BASF Supply Chain Review

BASF is the world’s largest chemical company by sales, ahead of their competitors Dow, DuPont, and Bayer. BASF is a global chemical company with operations on five continents and in more than eighty countries. They operate more than 380 facilities worldwide. The company is comprised of five main business segments: plastics, performance products, agricultural products, basic chemicals, and oil and gas exploration and production. The company’s recent actions to move a greater share of their production to the United States is a logical and sustainable move for the chemical giant for a myriad of reasons, which are reviewed below. Despite the recent economic decline and sustained recession in the United States, BASF has identified a booming section of the U.S. energy market in the form of natural gas production. Natural gas produced through hydraulic fracking and horizontal drilling through shale has turned America into the largest producer of natural gas in the world. This increase in production, combined with the recent nuclear disaster in Japan and continued unrest in the Middle East, provides a lower cost energy market that can’t be found in many parts of the world. This low cost energy market is one of the main attractions BASF has for building additional operations in the U.S. With supply of natural gas expected to be sustainable for well over the next 100 years, BASF will increase their profit margins and provide little risk to operational disruption that can occur from nuclear or petroleum energy supplies, or from the added expenses associated with renewable energy sources. To fully capitalize on the low cost energy market, BASF continues to develop more operational and supply chain assets in the U.S., specifically in the Gulf States, providing easy access to shipping ports throughout the Gulf of Mexico in addition to reducing transportation time between U.S. based facilities. The new joint venture with Total Petrochemicals and Refining USA will increase