BASF South Africa (SA) said on Wednesday that it would be downsizing operations at its mobile emissions catalysts plant, in Port Elizabeth.
“An extended reduction in the expected medium-term demand for products manufactured at this facility saw the site undertake an organisational restructuring exercise resulting in 53 current positions becoming redundant. The site currently employs 308 staff,” said the company in a statement.
BASF SA head of communications Petra Bezuidenhout told Engineering News Online that the reduced demand related “to specific overseas customers based in southern Europe, serviced by the Port Elizabeth facility. The global demand from the auto industry has decreased by 7.2%. Southern Europe is experiencing a double-digit decrease and the site is impacted on accordingly”.
The BASF statement noted that BASF’s other catalyst production facilities around the world were not affected by this site-specific restructuring activity.
“BASF’s global emissions catalysts business remains strong and is expected to continue to grow at above market rates, driven in large part by new emissions regulations, global automotive production growth and its innovative technology solutions.”
Catalytic converters made up just under 50% of South African vehicle component exports in 2011.
South Africa’s vehicle components industry increased exports by 18% to R37.8-billion in 2011, compared with 2010, National Association of Automotive Component and Allied Manufacturers executive director Roger Pitot told Engineering News Online in April.
Catalytic converters were again the star performer in South Africa’s parts stable, with exports reaching R19.9-billion in 2011, which was a 30% increase on 2010.
“This is a good recovery, but it was also, to some extent, brought about by higher platinum-group metal prices,” said Pitot.
Pitot said on Wednesday that some global vehicle manufacturers had not renewed their contracts for the supply of catalytic converters from South Africa, as the benefits offered to local component production under government’s new Automotive Production and Development Programme (APDP) would be lower than under the support programme it was scheduled to replace in 2013, the Motor Industry Development Programme.
“Even if there is support for vulnerable sectors under the APDP, this will phase out eventually. This means vehicle manufacturers are placing their business in other countries.”
Pitot said he did not expect the South African catalytic converter industry to grow further, but that “it would be good if they could hang on to the business they had”.
Bezuidenhout emphasised that BASF’s restructuring process was as a direct result of decreased demand for the catalysts produced at Port Elizabeth, and not the APDP.
“There is no direct impact of the APDP on business at this stage. Sourcing decisions of the OEMs [vehicle manufacturers] depend on a multitude of factors and criteria.”
BASF announced in March that its Port Elizabeth mobile emissions catalysts facility had produced its 50-millionth automotive catalyst for the catalytic converter industry.
The former Engelhard Corporation, which BASF acquired in 2006, pioneered the development of the first catalytic converters on 1975-model cars, and one year later introduced the modern three-way-catalyst, which is capable of destroying more than 90% of hydrocarbons, nitrogen oxides and the carbon monoxide produced by car engines.
The Port Elizabeth business began producing automotive catalysts in September 1994 in leased space at the local Ford engine plant, with two approved customers.
Increased demand led to capacity expansions until December 2001, when the business moved to a larger site in Struanway, where a new facility was established.
Today, BASF’s Port Elizabeth facility manufactures diesel oxidation catalysts, diesel particulate filters and three-way catalysts.
The BASF group in South Africa consists of six companies located in Johannesburg, Port Elizabeth and Cape Town. The group has also invested in a dispersions production plant in Durban, which will be producing acrylic dispersions as of the second half of 2012.
The local group’s portfolio includes chemicals, plastics, coatings, dispersions, agricultural products and nutrition.