BASF as a gas consumer
In this first installment of our series on German industry fleeing the Energiewende, we take a look at chemicals giant BASF.
This month, I asked readers to begin giving me examples of specific industrial firms that are allegedly leaving Germany because the Energiewende is raising the price of energy for them too much. Today, we start with BASF, the largest chemicals firm in the world. Last month, a report over at Deutsche Welle claimed that the firm, along with Wacker (whom we will come back to later), was indeed expanding to the US and quoted the German Chamber of Commerce saying that German industry is generally more willing to move to the US "rather than to fellow European nations."
Here, we can already see a bit more context. Industrial firms that do business internationally always have offices and production plants in numerous countries. Crucially, I could find no news about BASF shrinking its facilities or workforce in Germany, either on the firm's own website or on the web. In April, the firm announced that it would be laying off 500 people in "specialized chemical units", but this report says that "most jobs would affect the Basel region in Switzerland" and adds that the announcement of 215 layoffs in March would mainly affect "British facilities."
In fact, the most recent article about Europe (not Germany!) driving away BASF to the US is from January 2012 and concerns European resistance to biotech, not the cost of renewables. Finally, the expansion in the US announced in May is being made in the "printing, packaging, and industrial coating markets," which does not sound like the same jobs as those being produced in Europe in "plastic additives, pigments, and specialized chemicals for use in a range of leather and textile products." Likewise, the jobs being cut mainly in the UK pertain to "water, oil field, and mining chemicals."
But actually, BASF is largely unaffected by the Energiewende anyway. As I recently explained, the firm produces almost all of its electricity (and process heat) from its own natural gas turbine, so it is not greatly exposed to changing wholesale power prices (which, it is worth keeping in mind, are actually going down in Germany, not up). It is, however, exposed to fluctuations in natural gas prices. But overall, the firm does not seem to be reducing its commitment to Germany, and expansion abroad seems within the range of normal adjustments to changing markets.
Here, we see why the US is indeed more enticing than Europe for firms like BASF: lower gas prices. On Monday, I'll take a look at what is behind the difference in gas prices between the US and Europe and what the near-term future holds for power and gas.
In the meantime, use the comment boxes below to send me additional links about specific industrial companies that are allegedly fleeing the Energiewende, and I'll try to look into the matter. (Craig Morris)