Union to make last-ditch bid to avert plant closure at Grangemouth
Dark day for Scottish industry as Ineos axes 800 jobs
UNION bosses will make a last-ditch attempt to stop the closure of the Grangemouth petrochemical plant today and avoid the loss of 800 jobs. The move came after Ineos, the owners of Scotland’s biggest industrial powerhouse, announced its intention yesterday to axe the facility.
The announcement also raised fears for the future of Scotland’s only oil refinery, as the company suggested that it might not be able to survive on the Grangemouth site on its own.
The news sparked calls from politicians in both parliaments for further talks between both sides of the dispute to save the petrochemical plant,
But last night it emerged that Unite union officials may be ready to accept some of the conditions laid down by the owners on pay and pensions in the hope the decision to shut the plant will be reversed.
However, there were serious doubts as to whether Ineos would accept any last-minute offer after making their decision to close the facility, which they say is losing £10 million a month.
The announcement of the closure saw the firm accused of “industrial vandalism”, amid concerns that
the decision will devastate Scotland’s fragile economic recovery.
Stunned workers were told their jobs would go as the bitter dispute between management and trade unions came to a head yesterday morning.
First Minister Alex Salmond said the closure must not be allowed to happen and has stepped up the hunt for a new buyer as a “matter of urgency”.
The Scottish and Westminster governments have offered multi-million-pound funding packages in an effort to save the plant and called for both sides to keep talking.
There are growing fears that the entire complex could be facing closure, threatening the jobs of about 3,000 permanent staff and contract workers at Grangemouth and up to 10,000 posts in the wider local economy which rely on the complex.
Ineos site manager at Grangemouth, Gordon Grant, said: “What we’re facing now is a stand-alone refinery, losing all of this synergy, of the products, the gases, but also the synergy of the services and the utilities.
“The financial burden will be much greater going forward on that single refinery.
“We are less than 24 hours into this decision. We are very clear that we don’t know all the answers, that [the viability of the refinery] is one of the answers we don’t know.”
Workers were given the grim news at a meeting with Ineos chairman Calum MacLean. The decision to close was blamed on the rejection of a new deal on reduced terms and conditions aimed at saving the loss-making facility.
Staff left the meeting expressing shock at the move.
One worker said afterwards: “I feel sick. It’s gone. There’s no livelihoods left and we don’t even know if we’re going to get redundancy out of it. I hope they’re happy with themselves.”
Although the oil refinery has not been closed down along with the petrochemical plant, Ineos said a decision to restart production at this site, which has been shut for the past week following the threat of imminent industrial action, will depend on that threat being lifted.
The firm also wants staff to commit to the controversial changes to pay and conditions which were rejected by about 680 of the 1,350 permanent employees last week. It says the lossmaking complex needs £300m of investment. Liquidators will be appointed within the next few days to start running down the plant.
The entire site is worth about £1 billion a year to the Scottish economy and accounts for approximately 2 per cent of the country’s GDP.
Ineos director Tom Crotty confirmed that the closure of the petrochemical plant was “unhelpful” for the refinery.
The petrochemical plant effectively buys the by-products from the oil refining process at the refinery, to make chemicals which are then used in plastics and pharmaceuticals.
“I’m not accepting it’s going to close. It’s too important” Alex Salmond
Mr Crotty said: “It doesn’t help the refinery – the refinery is in a worse financial position than it was before.”
Ineos majority shareholder Jim Ratcliffe also warned at the weekend that the refinery could struggle to survive if the petrochemical plant closed.
Mr Salmond insisted last night that the petrochemical plant must be saved. “The closure of any part of the Grangemouth complex would be a most enormous blow to the Scottish economy,” he said. “We can’t really countenance that loss. I’m not accepting that Grangemouth is going to close – we can’t accept that. It’s too important.”
The Scottish Government has been talking to potential buyers for the plant. “We will now be actively exploring this as the main option as a matter of urgency,” added Mr Salmond.
But any new owner would need to invest £300m to upgrade the facilities and deal with a looming £200m pensions black hole.
