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Chemical manufacturing
Dyeing, Tanning And Colouring Materials
Essential Oils, Perfume Materials, Toilet, Polishing, Cleansing Preparations
Fertilisers, Manufactured
Plastic Materials, Regenerated Cellulose And Artificial Resins
BASF had already been in the chemicals business for 80 years when it began following its main customers to Asia. As economics in the region began to grow at mid-century, manufacturers of a host of consumer products and other goods set up local bases, and BASF wanted to be there to supply them. Today, the German-based multinational owns or has equity in more than 50 companies in 20 countries in Asia. Its revenue from the region reached 5.2 billion Deutschmarks last year, an increase of 17% from 1996.
The group's products can be divided in five major categories: health and nutrition, colorants and finishing products, chemicals, plastic and fibres, oil and cosmetics, printing and packaging.
BASF came to Thailand before World War II, taking a 30% equity in a joint-venture company with Bara Windsor, a local trading firm. The local operation is small compared with those in other countries, with a workforce of 157 at its plant in the Bang Poo Industrial Estate in Samut Prakan. However, BASF (Thai) generated revenue of more than one billion baht in sales last year. despite the downturn.
The company has three lines: caprolactam, a raw material for producing nylon fibre for the textile industry; polystyrene, with i-nany applications in the computer, electronics and construction fields; and industrial chemicals such as monomers, solvents and adhesives, with a total production capacity of 7,200 tons a year.
BASF has two local affiliates. BASF Vita is an animal feed joint venture between BASF (Thai) with local investors; and BASF East Asiatic Colours and Chemicals is a joint venture between the German parent and East Asiatic (Thailand). The latter deals mainly with the import and sale of textile dyes and chemicals to the textile industry. Mr Friesen, who has been in Thailand for more than a decade, said the economic downturn had hit the chemical industry hard. Major customers such as automotive, consumer product and textile makers had cut back by as much as 50% and the chemical industry was looking at a 30% drop in sales revenue as a result, he said.
However, BASF sees the crisis as short-term, and it is preparing for the recovery. Across Asia it has been steadily expanding production. Together with local partners, it will invest, DM 10- 12, billion 'In the region in the next five years. Among the show-cases will be an integrated petrochemical site in Nanjing, a joint venture with Yangtzi Petrochemical Corp and China National Petrochemical.
As well, BASF AG has just acquired a 50% stake from two Korean partners to gain full control of chemical plants there. It has also purchased a lysine business from local investors. In Malaysia and the Philippines, BASF has invested more than DM1 billion to set up two chemical plants. In Thailand, BASF Thai intends to increase its equity in BASF Vita to gain control of management of the animal feed producer, in the belief that the local economy will turn around within two years.
BASF has adopted the "Verbund system" as a company-wide strategy that stresses grouping operations in large, integrated plants for the low-est cost of production. The integrated plants dis-tribute products to customers in nearby countries through offices in each country. The Thai plant began by serving mainly local demand, with only 15 % of the output exported. However, the economic downturn has forced BASF(Thai) to export more, and that means working to cut costs in order to compete.
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