Germany’s BASF Plans MDI Production Expansion at Geismar Plant

By Nate Valyo, International Business Writer

The German chemical company, BASF recently announced plans to double their production of methylene diphenyl diisocyanate (MDI), a product commonly used for insulation, automotive, construction and packaging goods, from 300,000 metrics tons per year to 600,000 metric tons per year.

The $150 million multi-phase construction project is set to begin this spring at one of the company’s North American production facilities in Geismar, Louisiana. Officials at BASF say the new expansion will create 15 direct jobs, and Louisiana Economic Development estimates that 70 indirect jobs will be created because of the investment. In addition, an estimated 180 construction jobs will be created at peak production. BASF currently employs nearly 1,200 employees full-time, along with over 500 contractors. The new facility is expected to be completed by the end of 2020.

“Louisiana excels in chemical manufacturing because of our outstanding infrastructure, a great business climate and a manufacturing workforce that leads the U.S. in productivity,” said Louisiana governor, John Bel Edwards. “We’re proud that BASF is choosing to reinvest in its Geismar complex, which is one of the biggest economic drivers in Louisiana and one of the leading sources of highly skilled manufacturing jobs. Ascension Parish and the Capital Region of Louisiana will be major beneficiaries of this important modernization project.” Within the past decade, the German company has invested over $800 million in projects in Ascension Parish (the Louisiana equivalent of a county). The state offered a heavy incentive package to the company, which includes a $1.65 Modernization Tax Credit, to be claimed over the course of five years.

The need for a larger production facility comes at a time of high demand for MDI. BASF, along with its top competitors, Covestro, Wanhua, and Huntsman, had grossly underestimated demand shifts and potential earnings, which resulted in a significantly low output. BASF’s goal is to reach 600,000 metric tons produced per year, doubling its current output. Senior vice president Tom Yura stated, “If we want to meet those needs, then expanding in Geismar is the right way to do it.” Yura predicts that the company would meet its goal by the mid-2020s, assuming demand and financial markets remain steady.

“This new plant further strengthens our position as a leading supplier of chemistry for sustainable solutions,” Yura further stated. “This investment also demonstrates our strong commitment to our employees, our community and our presence in Louisiana.”

Satisfied with the Germany-based company’s expansion, CEO of the Ascension Economic Development Corporation, Kate MacArthur said, “AEDC has been very fortunate to have a great relationship with BASF and we are proud of the economic impact BASF has on our community. . . Manufacturing jobs are the backbone of our parish, and we appreciate the continued investment BASF is willing to make in the Geismar facility and the quality employment opportunities that the investment creates.”

“The investment that BASF is making in their Ascension Parish site is further proof that Ascension is a great place to do business,” said Kenny Matassa, Ascension Parish President. “In addition to the jobs they provide and the tax revenue they generate, they have given back to the community through support and sponsorships. BASF has always been a great corporate citizen.”

MDI is an extremely versatile plastic material used to create polyurethane foams, which are used mainly in home and appliance insulation, lightweight automobile parts, and for energy conservation in buildings.

 

A version of this article appeared in the Tuesday, February 13th print edition.

Contact Nate at

nathaniel.valyo@student.shu.edu

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