Grangemouth dispute: Ineos says petrochemical plant will close

Some workers at the Grangemouth plant give their reaction to the closure

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The petrochemical plant at the giant Grangemouth complex in central Scotland is to close with the loss of about 800 jobs, owner Ineos has announced.

The news was broken to the workforce at the plant and its associated oil refinery at a meeting on Wednesday.

Ineos said a decision on whether to restart the refinery would be taken once the "threat of strike action" had been removed.

Scotland's first minister said the closure "matches our worst fears".

The Unite union described the closure as "catastrophic" and said it had made further proposals in a "last-ditch effort" to keep the plant open.

It remained hopeful, along with the Scottish and UK governments, that the company would reverse its decision.

Unite is to present its new proposals to Ineos at a meeting on Thursday morning.

However, the company said while further meetings would be held in the coming days, there were "no prospects" of returning to conciliation service Acas to revisit the decision to close the petrochemical plant.

The closure of the petro-chemical plant puts the refinery at risk, and is a major blow to many manufacturers in which the plants have been a vital part of the supply chain.

Official figures today showed refined oil and chemicals were one of the main drivers of growing Scottish exports this year. That sector, in which Grangemouth has been dominant, was worth £3.7bn last year.

If much of that is thrown into reverse, with imports required instead of exports earnings, it will have a significant impact on the cost of sourcing materials from elsewhere, and potentially on the UK's trade figures.

Among other big questions that arise: what, if anything, is the government doing about security of refining supply?

About 800 of the 1,370 people directly employed at the complex work at the petrochemical plant, with many more working there as contractors.

The dispute at the plant, near Falkirk, began over the treatment of a Unite union official and escalated to the threat of strike action.

This was dropped but the operator shut down the plant and issued an offer of revised terms and conditions in a "survival plan", which was rejected by union members.

Workers leaving the staff meeting, which lasted about 20 minutes, told the BBC the decision to close the plant was "shocking".

One member of staff claimed that Grangemouth Petrochemicals chairman Calum Maclean had been "smiling" when he made the announcement. Mr Maclean has since denied the allegation.

Another 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 at points, 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."

First Minister Alex Salmond says he is not prepared to accept the closure

Ineos said liquidators for the petrochemical plant would be appointed within a week.

Ineos chairman and founder Jim Ratcliffe had said at the weekend that if the petrochemical plant closed it was likely the refinery would go as well.

The refinery provides most of the fuel to Scotland, the north of England and Northern Ireland.

In a statement released after the staff meeting, Ineos said: "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.

At the scene

Hundreds of workers at Scotland's largest industrial complex filed in to hear their fate in near silence.

When they emerged after a short meeting on the grounds of the Grangemouth plant some seemed stunned and were reluctant to speak.

Others were much more vocal, accusing Ineos of betrayal.

A few workers in bright orange dirt-stained overalls even seemed close to tears: tough men facing a difficult future, dreading the call to tell their families.

But this isn't just a disaster for the workers. According to the Scottish government, the complex as a whole contributes around a billion pounds a year to the economy.

Ministers in Edinburgh and London are now working furiously to find an alternative future for the petrochemicals plant.

If they can't it will be a long hard winter for many workers here in Grangemouth.

"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."

Unite's Scottish secretary Pat Rafferty said the announcement "has confirmed our fears that this was the intention of Ineos all along".

He added: "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 are tantamount to economic and industrial vandalism.

"Make no mistake, one man is holding this workforce and this country to ransom and that man is Ineos owner Jim Ratcliffe. The ball is now in the court of Jim Ratcliffe and the respective governments in Edinburgh and Westminster and we await their responses."

Scottish First Minister Alex Salmond said the closure of the petrochemical plant was the "outcome that matches our worst fears".

Mr Salmond spoke again to management and unions to try and seek further resolution. He also convened an emergency cabinet meeting with relevant ministers to discuss the on-going situation.

Background: Grangemouth dispute

  • The dispute first flared up in the summer over the company's treatment of Unite official Stephen Deans, who has worked at Grangemouth for more than 20 years
  • He was accused of trying to rig the selection of a Labour candidate for the Falkirk seat at Westminster but was later cleared
  • But Ineos has been carrying out its own investigation into claims Mr Deans improperly used the refinery for union business. Its findings are due to be published on Friday
  • Unite members at Grangemouth had been due to strike last Sunday over Mr Dean's treatment
  • Ineos had closed the plant ahead of the industrial action and said it would not be restarting the facility even after the strike was called off
  • It said Grangemouth was losing huge amounts of money and faced going bust unless staff agreed to a survival plan
  • The proposals included changes to pay and conditions. They were rejected by about half of the site's workers
  • The decision that the petrochemical plant should close was taken at a meeting of Ineos shareholders, including chairman and founder Jim Ratcliffe, on Tuesday

Afterwards he said there was still room for negotiation between both parties, particularly since Unite had put forward fresh proposals to the company.

Mr Salmond said: "We should give time for the proper consideration of this offer, especially given that we know an agreement between both sides was very close last week, and the prize is a viable future for Grangemouth.

"However, given that the current position is the one we always feared possible given the stalemate between the sides, if an agreement between Ineos and Unite is not possible then we will continue to pursue our contingency options of finding a buyer for the site."

Ministers - including the Scottish Secretary Alistair Carmichael and the Energy Secretary Ed Davey - were to meet in London to decide on a response to the decision.

Mr Davey said he was "saddened" to hear of the closure, particularly because of the impact it will have on the workforce and local community.

He added: "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."

Mr Davey said fuel supplies continued to be delivered as usual and there was no current risk of disruption to supplies.

He added: "I continue to work very closely with the Scottish government, and other colleagues across government to share information with them."

aerial view of grangemouth The refinery and petrochemical plants employ a total of 1,370 workers and many more contractors

However, Downing Street has indicated there will be no bailout for Grangemouth, and that it was up to the company and the trade unions to resolve the dispute.

Workers at the site had been given until 18:00 on Monday to agree to the changes, which included a pay freeze and downgrading of pensions.

Unite said half of the 1,370-strong workforce had rejected the proposed changes to contracts.

The company has said the Grangemouth site, which has been shut down for a week because of the dispute, is losing £10m a month.

The petrochemical plant is said to be losing £50m a year.

Ineos had said it was ready to invest £300m in Grangemouth, but only if workers agree to the new terms and conditions.

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