Ineos refinery cost cuts plan put to Grangemouth workers

Grangemouth is claimed by its owners to be "financially distressed"

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Workers at the Grangemouth complex are being told about changes the plant's owners want to see in pay and pensions.

Ineos said Grangemouth is "financially distressed" and must reduce costs.

But Unite the union has hit back with an analysis of accounts suggesting Ineos is in better health than it is saying.

Unite said it has "blown a hole" in the claims of losses, and that the Swiss-based company has been "pulling the wool" over the country's eyes.

On Wednesday, Ineos said Grangemouth "is shut and remains shut", despite Unite's strike threat being called off.

The company is putting proposed contract changes to the workforce, expecting an answer by Monday. The company will discuss the complex's future with shareholders on Tuesday.

ineos

Speaking on BBC radio's Good Morning Scotland programme, Ineos director Tom Crotty denied any suggestion that the company was holding its workforce to ransom.

Mr Crotty said: "That is certainly not the case. Let's be clear here - the reason the site is shut down today is because Unite called a strike for the weekend over the Stephen Deans issue.

"The reason we are not reopening it is because we have no assurances from Unite they will not continue to force us to close by having more industrial action.

"We will keep talking to the union as well, but we are going to talk directly to our employees and put it to them.

"We are going to talk to the workforce about the survival plan and ask them to support that survival plan, because we believe very, very strongly that Grangemouth has a great future but only if we can make the changes that are required to make it competitive. We are in a global market here. If we don't make changes it will not have a future."

Ineos said it was conducting direct consultations with employees on the changes to pensions and terms & conditions.

It said the changes had already been highlighted in the company's Survival Plan.

They said this would include "a top quality money-purchase pension scheme to replace the unaffordable final salary scheme" and maintain their salary (typically £55,000 per year).

Ineos also said it wanted "a more modern approach to workplace representation".

Calum MacLean, Ineos Grangemouth (UK) chairman, said: "This is D Day for Grangemouth.

"The site is safely closed whilst we consult the workforce. If we can get the changes we want, the company has committed to investing a further £300 million in the site which will help secure its long term survival."

'Collusion' claim

In a separate development, Labour MP Michael Connarty claimed in the Commons there may have been "some sort of collusion" between the government and Ineos to enable the company, he said, to "break the workforce".

The Falkirk East and Linlithgow MP said it was clear that "planning" went into the shutdown of the refinery in order to ensure that fuel supplies to Scotland could continue if the dispute is prolonged.

Mr Connarty claimed that Ineos chief executive Jim Ratcliffe was the "equivalent of a Russian oligarch" and may have been involved in "collusion with this government to store up supplies so he can take on the workforce and break them".

'Negative earnings'

Ineos has supported its claims of "financial distress" with evidence from its auditor, PwC.

This showed negative earnings of £110m between 2010 and this year, and capital expenditure of £468m. This has been described as a loss of £579m.

However, Unite asked Richard Murphy, an accountant and tax campaigner, to assess the claims, and to find out more about Ineos' finances.

He concluded that the claim of a £579m "loss" is misleading, as it includes capital spending and is cash flow.

Mr Murphy admitted that it is hard to find which parts of the Ineos business cover operations at Grangemouth.

But his assessment of the company called Ineos Chemicals Grangemouth Ltd suggests that the company has added special one-off measures to make the accounts look bad, including the write-off in valuation of the petro-chemical plant.

Mr Murphy says a deferred tax allowance of £117m implies that the company expects to make around £500m in profits over several years.

His assessment says the pension fund gained £7m, sales grew 50% and operating profit grew by 56%.

'Contempt'

Unite says the findings "blow a hole" in the Ineos financial claims. Pat Rafferty, regional secretary of Unite, commented: "We believe the company is using fancy accounting tricks to pull the wool over the country's eyes and treat us with contempt.

"The company gives the impression it is broke and it may need to close the Grangemouth site, but we believe this is just a ploy to justify attacking its workforce and to demand government handouts".

An Ineos source confirmed that the complex structure of its finances means the analysis has failed to account for internal transfers and loans and that it is "naive".

The BBC understands that a report on the investigation into Stephen Deans, the union representative whose case initially triggered the Grangemouth dispute, will be delivered to Ineos by legal advisers on Thursday.

The company has said previously the investigation would be completed by 25 October.

Operating normally

Meanwhile, BP says the Forties Pipeline System, which brings oil and gas ashore from more than 50 North Sea fields, is continuing to operate normally at the moment.

The pipeline and BP's processing plant at Kinneil depends on steam from the neighbouring Ineos facility at Grangemouth.

A spokesman for BP said: "At the moment the Kinneil plant and the Forties pipeline are operating normally."

But as the shutdown of Grangemouth continues, BP could not guarantee that this would continue to be the case.

The spokesman said what happened next was a matter for Ineos.

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