Grangemouth plastics plant to shut, 66 jobs to go

The Dow plant in Grangemouth. Picture: Complimentary

Management at Dow Chemical informed shocked staff of their decision to close the entire Scottish operation.

It will also impact dozens of contractors.

The announcement, just days before Christmas, comes eight months after the US-based owners of the world’s largest chemical company had placed its plastic additive-producing site on the market.

The plant is currently supplied its raw materials from neighbouring Ineos, which itself recently faced an uncertain future until unions relented to management plans for the massive petrochemical plant.

A Dow spokesman said: “Today, it was announced to employees at Dow’s manufacturing site in Grangemouth the business’s intention to cease manufacturing and shutdown the facility.

“The proposal to close the site, which makes MBS (Methyl Methacrylate Butadiene Styrene) Impact modifiers used in the packaging and building and construction industries, is the consequence of ongoing economic uncertainty, which has resulted in a significant deterioration of demand.

“When coupled with increases in manufacturing costs, competition, fluctuating raw material and energy prices, the facility has been operating in an increasingly challenging environment.

“Only after a comprehensive review of the Dow Plastics Additives business strategy, was the proposal to close the site developed.

“It was based on financial performance, challenging economic conditions and ongoing weak demand.

“In January 2014, the site will enter a period of consultation with employees where they will discuss the closure proposal in more detail.”

Peter Hodgson, a former plant manager at Dow, said: “The staff have just been told. They are shocked as they believed the operation had a future.

“It seems a strange decision, especially as the company only put the plant up for sale earlier this year. This plant is a major exporter, supplying North America and Europe.”

Earlier this year, Dow Chemical had announced changes to the way it managed its business interests around the world and stated it was placing its plastic additive-producing site in Wholeflats Road, Grangemouth, on the market.

Dow moved to Grangemouth when it acquired the site from Rohm and Haas in 2009 as part of a global $15.4 billion buyout. The deal, which took a year to finalise, looked to have secured the future of the plant in Wholeflats Road.

However, Dow, which employs 46,000 people in 160 countries, stated changing times led to a review of the way it operates.

The company had previously entered into an earlier sale of assets to a Kuwaiti firm for their plastics, polyethylene and polypropylene production facilities to help fund the purchase of 30 sites worldwide from Rhom and Haas.

The Kuwaitis, though, pulled out of the deal and left Dow with debt levels that they needed to bring down, so the decision was taken to sell all seven plastics additive sites in Europe.

It was only two years ago Dow had announced the construction of additional equipment to both expand capacity and advance its technology at its Grangemouth manufacturing facility.

The expansion, they said, would significantly increase the capacity of methyl-methacrylate butadiene styrene (MBS) based additives to better serve the growing demands of Dow’s global customer base.

A statement at that time said: “As a global leader in innovation, Dow is committed to offering the most technologically advanced additives in the world.

“The additional capacity of MBS products in Grangemouth, Scotland, demonstrates Dow’s commitment to investing in its downstream performance businesses. The facility will increase Dow’s capacity for MBS-based additives by 10,000 tons per year and serve customers globally.

“With this expansion, Dow is increasing not only the total capacity, but also the technical capabilities of the plant to produce the most sophisticated MBS products in the world for our customers, and the timing of this capacity increase will help us keep pace with increasing global demand for quality MBS additives.”

In October, more than 800 jobs at the Ineos petrochemical plant were saved after the Unite union accepted a rescue package from the company.

Ineos had initially announced that it was closing the petrochemical site after proposed changes to pay and conditions were rejected by the workforce.

That decision also left a question mark over the long-term viability of the neighbouring oil refinery.

But the union performed a turnaround and said it would accept the company’s survival plan. The deal includes a three-year pay freeze, ending of the final-salary pension scheme and other changes to terms and conditions.

Ineos immediately reopened the plant and the adjoining oil refinery and announced plans to invest £300 million in the site.

A Scottish Government spokesperson said: “Dow Chemicals are an important employer in Scotland.

“The Scottish Government understand this will be an anxious time for employees and their families, especially at this time of year. Officials will continue to engage with the company at this time.

“The Scottish Government is ready to offer all possible support to affected employees through our Partnership Action for Continuing Employment (PACE).”

Murdo Fraser MSP said: “First and foremost my thoughts are with the 66 workers who are losing their jobs so close to Christmas.

“Energy intensive industries, like Dow, are facing unprecedented strains due to escalating energy costs. Reducing this burden on business must be a priority for Governments.

“If an indigenous supply of shale gas can be sourced then energy intensive industries could have a surer footing.”