BASF, the world’s largest chemicals group, said yesterday that it was halting or scaling back production at nearly 200 plants after a huge decline in demand.

The group said that a collapse in orders from industries including car makers, textile manufacturers and construction had forced it to shut 80 factories temporarily and reduce production at a further 100.

About 20,000 workers in Asia, North America and Europe will be directly affected by the production cuts, including 5,000 at its headquarters in Ludwigshafen, Germany. BASF employs 95,000 people worldwide.

Jürgen Hambrecht, BASF’s chairman, said that conditions had deteriorated sharply in recent weeks. “We already drew attention to the difficult economic situation at the end of October. Since then, customer demand in key markets had declined significantly. How the coming year will develop is difficult to foresee. BASF is preparing for tough times.”

A spokesman for BASF, whose materials are used in products from fertilisers to electronics, and plastics to pharmaceuticals, said that its UK operations, which employ about 1,200 at sites in Alfreton, Derbyshire, Deeside and Swinton, South Yorkshire, could be affected but would escape the worst of the cuts.Instead, the brunt would be borne by the group’s sprawling chemical complexes in Ludwigshafen, Antwerp, Belgium, Nanjing, China and Kuantan, Malaysia.

Dr Hambrecht said that the company, the world’s largest chemicals manufacturer by revenues, with sales of almost €58 billion in 2007, would miss its 2007 earnings. He said that some staff would be put on enforced holidays over Christmas to help to reduce stocks. “We are responding flexibly to market developments and are acting quickly.” The company’s warning, which sent its shares plunging by nearly 16 per cent yesterday to €21.40, was only one of several gloomy announcements.

A string of British companies with heavy exposure to the downturn in the property market also announced plans to cut staff. They include Ennstone, the concrete supplier, which said that it would trim around 10 per cent of its workforce. The company gave warning that it was coming “under significant pressure from the lack of new development and housebuilding activity”.

SIG, a Sheffield insulation company, said that it was planning to cut 900 jobs. It will cut 7 per cent of its workforce and shut 65 trading sites to try to save £25 million next year. MJ Gleeson, the housebuilder, said that it would launch a cost-cutting plan. There were growing fears for 300 jobs at a Hoover factory in South Wales producing washing machines and tumble driers. The company is in talks with representatives of the 337 staff employed at the plant in Merthyr Tydfil, which has been operating for 60 years. The announcements came a day after Wolseley, the building supplies company, said that it would cut 2,000 jobs in Britain.

In America, Boeing said that it would cut about 800 jobs at its Integrated Defense Systems facility in Wichita, Kansas, because of the delayed US Air Force tanker replacement programme. Scott Strode, vice president and general manager of Boeing Wichita said: “We also are taking steps to restructure our business in order to lower our rates and become more affordable for customers.”

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive