Press Release; 10 April 2015

Sale of BAYER plastics division: Countermotion to ASM

The separation of the plastics division Bayer MaterialScience (BMS) is likely to be at the expense of the employees, especially outside of Germany. In addition, the company is abdicating its responsibility for the safety of the extremely dangerous plants.

The Coalition against Bayer Dangers has introduced a countermotion to the upcoming BAYER shareholder meeting, demanding not to ratify the actions of the Supervisory Board. The motion will be discussed in the meeting which takes place on May 27th in Cologne.

In September, the company bowed to pressure from the financial markets and announced the separation of its plastics division. Investors had demanded this step for years in order to further increase the already double-digit profit margin. Shortly after, the Private Equity firms Advent, Carlyle, Cinven and KKR expressed interest in a takeover.

The separation is likely to be at the expense of the more than 15,000 employees. The workforce had been pressured into making numerous concessions in recent years in order to keep the division in the company. BAYER implemented several "efficiency programs" that destroyed over 2,000 jobs, closed down several sites and cancelled bonus payments. These sacrifices were in vain.

Another problem is the risk of industrial accidents: Bayer MaterialScience operates a number of extremely hazardous plants. The production of polycarbonates and polyurethanes involves enormous quantities of toxic substances such as chlorine, ammonia, carbon monoxide and even phosgene, the former war gas.

Axel Koehler Schnura, founder of the Coalition against Bayer Dangers, that has been monitoring the company since 1978, says: “The future owners will be tempted to continue along the path followed by BAYER and further reduce costs for maintenance, personnel and the fire service. This automatically raises the risk of industrial accidents. It is irresponsible and unacceptable to build highly dangerous plants without assuming permanent responsibility for their safety.”

The union representatives on the Supervisory Board consented to the separation after massive threats from corporate management. Although a job guarantee was negotiated in return, this only applies to the German employees and only for five years. The employees of the Antwerp site had to go on strike in order to get a comparable agreement. In the United States, however, where BAYER denies 95% of the workforce a collective bargaining agreement and has driven the labor unions out of most sites, there is the threat of drastic cuts in social standards.

How things are likely to develop in the long term is clear from the chemicals division of BAYER, which was spun off ten years ago under the name Lanxess. Several thousand jobs have since been destroyed. A large proportion of the workforce had their pay reduced or were transferred to other sites. Over the years Lanxess was split into smaller and smaller pieces. Several units were shut down and others sold off. In view of a possible takeover by Private Equity firms, BMS is likely to experience a similar development.

Moreover, cities like Leverkusen, Krefeld and Brunsbuettel are threatened with a drop in their tax income. Private equity firms tend to charge the purchase price to newly acquired companies as debt to reduce profits and therefore tax payments. Apart from that, finance firms are often headquartered in tax havens.