It’s a grim day in Central Scotland as 800 people face losing their jobs at Grangemouth. It’s impossible to overestimate the effect that Ineos’s decision to close the petrochemical plant, which shares the site with Scotland’s only refinery, will have on the Scottish economy.
There are still some hopes that Ineos can be persuaded to reverse their decision, which was based on the Unite trade union’s rejection of changes to terms and conditions of employment. A further meeting takes place this morning. Unite are reported to have offered major concessions. Logic would dictate that if they’ve been offered what they want, Ineos should keep the plant open. We will have to wait and see.
If Ineos don’t change their minds, efforts will shift to finding a new buyer for the site
It’s been good to see Scotland’s two governments working together very collaboratively, broadly saying the same sorts of things. In the UK government, three Liberal Democrats share responsibility for this: Ed Davey, Alistair Carmichael and Vince Cable. Here’s what they and others have been saying:
Carmichael: UK Government’s considerable resource will work to find a solution
New Secretary of State for Scotland Alistair Carmichael has a major crisis to deal with just 2 weeks into the job. He will be helped by very detailed contingency plans for just this sort of situation by his predecessor Michael Moore whose contribution on this was acknowledged by Ed Davey yesterday.
Alistair had this to say after the news broke:
This is grim news for the 800 workers whose jobs are now at risk; for the town of Falkirk and surrounding area. It is also very bad news for Scotland as a whole. Grangemouth is a very important part of Scotland’s industrial portfolio. I want the focus of Scotland’s two governments in London and Edinburgh now to be on doing all we can to save these 800 crucial jobs.All the way through this process both sides have said they believe the plant has a future and I also believe that to be the case.If the owner is not going to be Ineos, then it must be someone else. This is too essential a site for our economy and capability here in Scotland to let it slip away without exhausting every avenue we can in order to keep it open.The UK and Scottish Governments are working closely together on this issue and continue to share information. I will be taking forward further discussions with the UK Department of Business, Innovation and Skills and my colleague Vince Cable to help scope out the potential for a new buyer. We will put the UK Government’s considerable resource and experience to work towards a solution for Grangemouth.There is no doubting the seriousness of this issue for Scotland’s economic portfolio.
He was interviewed on Newsnight Scotland last night. You can watch him here.
Davey: We are ready to assist with infrastructure guarantees
It is critical that we do everything possible to keep the petrochemicals plant and the refinery working. I am clear that, working with the Scottish Government, we will do everything that we can to get negotiations going again. I understand from INEOS this morning that it will be talking to Unite today, not just to tell it about the shareholders’ decision, but to discuss the issue in more detail. Let us see what comes from those talks. Should they not be successful, and should INEOS decide to walk away, of course we will be very much involved in trying to find a future. The Scottish Government have a key role for the petrochemicals plant in particular, and we will work with them on that. A lot will depend on the process that the INEOS management at the petrochemicals plant decides to follow. It says that it will talk to liquidators, but it has other options, so we will be in close contact with it as it develops those options. There may be alternatives with INEOS’s involvement. Whatever happens, we will be active in seeking an acceptable solution for the people involved and the Scottish economy…
…I remind the House that Her Majesty’s Treasury has been working with INEOS to look at potential infrastructure guarantees, should INEOS make a decision to invest in the petrochemicals plant. My right hon. Friend the Chancellor of the Exchequer has developed innovative infrastructure guarantees and we stand ready to assist with that. I know that the Scottish Government have plans to assist as well.
Moore: Closure would be biggest act of industrial vandalism in decades
I think that everybody here accepts the seriousness of what is at stake in this dispute, but we are in danger of downplaying the impact that closure would have not only on Grangemouth, Linlithgow and central Scotland, but on Scotland’s economy and, as other Members have said, that of the United Kingdom. The closure of the Grangemouth complex, or indeed any part of it, would be an act of industrial vandalism the scale of which we have not seen in decades. Given the seriousness of that, I welcome what my right hon. Friend and the Secretary of State for Scotland have been doing, including working with the Scottish Government. Can he assure me that he is willing, before we give up on negotiations, to work with the Scottish Finance Secretary and anybody else and to meet the key players around a table so that we do every last possible thing before thinking of this being sold to somebody else?
