Oct 23 2013
Thousands of jobs are under threat after a bitter dispute over pay and conditions led to a shock decision to close a huge petrochemicals site.
Owners Ineos said it will appoint liquidators within the next few days to start running down the site at Grangemouth in Scotland, describing it as a "hugely sad" day.
Ineos said it had made the decision after workers were split 50/50 on a survival plan for the site, which included accepting a pay freeze and changes to pensions and other terms and conditions.
A bitter war of words flared between Ineos and the Unite union, which described the closure as "catastrophic".
Around 800 workers are employed on the site, with an estimated 2,000 working for contractors and other firms supplying the site with goods and services.
The adjoining oil refinery will remain open, but the company said it had not yet decided whether to restart production after the site was closed last week because of the dispute.
Unite said it had made new proposals in a "last-ditch" effort to save the site, while the Scottish Government issued a fresh appeal for the two sides to hold talks to resolve the crisis.
Workers were given the grim news at a meeting with Ineos chairman Calum MacLean, and left expressing shock at the move.
The closure decision followed the passing of a deadline on a survival plan put to employees which asked them to accept a pay freeze, the closure of the final salary pension scheme and changes to other terms and conditions.
The company said the plant, which has been shut down since last week because of the dispute, is losing £10 million a month.
Ineos had said it was ready to invest £300 million in Grangemouth, but only if workers agreed to the new terms and conditions.
The firm said that following the breakdown of talks at the conciliation service Acas last week and Unite's "refusal" to provide a no strike guarantee, the company decided to approach workers direct.
"Employees were asked to support the changes necessary to save the business. Management held direct meetings with all employees to explain the very serious nature of the problem.
"The company made it clear that rejection of change would result in closure. Regrettably, the union advised union members to reject any form of change.
"The outcome of the employee vote on the company's survival plan was a 50/50 split.
"Within this, almost all of the administrative staff voted for the company's plan but a large majority of shop floor employees voted to reject it.
"The shareholders met yesterday to consider the future of the business following the result of the employee vote.
"Sadly, the shareholders reached the conclusion that they could not see a future for Grangemouth without change and therefore could no longer continue to fund the business," said a statement.
Mr MacLean said: "This is a hugely sad day for everyone at Grangemouth. We have tried our hardest to convince employees of the need for change but unsuccessfully. There was only ever going to be one outcome to this story if nothing changed and we continued to lose money.
"We still struggle to comprehend what has happened here. 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's Scottish secretary, Pat Rafferty, said workers were "devastated" by the announcement, adding: " Discussions have taken place with the company this morning and will continue over the course of the day. 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 the Ineos owner, 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."
One worker, who did not want to be named, said: "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."
The worker, who appeared close to tears, said he could only listen to about 10 minutes of the meeting, before he felt he had to leave.
He went on: "There are folk in there have a husband and wife work here. That's it. Folk will be lucky if they have a house at Christmas."
On the impact of the move on Grangemouth, he said: "It's gubbed (ruined). Everything, burger vans, everything's gone."
Energy and Climate Change Secretary Edward Davey said: " While respecting Ineos's right to make this decision, it is regrettable that both parties have not managed to negotiate a fair and equitable settlement that delivers a viable business model for the plant.
"Even at this late stage, I urge Ineos to continue dialogue with the workforce, and Government will offer help and support with this.
"Ineos have informed us that the refinery will stay open and the management wish to restart full operations as soon as possible.
"We stand ready to help with discussions between the management and the union to ensure this can happen.
"Fuel supplies continue to be delivered as usual and there is no current risk of disruption to supplies.
"I continue to work very closely with the Scottish Government, and other colleagues across Government to share information with them."
TUC general secretary Frances O'Grady said: "This is a savage blow to the Grangemouth workforce and the wider Scottish economy. This is irresponsible capitalism at its worst.
"The Government always has contingency plans when workers go on strike, now ministers need to show they are as well prepared when owners go on permanent strike."
Scotland's First Minister Alex Salmond convened an emergency cabinet meeting, saying: "T his announcement by Ineos is hugely disappointing. It is, however, the position we always feared as it became apparent that the stalemate was not going to be broken.
"It has been a growing danger since the plant was shut down last week and the emergence of a virtual deadlock between workers and management over the weekend.
"This is the outcome that matches our worst fears, which is why we urged getting the plant fired up instead of lying cold.
"I will be speaking again to management and unions today to try and seek any further resolution we can. In preparing for this extremely difficult position we have been pursuing the contingency of potential buyers - we will now be actively exploring this as the main option as a matter of urgency.
"The Scottish Government strongly believes the site has a positive future and we will continue to work with the UK Government and all other parties concerned to find a solution that supports the workers affected and the wider Scottish economy."
Unite and Ineos have been embroiled in a bitter dispute for weeks, initially over the treatment of Unite convenor Stephen Deans, who was involved in the row over the selection of a Labour candidate in Falkirk, where he is chairman of the constituency party.
He was suspended, then reinstated, and is facing an internal investigation, which is due to report on Friday.
The dispute widened to the future of the entire site, with Ineos saying it was losing £10 million a month.
AA president Edmund King said: " The AA is concerned with the impact of this refinery closure. The European commodity trading houses have been predicting the loss of five to six refinery plants over the next two years.
"In March/April of last year, with the closure of refineries and the impending start of the US motoring season, wholesale prices went up by 20%, adding 8p to 10p to a litre of petrol. The spike was short-lived because US drivers cut back and some of the refineries were bought. However, the damage was done and a new UK petrol record (142.48p a litre) was set."
Prime Minister David Cameron's official spokesman said: " We would continue to urge both parties who have been involved in the dispute to try to find a way to continue their dialogue.
"Even at this stage we hope that a way forward could be found."
Asked whether there was a possibility of the plant being nationalised, the spokesman replied: "No."
Asked what contingency arrangements had been made in case petrol supplies were halted, the spokesman said: "Fuel supplies are continuing to be delivered, so that's the actual situation."
Grahame Smith, Scottish Trades Union Congress (STUC) general secretary said: "The behaviour of Ineos is simply disgusting and it reveals the true nature of a feral private equity concern that clearly believes it has no social obligations whatsoever."