New BASF Coatings site in Russia one of Europe’s most modern production facilities

Date: 31 July 2008

First international paint manufacturer with its own production facility in growth market Russia As the first international paint manufacturer to operate in Russia, BASF Coatings has now marked the launch of operations at its new production site in the country at a ceremony.

The new facility at Pavlovskij Posad, 60 kilometers east of Moscow, has an annual production capacity of 6,000 tonnes of paints (basecoats and clearcoats). Production capacity can be expanded to over 20,000 tonnes at any time. BASF Coatings is a leading producer of automotive OEM coatings in Europe. With this site, one of Europe’s most modern facilities, it can now supply the automotive industry in the growth market of Russia locally and thus promptly. At the Pavlovskij Posad site a staff of 50 will be employed in production, the quality test lab, the warehouse, the workshop and administration.

Russia - European leader in new registrations of passenger cars

The latest figures prove that the Russian market is booming. For instance, in the first six months of 2008, Russia led the number of new registrations in Europe – ahead of Germany. Russia is already considered to be one of the world’s four largest growth markets and in the coming years, will be expanding. This will make it Europe’s second strongest national economy, after Germany. "These statistics, as well as the fact that all of the key carmakers, including the Asian OEMs, are either already represented in Russia or will be establishing their presence there shortly, prompted us to make this investment," said Juan Ximénez-Carrillo Gerber, head of BASF Coatings’ Automotive OEM Coatings unit for Europe, addressing the employees and representatives of the government and authorities attending the opening ceremony for the new facility. The new site’s products and processes attest to the successful combination of quality, environmental protection and ecology. The first batches of the colors Milky Way and Quarz have been produced for customer AvtoVAZ, who manufactures the Lada at its Togliatti site. They and the first clearcoat filled at the site are both examples of the high standards of quality, Ximénez-Carrillo Gerber added.

"Our next task involves expanding our existing successful customer relations and winning lots of new customers for our company. Our preliminary work and our achievement to date give me reason to be very optimistic," said Semen Belyakov, head of BASF Coatings in Russia. And of course the production numbers will be developing in line with this. "We are well prepared for the future and will respond to our customers’ needs promptly," added Ximénez-Carrillo Gerber.

Site passes audit, meeting automotive industry’s high standards

The quality of the products and production processes from the Pavlovskij Posad site has been certified. The site meets the automotive industry’s high standards for quality for suppliers with regard to products and processes in every respect. This was the conclusion of neutral auditors after they intensively tested the site of a period of several days. The Pavlovskij Posad site thus passed the DQS audit to test conformity with automotive standard TS 16949. As part of the process, certification according to ISO 9001:2000 was also successfully obtained. "For our current and potential future customers, this means they can absolutely rely on the quality," explained Stanislav Zabnev, Site Manager of the Pavlovskij Posad site.

First “Greenfield” facility

For BASF Coatings, the new Russian site is the first Greenfield facility since the construction of the Guadalajara site 25 years ago. "Greenfield construction" refers to completely new construction of a production site on previously unused land. "The construction of the production site was based on professional teamwork on the part of the experts at BASF Coatings in Muenster, BASF SE in Ludwigshafen and our Russian employees. This was complemented by the right expertise of engineers and market specialists, and even more, by a high level of stamina. It was real work in a successful network," said Piotr Galitzin, head of the BASF Business Center Russia, praising the "construction team's" commitment.

The fact that BASF is extremely welcome in this region outside Moscow was demonstrated by the presence of high-ranking guests from the world of politics at the opening ceremony, Vladimir Kozyrev, Minister for Industry of the Moscow region and Igor Varfolomeev, head of the Pavlovskij Posad municipal administration. They were both enthusiastic about the new site, which is an ideal addition to the city's new industrial park.

"The local production capacity now provides a good basis to help shape the dynamic development of the Russian automotive market," said Ximénez-Carrillo Gerber. Speaking to the employees and all the visitors at the opening ceremony, he added, "We are now in a great position in the region. Now it’s time to roll up our sleeves. In addition, soon a number of visitors will be here who are interested in seeing a new, state-of-the-art site. If we win them as new customers and maintain our already existing customer relations, we will meet our objectives."

About BASF Coatings

BASF Coatings, the Coatings Division of the BASF Group, develops, produces and markets a high-quality range of innovative automotive OEM coatings, automotive refinishes and industrial coatings as well as decorative paints. BASF has significant market positions in the Coatings sector in Europe, North America, South America and the Asia/Pacific region. In 2007 BASF Coatings achieved global sales of almost 2.6 billion euros. The internet address of BASF Coatings is www.basf-coatings.com

About BASF

BASF is the world’s leading chemical company: The Chemical Company. Its portfolio ranges from oil and gas to chemicals, plastics, performance products, agricultural products and fine chemicals. As a reliable partner BASF helps its customers in virtually all industries to be more successful. With its high-value products and intelligent solutions, BASF plays an important role in finding answers to global challenges such as climate protection, energy efficiency, nutrition and mobility. BASF has more than 95,000 employees and posted sales of almost €58 billion in 2007. BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA) and Zurich (AN). Further information on BASF is available on the Internet at www.basf.com.