Ed Davey’s reply was:
I will first pay tribute to my right hon. Friend, who worked extremely hard on this case when he was Secretary of State for Scotland. Much of the contingency planning we have in place is down to his hard work, for which I am grateful. He knows better than anyone what the impact on the Scottish economy would be if part or all of the Grangemouth plant were to close. I can reassure him that we—I am sure that I speak for the Scottish Government on this—will do everything we can together, leaving no stone unturned, to try to reach a resolution.
* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings
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20 Comments
Is the party line that we fund a private company to carry out its business – I don’t think I would be comfortable with that
800 workers at Grangemouth whi earn an average of £50,000 pa voted not to have their pension changed from fixed benefits to fixed contributions and instead voted to make themselves redundant.
They deserve to lose their jobs.
David Evershed
What is wrong with people earning £50000 per year?
On your logic then we should reduce all the salaries and pension rights for people earning over that on manufacturing sites because it is clearly not right!
Only people wearing suits or living in the South East should expect that.
Do you know anything about petrochem and what they do at all?
The situation is far more complex that your pitiful post states – both sides have made some mistakes but it shows how powerless unions now are – although reading here sometimes you would think they are still all-powerful – and how multinational corporations can force things through like this ruthlessly with no consideration for the impact.
Ineos have been paying too high wages for years but this has enabled them to hoover up all the talented engineers from this part of Scotland on the promises of higher wages and better conditions then suddenly decide it is no longer viable. Suggests to me a management that doesn’t know what it was doing. They could easily have started off offering different conditions to new recruits like lots of other firms have done but they didn’t think that far ahead.
An all round shambolic situation and neither side comes out with much credit – imagine though the fact that a Swiss-based company that took on what was once a state asset can close down 8% of the manufacturing capacity of a country without a second thought…..and I ask you who is holding the country to ransom?
The new conciliatory talks must succeed between Unite and the owners of Grangemouth, as this petrol-chemical and refinery serves as a template for a burgeoning Economy in the whole of the the UK and a workable solution that protects all jobs is paramount to achieve..
By all accounts there is a serious over capacity in refining petroleum and several refineries have been closed in Europe recently. As this is a fairly recent development the company cannot be blamed but the Union and workforce should have known this. They gambled with their jobs. Let us hope there is a satisfactory resolution which is fair to the workers, the company and the nation. The Union will have lost credibility whatever the outcome. We need strong unions to challenge the might of big companies but they have to be realistic in what they can achieve. However profitable a company is at present it will not stay that way for long if it were to carry unprofitable parts which could drag the whole thing down.
nvelope “there is a serious over capacity in refining petroleum and several refineries have been closed in Europe recently. As this is a fairly recent development”
No, it isn’t. In particular fractionating refineries, (without cat crackers) have been unviable in Europe for over 20 years. Exxon shut its refinery in Milford Haven a long time ago – it is now an LNG import terminal.
b crombie
” a Swiss-based company that took on what was once a state asset”
It was never a state asset, though it was an asset of BP , in which the government had a controlling interest until 1979. Of more interest is the fact that that the huge INEOS company is two-thirds owned by one man (Jim Ratcliffe) as a result of a succession of deals.
@bcrombie
“What is wrong with people earning £50000 per year?”
You asked a question, to which the answer is “nothing”, assuming that £50,000 pa is what is needed to recruit and retain suitable staff.
My assumption is that it is significantly in excess of what is needed. Do you know different?
Simon Shaw
Why is that your assumption?
What do you base it on? Do you know who works at places like that and what their employment structure looks like?
Goldman Sachs average salary is £250k per annum – is that too much as well?
Funny how people like you talk about market dictating salaries when it is for bankers in the South but engineers working in a dangerous industry aren’t allowed a fraction of that
@bcrombie
I take that as meaning that your answer to my question “Do you know different?” is No.
The reason for my assumption that £50,000 pa is significantly in excess of what is needed to recruit and retain suitable staff is because of the involvement of the Unite union.
@bcrombie
So you are claiming that Unite has had no impact on the wage levels paid at the Grangemouth plant?
I thought you claimed that it was perfectly permissable for workers to use their “industrial muscle”. Your problem is that you can’t have it both ways.
Wouldn’t the fairest thing have been for Unite to withdraw from involvement in negotions on the remuneration package so that we could all see whether the claimed average of £50,000 pa is significantly in excess of what is needed to recruit and retain suitable staff?
@bcrombie
“I do know the area, I do know the industry – you are ignorant of both”
Are you talking about Goldman Sachs and their average salaries of £250k per annum? Are you saying they are paid too much?
