Hambrecht, Jürgen 1946–
Born: 1946, in Reutlingen, Germany.
Education: University of Tübingen, PhD, 1975.
Career: BASF, 1976–1985, chemist; Lacke und Farben, 1985–1990, head of research and purchasing; 1990–1995, president of Engineering Plastics Division; BASF, 1995–2002, president of East Asia Division; 2002–, chairman.
Address: BASF, ZOI-D 100, D-67056 Ludwigshafen, Germany; http://www.corporate.basf.com.
■ When Jürgen Hambrecht became chairman of BASF, the world's largest manufacturer of chemicals, on May 6, 2003, he took over the helm of a company with interests that stretched beyond Germany to almost all areas of the globe. BASF was one of the world's most important companies; the products it manufactured were used in a huge variety of goods ranging from the indigo dye coloring blue jeans to the brake fluid in automobiles. In the words of the Wall Street Journal contributor Vanessa Fuhrmans the company's wide diversity of interests and global reach made it "a de facto bellwether for the business world" (April 17, 2003), anticipating swings in the global industrial economy by as much as six months. Hambrecht's position as head of BASF made him a major player in the global economy; at the beginning of the 21st century he was positioning his company to maintain its leadership position in the production and distribution of chemical products in Asia and worldwide through increased efficiency and justin-time delivery practices.
For decades BASF dominated chemical production and supply throughout the world. Hambrecht, whose career with the company stretched back 27 years, earned his reputation while serving as the head of BASF's East Asia operations from 1995 to 1999. When the region's economies began faltering in 1997, many companies began restructuring their joint ventures. In particular two South Korean firms dropped out of
partnerships with BASF because of financial problems. Hambrecht argued that BASF needed to remain economically active in East Asia and urged his superiors to continue their long-term plans by buying out the South Korean partnerships. His decision positioned the company to profit immensely from the economic rebound that began several years later.
Hambrecht began his career not as a businessman but as a chemist. He received his doctorate in organic chemistry from the University of Tübingen in 1975 and began his career with BASF the following year, working in the company's polymers laboratory on polystyrene, styrenic copolymers, and polyphenylene ethers. Nine years later he earned the position of head of purchasing and research at Lacke und Farben—which later became BASF Coatings—in Münster. In 1990 Hambrecht advanced to the position of president of BASF's engineeringplastics division, and in 1995 he assumed the rank of president of the corporation's East Asia division, which operated out of Hong Kong. He joined the executive board of directors in 1997 and in 2002 became chairman of the corporation.
Hambrecht's management style reflected his origins as a scientist rather than as a businessman. In an interview published in Chemical Market Reporter (May 26, 2003), the BASF head explained that the key to his decision-making process was communication—which was ideally personal and up front. He noted that a business leader "has to be a role model and lead by example." He put this principle into practice, he explained, by making regular visits to local production plants and to customers around the world. He kept in touch with employee issues by regularly dining in the company cafeterias with the backbone of the company workforce.
A SHAMEFUL CORPORATE PAST
When Hambrecht came to the helm of the world's largest chemical corporation, he inherited not only the company's huge international infrastructure but also its mixed legacy of nearly 150 years of developing industrial chemicals. Badische Anilin & Soda Fabrik (BASF) was founded by the German chemist Friedrich Engelhorn in Ludwigshaften in 1865 to exploit the new dyes being developed from the industrial residue known as coal tar. Within a few years of its inception the company dominated the Victorian-era market with a variety of brilliant aniline-based hues, including methylene blue, alizarin, and indigo. In the early 20th century BASF expanded into the production of artificial nitrogen-based fertilizers, using the Haber-Bosch process of ammonia synthesis. During World War I BASF became one of the largest suppliers of ammonia to the German army, which used the chemical for making war munitions.
During the 1920s BASF entered into the most controversial phase of its history. At that time the chairman Carl Bosch oversaw the incorporation of BASF into I. G. Farbenindustrie, a huge conglomeration of major German chemical businesses. I. G. Farben was closely associated with the Nazi regime; one of its subsidiaries produced Zyklon B, the infamous lethal gas used in concentration camps. Although the Nazis initially regarded BASF as a suspect, unpatriotic organization with links to the Jewish community, the company prospered under Hitler. According to Daniel Bogler of the Financial Times, BASF's revenues increased 500 percent between 1933 and 1943, when the Nazis were in power. BASF became involved in the production of synthetic rubber during World War II, locating its major plant very near to Auschwitz, the most notorious Nazi concentration camp. Bogler noted that I. G. Farben "financed the SS-run work camp at Monowitz, near Auschwitz, the inmates of which helped to build as well as staff the rubber factory and of whom 20,000–25,000 died in the course of the war" (December 20, 2002).
