Grangemouth: Unions accuse Ineos over taxes

THE bitter dispute at Grangemouth oil refinery has taken a new twist after union leaders urged Revenue and Customs to investigate the tax affairs of the site’s owners.
Alex Salmond is to hold talks with management at Grangemouth. Picture: Phil WilkinsonAlex Salmond is to hold talks with management at Grangemouth. Picture: Phil Wilkinson
Alex Salmond is to hold talks with management at Grangemouth. Picture: Phil Wilkinson

Unite said it had concerns that Ineos Group’s arrangements “obfuscate the true position” of its activities.

Meanwhile, Ineos said the site, which it has shut down because of the dispute, would restart if Unite gave an assurance there would be no industrial action while the company consults workers over a survival plan.

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Earlier, the Scottish secretary of the Unite union said workers would “happily” agree not to strike until the end of this year, in return for employers reopening talks about future pay and conditions.

Pat Rafferty’s comment came after First Minister Alex Salmond called for a “truce deal” between unions and operator Ineos, which has shut down the plant on safety grounds in the face of threatened industrial action.

Ineos director Tom Crotty said the company would be ready to reopen the complex on the Firth of Forth if it received formal assurances from Unite that there would be no strike between now and the end of December. The union has called off a 48-hour strike planned for Sunday.

Mr Rafferty told BBC Radio 4’s Today programme: “We would happily sign up to having no more strikes until the end of the year.

“We will enter happily into an agreement right now that will take us to Christmas, where we will have no industrial action and no ballots. In return for that, all we ask the company to do is sit down with us at the negotiating table over the next 45 days and look to try and seek agreement.

“We are willing to say no strikes until the end of December and we welcome the First Minister’s input. What we are saying is, in return for that, the company should sit down with us over the next 45 days. The plant should be turned on. There’s no reason right now why that plant shouldn’t be turned on, because there’s no industrial action.”

Mr Rafferty said the no-strike offer until the end of 2013 was on the table at recent talks at conciliation service Acas, but he said Ineos “walked away” from those talks and moved to impose “detrimental terms and conditions” on workers.

Salmond calls for talks

Mr Salmond last night called for concessions from both management and unions in a bid to break the deadlock in the bitter industrial dispute over the Grangemouth oil refinery and petrochemical plant. In a major intervention into the row, the First Minister has asked owners Ineos to fire up the plant and return to normal production following days of closure.

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He also urged Unite to guarantee in writing that it will not strike and will ensure a period of normal working until 31 December.

Mr Salmond predicted “there will be a long way to go” before finding a resolution, but that the concessions would provide the right atmosphere for the necessary negotiations to build a secure future for the facility.

He said last night: “It’s a truce deal to get the plant up and running.

“It’s not for me to tell Unite or the company or the workforce how they should negotiate or consult on their terms and conditions, that’s for them to do, but I want these negotiations to take place against the background of a plant that is operating as opposed to that is cold.”

He added: “From my discussions tonight with both parties in this dispute, I believe both are sincerely committed to create a great future for Grangemouth. I believe that while there will be a long way to go, acceptance of my proposal tonight would be an essential first step in this process.”

His comments followed hours of emergency talks with the management and representatives of the workforce in Edinburgh in an attempt to resolve the dispute that has shut down the site.

Ineos was yet to give their response last night while Unite simply said that “his intervention assists us in reaching a settlement”.

But a senior Scottish Government source last night told The Scotsman each side had privately indicated to the First Minister that they would agree to his suggestion.

Survival plan

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Earlier, Ineos outlined details of a survival plan for the petrochemical arm of the facility, including a pay freeze, an end to the final salary pension scheme and financial support from the UK and Scottish governments.

Unite, which called off a 48-hour strike this week, accused Ineos of using “menacing” tactics and said it was considering legal action over the cuts.

“It is increasingly clear that the company is deliberately generating a dispute and hiding behind fancy accounting to attack its own workforce,” Unite said.

Ineos insisted there would be no decision on reopening the petrochemical plant before a meeting of the company’s shareholders on Tuesday. It also said government financial backing must be a key part of any rescue package, adding it did not “know what would happen” if ministers refused to approve a bail-out.

The First Minister took time out from the SNP conference in Perth to return to Edinburgh for the talks last night. Speaking ahead of the talks, he insisted Grangemouth “as an industrial facility has a great future”.

The First Minister went on to say that “contingency plans have been well-laid to ensure” fuel supplies continued to reach Scotland’s petrol stations.

Pat Rafferty, Unite Scottish secretary, said following the talks last night: “The First Minister’s involvement underlines Grangemouth’s importance to the Scottish economy.

“We hope his intervention assists us in reaching a settlement that secures the future of such a vital national asset.

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“Going forward the company needs to lift the fear of it’s ‘sign or be sacked’ ultimatum which is hanging over the workforce and negotiate a transitional plan for the site.”

The company yesterday continued to refuse to restart operations at the Grangemouth site, which was shut down ahead of an expected strike, despite Unite having abandoned a 48-hour stoppage planned for this weekend. A statement issued by Ineos said the firm was “being encouraged to restart the complex immediately” but said it was “unable to do that on safety grounds” until the union had agreed a no-strike deal for the rest of the winter.

Company executives met staff at Grangemouth yesterday, and gave them until Monday to consider its proposals on changes to pensions and conditions.


Letters have been sent to the homes of Grangemouth workers detailing the changes to their contracts, including ending their final salary pension scheme, freezing pay and bonuses, reducing shift allowances and new agreements with unions – including a move to part-time conveners.

The letter said: “We expect to seek individual employee agreement to the final changes, and, where agreement is not forthcoming, to implement the changes in due course by issuing notices of termination and offering new contracts of employment to those employees which incorporate the new terms.”