Mr MacLean said: “If Mr Salmond wants to continue this business he will have somebody who is prepared to take £50m of losses, prepared to put in £300m of capital in the business in order to build the infrastructure to receive the feedstocks, and he will have to have someone who has feedstock to bring in. I can’t think of any combination he would [find] able to do that.
“he may choose to put someone in front of us. We’ll try anything we can do, but I don’t see where that is coming from.”
Scottish Secretary Alistair Carmichael also said the plant must not be allowed to close.
“If the owner is not going to be Ineos, then it must be someone else,” he said. “This is too essential a site for our economy here in Scotland to let it slip away without exhausting every avenue we can.”
Westminster’s Department of Business, Innovation and Skills will also help seek a new buyer.
The closure decision followed the passing of a deadline on Monday of a “survival” plan put to employees, asking them to accept a pay freeze, the closure of the final salary pension scheme and changes to other terms and conditions.
Mr MacLean said: “The employees were offered a chance to secure substantial new investment in the company, preserve their jobs and keep their salaries. Sadly this will no longer be the case.”
Unite Scottish secretary Pat Rafferty said workers were “devastated”, adding: “We have made further proposals in a last-ditch effort to stave off these catastrophic job losses, which we believe is tantamount to economic and industrial vandalism.
“Make no mistake – one man is holding this workforce and this country to ransom and that man is Jim Ratcliffe.
“Unite cannot do any more. The ball is now in the court of Jim Ratcliffe and the respective governments in edinburgh and Westminster, and we await their responses.”
Business leaders last night warned of the wider impact on the economy.
Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “This major shock threatens the recovery of Scotland’s economy. The priority now is for key players to ensure a solution is reached which prioritises Scotland’s economic recovery. We need contingency plans in place immediately to ensure a continuous supply of fuel throughout Scotland.”
David Watt, executive director of the Institute of Directors Scotland, said: “I’m disappointed it’s come to this and hope that a solution can be found to keep the petrochemical plant open.
“The closure of the Grangemouth plant has major ramifications for the Scottish economy. It’s important that plants like this are close to centres of industrial activity, otherwise it becomes too expensive for companies to do business.”
THE total breakdown of industrial relations at Grangemouth has left ministers rolling their eyes in dismay in recent days.
Privately, there is deep frustration that a war of words between Ineos and Unite has escalated to such toxic levels, given the high stakes. Both UK and Scottish governments are united – for once – in fearing the consequences if the lights in the vast refinery on the Forth do go out permanently.
And with former Scottish secretary Lord Forysth calling hopes of finding another buyer for the site “a red herring”, both governments know their best chance of avoiding a calamitous closure is to try desperately to patch things up between the union and the firm. Thus, despite the blunt finality of Ineos’s announcement, talks continued yesterday with both.
Neither Alex Salmond in Aberdeen nor Ed Davey in Westminster was taking sides, as they sought to keep the flames at Grangemouth alive. After taking questions in the Commons, Davey spoke to Ineos founder and chairman Jim Ratcliffe, assuring him that Treasury guarantees were still available should the company opt to invest in the plant.
In Scotland, Mr Salmond also spoke to Ratcliffe and to the Unite leadership in a similar vein. Following a Cabinet meeting, Salmond also talked up the prospect of a fresh offer from Unite to Ineos, made yesterday after officials realised their members were facing redundancy. There will be hopes a cooling-off period might allow talks to succeed this time. But that prospect looked unlikely yesterday, as Unite’s Pat Rafferty accused Ratcliffe of “holding the country to ransom”.
If Ratcliffe decides to stick to his course, both London and Edinburgh will then turn to a Plan B, with the aim of finding a new buyer. Both UKTI – the UK body which brings in investment – and Scotland’s “GlobalScot” are understood to be on the case, to find a suitable partner from around the world.
The trouble is, when asked to name any potentially interested parties yesterday, politicians were distinctly vague. That suggests the real hope of any 11th-hour solution lies in diplomatic activity by the country’s political leaders.