BASF did not emerge from the destruction wrought by Germany's defeat in World War II until 1952, when it was reformed as an independent company. In the decade following its reincorporation BASF moved into the production of plastics and other polymers. In 1958 the company entered the North American market, forging a relationship with Dow Chemical's Freeport, Texas, facility in order to produce basic chemicals and materials used to create synthetic fibers. In 1969 BASF bought the old Michigan Alkali Company, which was then known as Wyandotte Chemicals Corporation, with sites in Wyandotte, Michigan, and Geismar, Louisiana.
In 1984 the Geismar plant became the site of a less conspicuous milestone in BASF's history, when a five-year dispute began between the company and the Oil, Chemical, and Atomic Workers' International Union (OCAW). Union workers finally won the dispute after enlisting the help of environmental associations such as Greenpeace, which helped the OCAW pressure BASF into negotiations. In return for the environmental groups' support, the OCAW provided records of BASF's plant emissions. The groups then tried to raise public awareness about the threats such emissions posed to public health—as evidenced by the high rate of cancer that plagued Louisiana residents during those years. At one point OCAW members joined environmental activists in a "Toxic March" to increase public awareness of the role plant emissions played in public health risks. The cooperation between the union and the environmentalists brought the dispute to a close in 1989.
A NEW CENTURY: PLANNING FOR THE FUTURE
In an interview conducted at the beginning of his tenure as chairman of BASF in 2002, Hambrecht emphasized the importance of BASF's traditions of reliability and trustworthiness; he also explained that he had developed a long-term business plan based on innovation and devotion to customer service and satisfaction. Hambrecht identified three major areas of concentration for the fulfillment of his vision of BASF's future: providing customers with top-notch service; creatively exploring new technologies and cultivating employees who could competently approach problems using innovative thinking; and managing the cost of capital by offering the best return on investment dollars available in the chemicalsmanufacturing industry.
Furthermore Hambrecht identified five factors that influenced his vision for BASF's long-term success at the beginning of his tenure. The first of these factors was political: namely, the fallout resulting from the American war with Iraq. Because of Iraq's petrochemical resources and the American dollars devoted to the conflict, the war had a large impact on both the raw materials upon which BASF relied in making its products and the ability of firms to buy the company's finished products. The war, which accelerated demand for some of BASF's products while reducing demand for others and increasing raw material expenses, created a more volatile market.
The second factor considered by Hambrecht was governmental policies, especially those regulating the production and emission of chemicals and the byproducts of chemical production. The European Union had issued a white paper establishing a new chemicals policy, setting limitations on emissions trading, tax laws, and subsidies that, as Hambrecht explained in the Chemical Market Reporter interview (May 26, 2003), cut into BASF's profitability by "dampening the competitiveness of the chemical industry and our customer industries." He pledged to work with EU officials and other policy makers to find equitable solutions to such regulatory problems.
The chairman's third area of concern lay in the corporate restructuring that had characterized the chemical industry in the early 2000s. BASF's future, he stated, would be shaped by a combination of four different business approaches: internal consolidation of operations, increasing efficiency; the acquisition and divestiture of product portfolios; the attainment of increases in investment by private equity firms; and the strengthening of BASF's petrochemicals product line. Those approaches, he felt, would result in a stronger, more diversified corporation ready to face the challenges of the 21st century.
Fourth, Hambrecht's experience in East Asian markets gave him valuable insight into the importance of expanding BASF's customer base throughout that region; he identified Asia as the most rapidly growing market for the corporation's chemical products. Andreas Kreimeyer, one of Hambrecht's fellow board members, predicted that by 2010 Asia and the Pacific basin would provide 20 percent of BASF's total worldwide sales and earnings. In 2003 BASF began work on the world's largest plant for the production of polytetrahydrofuran—a chemical used in the manufacture of spandex and some polyurethanes—in China. Located at the Shanghai Chemical Industrial Park, the plant opened in 2004.
The final challenge Hambrecht foresaw for BASF was the need to attract new chemical-engineering talent to the company. The addition of highly motivated, well-educated chemical engineers to BASF's workforce would be of crucial importance, he said, not only to the company's future but to the future of the entire global economy. He explained in the Chemical Market Reporter interview, "It is estimated that almost 90 percent of all industrial innovations are based on investments that originate from the chemical industry" (May 26, 2003).