Unite said staff had been told to accept the new terms and conditions by 6pm on Monday, which amounted to a “sign or be sacked” ultimatum, and that it was considering legal action.

Mr Rafferty said: “This is cynical blackmail from a company that is putting a gun to the heads of its loyal workforce to slash pay, pensions and jobs. We are considering taking legal action over the company’s menacing tactics and urge members not to be threatened into signing their livelihoods away.

“It is increasingly clear that the company is deliberately generating a dispute and hiding behind fancy accounting to attack its own workforce.”

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Ineos claimed the dispute with Unite over the treatment of union convener Stephen Deans had cost it £20 million at a time when it said Grangemouth was losing £10m a month.

Mr Deans was involved in the row over the selection of a Labour candidate in Falkirk, where he is chairman of the constituency party. He was suspended by Ineos and later reinstated, but is facing an internal investigation by the company over issues linked to the Falkirk affair.

An Ineos spokesman said the company was “not in a position to say what the shareholders would do if the workforce say no” and refused to say whether the petrochemical plant would reopen if staff rejected the pay and pensions offer – or if they accepted the plan.

The spokesman would only say that shareholders “would be more sympathetic” to investing in the site if workers agreed to accept the jobs and pension cuts.

Ineos has also refused to say whether it would reopen Grangemouth if the two governments refuse to back a bail-out.

The Ineos spokesman said: “The crucial thing is that the workforce agrees. The Scottish Government and UK government have put out positive signals that they will support this venture. If all that happens with the three parts of the plan, then it would be hopeful.”

Ineos said yesterday it was unable to restart the complex on safety grounds. “It takes days to shut down properly and it takes weeks to bring it back up again,” a statement from the firm said.

Ineos chairman Calum Mac-Lean said: “This is D-Day for Grangemouth. The site is safely closed while we consult the workforce. If we can get the changes we want, the company is committed to investing £300m in the site, which will help secure its survival.”

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Paddy Gourlay: Upgrading to diesel could save Europe’s refineries

The decision by Ineos to keep the oil refinery and petrochemical plant closed unless the union starts to play ball leaves Scotland precariously on the brink of losing another industry.

Behind this dispute lies the economic reality that European refining is broke. Plants have been closing across the continent for several years, and they are going to keep closing.

French oil major Total, Europe’s largest oil refiner with 13 plants, saw profit margins for this section of its business plunge to their lowest in more than ten years between July and September.

Since 2008, a string of closures has seen 1.7 million barrels a day of oil refining capacity closed, according to figures from the International Energy Agency. The UK lost the 220,000 barrel a day Coryton refinery, despite its proximity to London.

“Faced with stronger extra-regional competition, falling demand, dieselisation, stricter environmental legislation and outdated capacities, European refineries are clearly the weakest link in the global refinery system,” noted David Wech, chief analyst at the oil group JBC Energy.

Part of the problem is that European oil demand is waning. More efficient cars and boilers and a switch to green alternatives have seen consumption slip. Also, Europe is struggling to export its petrol. Many of its 120 or so refineries were built in the two decades after the Second World War and are geared towards petrol production.

Europe produces about 1.1 million barrels of surplus petrol a day. In the past, this was largely exported to the United States, but that market has dried up thanks to its rising shale oil production.

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Conversely, Europe is short of heating oil and diesel, and imports about 800,000 barrels a day. About 1.2 million barrels a day of up-to-date refining capacity will come on line in the Middle East over the next two years. There is also competition from Russia and India.

Ineos claims Grangemouth has lost £576 million over the last four years. But it is not looking to close the plant. Its survival plan includes a £300m investment, and pension changes.

There is money to be made if European refineries can be upgraded to produce diesel.But several plants still face the axe over the next few years.

• Paddy Gourlay is an energy analyst and freelance reporter.

Gregor Gall: Ineos using the old tricks to get what it wants – a broken union and compliant workers

The current Ineos dispute is a classic case of corporate blackmail and union-busting combined.

A company that has expanded rapidly in a short space of time by buying other companies’ operations is now in the process of cutting labour costs in order to try to square the circle. It wants an increased return on its investments and to pay off the debt incurred in buying the new operations. The surest way of doing so is to reduce workers’ terms and conditions.

It’s using all the oldest tricks in the book to break the union and undermine pay and pensions.

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First, it targets one of the union’s officials on spurious grounds. To get rid of him would decapitate and demoralise the union. Next, it pleads poverty. Then it presses the nuclear button by going for a cold shutdown, effectively saying to the workforce: “Unless you give us these concessions, don’t expect to have a job as the temporary shutdown just might become a permanent one.”

In making its case, it has dispensed with talking to Unite because Unite won’t agree to give the company exactly what it wants. It tries to paint Unite as being unreasonable, despite the union frequently offering talks at Acas and being willing to discuss some concessions.

Instead, it walks away from talks and informs workers directly: here’s the deal – we want your individual responses by Monday because we’re meeting our shareholders on Tuesday. This is a metaphorical gun to their heads.

No doubt the company hopes that when workers consider their response over the weekend, the wives, partners, parents and families will be saying: “Don’t you think it’s better to have a job (even with these concessions) rather than no job at all?”

If Ineos wanted to change terms and conditions in an equally brutal but more conventional way, it could have issued Section 188 redundancies that lawfully allow a period of redundancy consultation whereupon all workers are re-hired on inferior terms and conditions. Hundreds of public and private employers have done this since the financial crash.

It’s not nice, but it does not mean derecognising Unite. If Unite does give in, this will be the beginning of a slippery slope. The workforce will not be in a position to refuse requests for further concessions.

Given an inch, Ineos will gladly ask for a mile.

• Gregor Gall is professor of industrial relations at the University of Bradford.