@bcrombie
Are you seriously unaware that Unite are the union involved at Grangemouth? A surprising failing on the part of someone who claims to “know the area and the industry”.
I notice that you failed to answer my key question as to whether you believe that Unite has had no impact on the wage levels paid at the Grangemouth plant?
You state that “workers at the refinery are paid more than in other industries but oil/gas is known for that.” Why do you think that is, and why do you justify that?
Workers at Goldman Sacks are paid more than in other industries. Do you justify that as well?
@Simon Shaw
“My assumption is that it is significantly in excess of what is needed. Do you know different?”
My assumption is that because Unite are involved, the “average salary” is a distortion and that many probably earn less. Without more data giving salary distributions, skill groups, age and longevity of service we can draw no real conclusions. If however this really is an average salary, then I suggest that Unite seems in this to have done its members proud, I suspect this might be the case given the level of support (through the ballot) for the Unite negotiating stance.
From viewing the news reports it would seem that many workers have given long service and hence have gained pay rises over the years and being on a final salary pension scheme are now ‘expensive’ workers – hence the reason for the changes to the pension scheme ie. cap liabilities accrued todate; but this is just speculation.
Likewise we don’t know the details of the wage cut package, because Unite have kept quiet about details, I assume it is not an across the board cut, but more nuanced.
I see no reason why people shouldn’t get £50+k pa, at least we know that they are paying more in taxes than they are getting in return, hence are net contributors to the Treasury. A concern for government must be that these employees who will potentially have minimal draw on the state in their retirement (due to the final salary scheme), actually do just that…
What has been clear that whilst this dispute has hit prime time news, both sides have been remarkably restrained in giving out any real details of just what exactly is on the table and their opinions about the other side…
@Roland
“If however this really is an average salary, then I suggest that Unite seems in this to have done its members proud, I suspect this might be the case given the level of support (through the ballot) for the Unite negotiating stance.”
Yes, that’s exactly my point. I said that I suspected that £50,000 pa is significantly in excess of what is needed to recruit and retain suitable staff. You say that “Unite seems in this to have done its members proud”.
It’s just two ways of saying the same thing.
How can a system in which one man can apparently threaten the livelihood of so many employees, and hundreds more in terms of knock-on effects, without being charged with econ omic sabotage and terrorism and placed on trial for his life, possibly be tolerated? There seems to be a blindness when it comes to recognising white-collar crime, where these threats,like the and criminal misrepresentations of bankers, are passed over as accepted self-ineterest, miss-selling etc. What society faced here was far worse than stealing from a looted shop, or even than swindling a million or two in “benefits”. It was I suggest a small example of the large-scale operation of our current kleptocracy.
@Michael Parsons
The problem with prosecuting Len McCluskey as you suggest is that it would be seen as “anti-Trade Union legislation”. If we want to live in a free society we have to allow for the fact that, on occasions, people will behave very foolishly.
Simon Shaw
Do your satiric talents know no beginning?
Jennny Barnes
At my age 20 years is recent . We do not know how long the company has been trying to make the site more efficient but we do know that Unite is keen on confrontation and workers generally assume that they are entitled to whatever wages they have traditionally received regardless of any change in circumstances. There was a rapid change of heart when the owners decided to close the plant.
Michael Parsons
If a plant is losing money then the owners have to do something about it like reducing costs. Running refineries seems a rather more socially useful activity than looting shops. I f they are losing money then someone has to pay for that – hopefully not the taxpayer. I do not wish to pay for the losses of mismanaged industries which we used to have to do and still do in respect to things like Network Rail. I can see another vast loss for the taxpayers to support when they get their hands on HS2 – that is why so many people oppose what would possibly be a great asset.
@ nvelope 2003
Perhaps shareholders are more interested in raking off profit, and in tax avoidance, than in efficiency, don’t you think? We still lack a high tax rate (95%) on distributed profits, which would encourage profit retention and real (not financial)investment in UK, after all. Owners would gain by boosted capital share-values if they made real investments instead of the proposed asset-stripping,; and pension funds could be compensated out of the resulting tax-growth (where and if these pension organisations deserve it; and have not willfully bought watered stock from what seems to be criminal banking operations, and where they have also been forced to regurgitate the proceeds of ‘contribution holidays’; and beencompensated for the wretched Brown’s shafting them with his investement tax).