TESTS AND CHALLENGES
The global downturn that began in the early 2000s caused problems for BASF and its management. In the period between 2001 and 2004 profitability in the North American sector fell abruptly. When he was appointed to the chairmanship in 2003, Hambrecht addressed the situation by ordering 1,200 job cuts across the United States. Although the company's half-year earnings were up 1.2 percent over the same period from the previous year—to about EUR 832 million—BASF suffered from the fact that oil prices did not drop at the end of the Iraq war as many had anticipated. Also purchases of chemical products were not as high as had been anticipated because many customers chose to reduce their inventories before reordering.
From the beginning of his tenure at the head of BASF Hambrecht focused his attention on increasing profits and using cutting-edge technology to improve both production and profitability. BASF responded to the loss of revenue in 2003 by improving efficiency in its 50 North American plants, reducing costs by about $100 million. In a second phase Hambrecht planned to consolidate operations and eliminate some plants; the board member Klaus-Peter Lobbe noted that determining which plants would be closed or consolidated would depend on both the profitability of individual sites and their potential for growth. One area of possible development, Lobbe explained, lay in inorganic chemicals, such as the chemicals used in manufacturing pharmaceutical drugs and industrial plastics. In Process Engineering (September 24, 2003), Hambrecht promised that BASF would remain committed to production and perhaps even expansion at its North American facilities—but such expansion would take place only "on a more stable basis."
Hambrecht's attention to profit and to the company's bottom line paid big dividends for BASF during the first two years of his tenure as chairman. As part of his business strategy he gave instructions to limit capital expenditures to areas where profits after taxes and expenses exceeded the original capital investment—in other words, to limit business growth to areas of certain profitability. However, he also emphasized the need to explore the business potential of new, emerging technologies, including nanotechnology, where processes occur at the molecular level; materials science, for the development of more efficient, tougher materials; energy-management technologies, wherein energy consumption is made more efficient; and biotechnology.
As a symbol of BASF's new approach, in 2004 Hambrecht revealed a change to the corporation's logo—the first such change in nearly two decades. While the company retained the block letters that had come to signify stability and reliability in the chemicals industry, it added two complimentary squares in front of its acronym. The two squares, said Hambrecht in a Process Engineering article, represented the corporation's commitment to the success of its partnerships and collaborations. According to Hambrecht, the company's new motto—"The Chemical Company"—reflected its commitment to maintaining the standards of its past while planning for the future. The chairman stated in Process Engineering (September 24, 2003, "With this claim we make it clear what we are proud of: what we are and want to remain—the world's leading chemical company."
See also entry on BASF Aktiengesellschaft in International Directory of Company Histories.
sources for further information
Alperowicz, Natasha, "BASF to Build PO Plant Using Hydrogen Peroxide Route: Develops Adiponitrile Process," Chemical Week, March 28, 2001, p. 21.
"BASF Names Hambrecht to Succeed Strube," Chemical Week, July 24, 2002, p. 7.
"Board of Executive Directors: Dr. Jürgen Hambrecht," BASF, http://corporate.basf.com/en/ueberuns/fuehrung/vorstand/hambrecht.htm.
Bogler, Daniel, "Germany Comes Clean: Companies Are Putting the Past Behind Them by Revealing the Truth about Their History," Financial Times, December 20, 2002, p. 13.
"Corporate Reporting: Eras in BASF's History," BASF, http://berichte.basf.de/en/2004/datenundfakten/unternehmen/geschichte.
"Downstream Moves," Oil and Gas Journal, August 19, 2002, p. 44.
"Focus 2003—Chemical Leaders: CEOs and Companies: Gaining Executive Mindshare: U.S. and European Chemical CEOs," Chemical Market Reporter, May 26, 2003, p. FR8.
Fuhrmans, Vanessa, "BASF Chief Is Cautious in Outlook for His Industry," Wall Street Journal, April 17, 2003.
"Jürgen Hambrecht Appointed as New Chairman of BASF," Chemical Market Reporter, July 22–29, 2002, p. 6.
Milmo, Sean, "BASF Prepares for Tough Conditions during War," Chemical Market Reporter, March 24, 2003, p. 6.
Minchin, Timothy J., Forging a Common Bond: Labor and Environmental Activism during the BASF Lockout, Gainesville, Fla.: University Press of Florida, 2002.
"New BASF Chief Prepares U.S. Job Cuts," Process Engineering, September 24, 2003, p. P3.
"Old Letters, New Strategy for BASF," Process Engineering, January 31, 2004, p. P3.
Tremblay, Jean-François, "C&EN Talks with Jürgen Hambrecht," Chemical & Engineering News, April 5, 1999, p. 17.
—Kenneth R. Shepherd