Ineos problem requires politicians to co-operate
BATTlING over the future of Ineos’ Grangemouth refinery now switches from the workforce at the site to london, where the companies’ shareholders will decide what to do. By last night, the companies had secured acceptance of the less favourable terms and conditions under which it is willing to employ people from about half of the workforce. Is it enough to ensure it continues?
The immediate fear is that since Jim Ratcliffe, the billionaire and somewhat secretive founder of Ineos, owns 75 per cent of the company and is well known for being a ruthless costcutter (which is why he is a billionaire), he will simply go ahead and close it. Billionaires do not run businesses as loss-making job-providing charities and since Grangemouth is said by Ineos to be losing £10 million a month, he may just decide to cut his losses.
Actually, it is a bit more complex than that. There are two main businesses at Grangemouth. One refines crude oil to produce petrol for cars and trucks; the other is a petrochemical business using some crude oil products and natural gas to make chemicals. The axe hangs rather more heavily over the chemicals business than over the refinery and it is in the chemicals business where most of the work is.
An important shareholder in the refinery, but not the petrochemicals plant, is Petrochina, which bought into it to learn expertise which it can deploy in its own growing oil industry. Ineos did not agree to that sale for altruistic reasons – it needed the capital for investment that Petrochina could bring. So it is possible that the refinery could stay open but the petrochemicals plant could close.
That, however would be dreadful, not just for Grangemouth and the surrounding Forth Valley, but for the Scottish economy. Many thousands more jobs in supplying materials and services to Grangemouth and in the chemicals industry, which uses petrochemical products from Grangemouth, are dependent on the whole complex staying open.
The prospects of another company buying the petrochemicals business range from slim to nil. Ineos has become one of the world’s biggest chemical companies by buying inefficient lossmaking plant and making them profitable. So bad are the industrial relations at Grangemouth, and so competitive is the industry which, globally, has too much capacity for existing demand, that it is highly improbable any other company would think it likely it could turn it round.
Political intervention at this late stage could help, but it is incumbent on the Scottish and UK governments to work together and not to engage in any pointscoring. If there is no positive outcome to this sorry story, the public will view any politician attempting to pin blame on another with as much contempt as the apparently blameworthy. Alex Salmond and Alistair Carmichael must put all differences aside and act and speak as one.