Squaring up to the union in battle of Grangemouth
CaLUM MacLean was still at school in the 1970s when Britain’s industrial landscape was blighted by bitter trade union disputes. But as chairman of petrochemicals giant Ineos’s operations in Grangemouth on the Firth of Forth, he finds himself embroiled in a bruising confrontation all too reminiscent of those days.
Swiss-based Ineos, which hoovered up assets from the likes of BP and IcI to become one of the Uk’s biggest manufacturing concerns, i s now squaring up against the muscle of the country’s biggest and most powerful trades union, Unite.
Each side is accusing the other of playing Russian roulette with the future of the site and its workers.
The stakes are certainly very high. The bare-knuckle fight with the union comes at a time when Grangemouth – the biggest manufacturing site in Scotland – is fighting for its very survival.
MacLean, 49, delivers a stark warning that the plant will have to be shut within three years, with heavy job losses, unless the company secures a government loan guarantee and agrees workplace reforms with the unions.
‘around 800 jobs at the plant would certainly go in 2017,’ he says, adding that many more contractors and jobs in supply chain firms could be affected.
‘The impact on jobs will be pretty huge. It would also have a big impact on the petrochemicals industry in the Uk.’
a separate oil refinery on the site that Ineos jointly owns with Petro china would also be hard hit, he says.
‘Those two businesses are highly integrated. You could run one without the other, but anything that happens to the petrochemicals plant will cause a lot of pressure on the refinery.’
The repercussions could be felt much more widely, as Grangemouth supplies petrol and diesel across Scotland and the North East of England. analysts are warning of possible shortages and panic buying if a solution cannot be found.
The return of the aggressive, old-school industrial showdown also threatens to damage the coalition’s hopes of boosting Uk manufacturing and to deter potential foreign investors.
But to understand why relations between the company and the union have sunk to such a low ebb, we need to spool back to the internecine Labour Party row in the summer, over the selection of a candidate in Falkirk to replace the bellicose MP Eric Joyce.
Having faced down Labour leader Ed Miliband in the Falkirk affair, Unite has turned its fire on Ineos, accusing the company of ‘reckless decisions’ that may put the Uk’s energy supplies at risk.
MacLean’s would-be nemesis is shop steward Stevie Deans, who in addition to his role as a full-time union convenor at Ineos (paid by the company, according to MacLean) is chairman of the Falkirk constituency Labour party.
AN internal Labour inquiry cleared Deans of any wrongdoing in the vote-rigging allegations. But Ineos launched a separate i nvestigation i nto whether he had misused company facilities and it is this probe that has set off the threat of industrial action.
Unite l abels the company’s treatment of Deans ‘sinister victimisation’ and claims there is a ‘culture of fear’ at the site.
But MacLean says: ‘ Mr Deans was accused by the Labour Party of trying to select a Unite-friendly candidate. He was cleared by the police and the Labour Party and reinstated, but that is nothing to do with us.
‘We have been investigating whether he was r unning a campaign for the Labour Party on Ineos time, using our facilities and our databases.
‘We could see it was quite a sensitive issue and said we would do a third-party investigation conducted by a law firm, which we will have later this month.’
He adds: ‘ Mr Deans was suspended, but after two or three days we received calls from [Unite leader] Mr Len Mccluskey saying we had to lift the suspension or there could be a strike, so we brought him back to work.
‘We are not treating him any different to anyone else. We cannot give preferential t r eatment because he is a union convenor. We will treat him fairly.’
One point on which both sides can agree is that the Grangemouth site is in dire financial straits. It has been running up multi-million-pound losses for several years, forcing Ineos last week to write down the value of the petrochemicals plant to zero.
MacLean says the Deans dispute is a ‘parallel issue’ to the financial problems. But so long as the management and the union remain at loggerheads over Deans, attempts to secure its future remain paralysed. The core financial problem, he says, is that costs at Grangemouth, including labour, are too high.
‘We have many assets globally and this site is one of our most expensive. One reason the cost base is quite high is because we have a very expensive pension fund that we acquired when we bought the assets at Grangemouth from BP in 2006. On top of that, the site has lost £150m a year for the past four years.’
The staff retirement scheme has fallen into a £200m deficit and, as a consequence, the company wants to close down the final salary fund, which has 1,500 members, and replace it with a ‘good quality’ plan linked to the stock market.
‘We don’t deny we are asking the employees to change to a less attractive pension, but the scheme they have now is totally unaffordable,’ MacLean says.
‘We know we have to remain competitive as an employer, so we are not cutting salaries. The average salary in Scotland is £26,000. a typical operator at Grangemouth is earning around £55,000 in basic salary plus shift allowances, plus we have to put in another £30,000 or so for their pension.’ Unite says it has gone to great lengths to resolve the row and claims it is Ineos management that is being intransigent.
as the dispute drags on, the clock is ticking for Ineos, which is facing a dwindling supply of gas from the North Sea to feed the petrochemical plant.
To solve this problem, the company wants to build a terminal to take delivery of cheap gas from the US, at a cost of £300m.
It has applied to Westminster for a £125m loan guarantee and to Holyrood for a £9m grant, with the company writing a cheque for the balance.
Some might question whether Ineos, a multi- billion- pound international concern, is really a worthy recipient of aid from the Uk taxpayer.
Particularly so, since it moved its headquarters to Switzerland in 2010 to reduce its tax bill, after the Labour government refused to allow it to defer payments at the peak of the credit crunch in 2008.
MacLean says: ‘No one can suggest Ineos has not done its bit to try to support manufacturing in the Uk. We have put £1bn into Grangemouth since 2006 and it has lost £500m of cash.
‘It is not logical, what the unions are trying to do. They are potentially threatening the whole site by trying to hang on to benefits that are far outside what anyone else in the country is getting. Hopefully they will come to the table this time.’
Logical or not, the union has a great deal of leverage. Even a short strike can cost the company millions, because it takes up to a fortnight to make the site safe again after a stoppage.
and what chance Britain’s aspiration to be a modern manufacturing powerhouse if the trades unions can call the shots as they did back in the Seventies?