems to have burned down,” Steingart noted, saying that there was little chance in the foreseeable future that BASF Germany could make a profit there, citing the firm’s supervisory board and executive directors.
He also pointed to the European Union Court of Auditors’ warning that the European Commission must “not to take its climate targets to the extreme”.
“Europe must not jeopardise industrial sovereignty in its ambition in terms of climate protection. That’s exactly what is happening now.”
Furthermore, he said, under the EU Chemicals Directive, the EC hurts the “production of chemicals that are indispensable for the energy transition”.
China represents almost half of the global chemistry industry, being a dominant force in export, domestic consumption and in so-called organic chemical-material manufacturing.
“Politicians will one day pay dearly for this deliberate ignorance of the economic interests of their companies and citizens – possibly with democracy itself,” Steingart concluded.
On the Left, it was noted that the new BASF factory in China will likely be highly polluting and that air quality in its surroundings will drop. Working conditions and a perceived lack of respect for human rights in the country were also cited.
The Conservative opinion magazine Tichys Einblick reported: “What is taking place is a sell-out of comparatively environmentally friendly production, which is necessary because gas and energy supply in Germany are no longer guaranteed.
“Now ‘de-growth’ is becoming noticeable,” it concluded.
