Ineos chief tells of board ‘shock’ at Unite decisions

It has been announced that the plant will be staying open. Picture: Greg Macvean
It has been announced that the plant will be staying open. Picture: Greg Macvean
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THE man at the centre of the biggest industrial dispute to hit Scotland in many years has revealed there was “shock” in the Ineos boardroom when Grangemouth staff rejected proposals that would have led to a £300 million rescue deal.

Chemical engineer-turned-industrialist Jim Ratcliffe also spoke of his personal anguish at the decision to close the plant, frustration over the tactics of trade union officials and details of the firm’s rescue plans which will secure its future.

In an interview with The Scotsman, he branded claims that potential owners were prepared to take over the loss-making plant as “absurd”.

The plant’s future looks secure for up to the next 25 years after union chiefs relented and accepted the firm’s rescue deal, but the billionaire has made it clear the company was ready to walk away from Scotland.

The decision to close the petrochemical plant at Grangemouth – reversed yesterday – sent shockwaves around the UK. The closure announcement came just two days after workers had rejected a deal on reduced pay and pensions, but the Ineos majority shareholder insisted it was “just a piece of simple reality”.

“Grangemouth is losing a lot of money,” he said. “We’ve invested a lot of money. It continues to lose a lot of money and we have to fund those losses every month.”

The dwindling supplies of North Sea gases are clouding the future of Grangemouth, leaving it running at “half rates” and losing money, meaning it must look to cash in on the shale gas boom in the US. In addition, staff costs, according to the firm, do not reflect the “modern world”, including pensions which amount to 65 per cent of salary.

“All we tried and tried to do was say to people that we are prepared to back Grangemouth, we are prepared to write another cheque for £300m on top of this £1 billion that we’ve already invested but you need to accept some change – and you need to tell us whether you’re prepared to accept some change.

“That change wasn’t a huge amount of change, to be clear. They still get double the national average in terms of wages.

“If you don’t accept change, then we will not be able to spend the £300m. It will get invested in the US or somewhere else where there’s lots of good opportunities, in which case Grangemouth will close.”

The firm has faced accusations that it was out to “get” Unite after a dispute involving convener Stephen Deans, which prompted an inquiry which is due to report early next week.

Mr Ratcliffe, though, said unions have a “proper role” in large organisations and most of Ineos’s European facilities have unions.

He added: “We’ve never been able to sit down with the union there – Unite – and have a conversation about the issues facing Grangemouth.

“In 2008, we tried to start that process and they took us out on strike and it cost us £125m. As a consequence, we weren’t able to begin to make changes and it finished up in a crisis where it’s just losing an awful lot of money and you haven’t been able to make any changes.”

The rejection of the rescue deal by staff on Monday was met with disbelief at a crunch meeting of the Ineos shareholders the following day, he added.

“We were really shocked that 600 to 700 people said, no we don’t want any change, we don’t want your money, and effectively were voting for closure.

“Frankly, we had an awful day on Tuesday trying to decide what to do. In the end we said we don’t really have any alternative, we have to say enough is enough.

“What we’ve seen this week is a very distressing state of affairs. We’ve had people breaking down in corridors, people losing their jobs, their livelihoods their pensions – it’s been an awful week.”

Asked if the plant now has a long-term future, Mr Ratcliffe said: “I think it does.

“We have a challenging three years ahead because we have to put in place this gas terminal which we need to build and we’ve got to put in place contracts to buy US gas and build ships. That’s quite an undertaking over the next three years. We’re then in a position where we can bring in US shale gas to Grangemouth and supplement the North Sea gas.

“At that point, Grangemouth becomes very competitive again. Then I think that assures us of a very good future for Grangemouth and the refinery for the next 20 to 25 years.”

The Grangemouth upgrade will be effectively a carbon copy of a facility which is close to completion at Rafnes in Norway which “cracks” ethane gas to produce ethylene and other raw materials for use in chemicals.

“We’re well down the track there – the ships are ordered, the gases are contracted and the terminals are out of the ground being built, so all we’re doing is replicating that which was very challenging,” he added.

“It was the first time anybody had done that. Nobody else has brought US shale gases out of America. So it’s a road we’ve already trodden, but its still a significant undertaking.”

First Minister Alex Salmond had insisted this week that buyers had been identified and were being courted by Scottish ministers. The Grangemouth refinery’s co-owner Petrochina was among those touted, but this was dismissed by Mr Ratcliffe.

“That is about as absurd as anything I’ve heard,” he said.

“There’s no future for Grangemouth unless you were going to bring the feedstocks in … Ineos is the only company that brought gases out of America.”