Suppliers rage as Ineos delays paying bills

Published on Saturday 10 May 2008 14:25

Small firms fear Grangemouth owner's decision will push them to brink as terms are extended.

OIL refinery firm Ineos is back in the firing line over a decision to delay paying hundreds of suppliers, including some who fear it will push them close to the brink.

Ineos, which was hit by a two-day strike last month in a dispute over its final salary pension scheme, confirmed that it was introducing the change to its payment terms and was in discussions with suppliers.

But the owner of one firm, which is owed almost 2m, said a letter came out of the blue to say payment would be delayed from last week to early July.

Some claim that contracts have been pared back and the number of staff they now employ at the site have been reduced since the dispute ended and that the real reason for the change in payment terms is to replenish Ineos's battered cash balance.

"We are getting permits to work for a few days at a time when we would normally expect to work on a non-stop basis," said Hugh Hayes, executive chairman at engineering services firm Motherwell Bridge, which will now have to wait an extra nine weeks for payment.

"I am not particularly comfortable with that and we will be talking to Ineos about it."

Another supplier accused Ineos of "taking a cavalier attitude with the suppliers who supported the firm during the dispute".

It is understood that the decision to change payment terms from 30 days to 60 was taken by local management, though it is a system that prevails in other parts of the group. A spokesman said the change was not due directly to the effects of the recent strike.

The firm, which runs Scotland's only crude oil refinery, lost millions of pounds because of the stoppage by 1,200 members of the Unite union and by having to run at below capacity for several days afterwards. The strike threatened to cripple the Scottish economy and prompted Government intervention.

Ineos has since withdrawn the planned changes to the pension scheme, which it said it needed to introduce to help finance a 750m investment in the site.

Industry experts claim the strike was the UK's costliest ever dispute, with lost output and losses to the other firms and the Treasury contributing to a 600m total bill.

"We are reducing costs and removing complexity from the business," said the spokesman. "Grangemouth is advising suppliers of the change of payment terms. It is a commercial decision.

"Some are okay about this and we are in discussion with the others. Where there is significant hardship we are happy to discuss it with them. We are trying to be sensible about this. All businesses have to be cost competitive. It is done for no other reason than that."