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Baseefa Ltd

Ineos announces Grangemouth to close

23 October 2013

About 800 direct employees plus subcontracted staff will lose their jobs as Ineos today announces the permanent closure of the petrochemical plant at Grangemouth, but the refinery next door will remain open. Liquidators are expected to be appointed in a weeks time.

Ineos said in their statement: 

'Following the breakdown of the ACAS talks last week and Unite’s refusal to provide a no strike guarantee, the company decided to approach the employees direct.

Employees were asked to support the changes necessary to save the business. Management held direct meetings with all employees to explain the very serious nature of the problem. 

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.

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.  

Calum MacLean, Grangemouth Petrochemicals chairman, says, “This is a hugely sad day for everyone at Grangemouth. We have tried our hardest to convince employees of the need for change but unsuccessfully. There was only ever going to be one outcome to this story if nothing changed and we continued to lose money”.

As a result of this decision, the directors of the petrochemicals business have had no option but to engage the services of a liquidator.   It is anticipated that a liquidation process will commence in a week.

Petroineos will now decide on whether to restart the refinery.   This will be primarily dependent on the removal of the threat of further industrial action.'
 
Calum MacLean, Grangemouth Petrochemicals chairman, adds,”We still struggle to comprehend what has happened here. The employees were offered a chance to secure substantial new investment in the company, preserve their jobs and keep their salaries. Sadly this will no longer be the case”.


Union Unite says nearly half of the 1350 workforce have rejected the proposed changes as of the 21st October deadline. Ineos last week said that the Grangemouth refinery and petrochemical plant it operates in Scotland can only re-open this week if workers accept cuts in pensions benefits and changes to union representation. 


The Scottish government is now actively seeking a buyer although they will not be moving towards a state owned facility. The company started closing down the plant a week before the start of a 48 hour strike by staff, called by the Unite union over the treatment of a union convenor by the company. Unite called off the strike, but Ineos continued with the so-called “cold shutdown” of the site, despite union protests, confirming that the 210,000 barrel per day refinery was non-operational on October 16.

Ineos then said that it would not re-open until it had a response from workers on proposed changes to staff terms and conditions, changes to union representation and guarantees there would be no more industrial action at the site before the end of the winter.

"The site is safely closed whilst we consult the workforce," Callum MacLean, Ineos Grangemouth chairman then said.

The company has said that the plant is losing £10 million a month and that its survival is dependent on changing to a more secure financial footing. Earlier, Ineos said that without big cost cuts, the site’s petrochemical plant will close by 2017 with the loss of 700 jobs. The union disputes the company's analysis of the financial situation at the plant.

Ineos said it will give workers until October 21 to respond to the new proposals, and make a decision on the plant's future on October 23.

The company said in a statement that the offer is to replace a pension scheme that offers a percentage of salary with one that relies on contributions from employees, in return for a cash payment. It also said: "We want to have new union agreements, one for each business area, which are refining, chemicals and infrastructure," a spokesman said.

Ineos said it is putting the offer directly to workers because the union, with which it has been engaged in a lengthy dispute, has refused to discuss the issues.

Maclean said: "This is D Day for Grangemouth."

"The site is safely closed whilst we consult the workforce. If we can get the changes we want, the company has committed to investing a further £300 million in the site which will help secure its long term survival."

BP said the Forties Pipeline System, which brings oil and gas ashore from more than 50 North Sea fields, is continuing to operate normally at the moment. The pipeline and BP's processing plant at Kinneil depends on steam from Grangemouth.

If the shutdown of Grangemouth continues, BP said it could not guarantee that this would continue to be the case.


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