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Grangemouth petrochemicals plant reprieved after union climb-down

25 October 2013

On October 25 Ineos petrochemicals chairman Calum MacLean said that the company would keep the Grangemouth petrochemicals plant open after the Unite union confirmed it would now support the company’s survival plan for the site. Maclean said Ineos had invested £1bn in the business and would invest another £300m to secure its future for at least the next 15 years.

Jim Ratcliffe, Chairman of Ineos Group
Jim Ratcliffe, Chairman of Ineos Group

The next step will be a 45-day consultation period with employees and unions about the survival plan for the plant, he said, adding that "very limited redundancies" would need to be made.

Ineos said the £300m would be used to fund ongoing losses and finance the building of a gas terminal to import shale gas from the US to create low-cost ethane, the main feedstock of the petrochemicals plant. Traditional ethane sources from the North Sea into Grangemouth have declined significantly in recent years.

The Scottish government has indicated it will support the company’s application for a £9m grant to help finance the terminal and the UK government has given its prequalification approval for a £125m loan guarantee facility.

Fuel production will resume at the adjacent refinery, also owned by Ineos, after a shutdown of more than a week following Unite’s decision to call a strike over the suspension of a union convenor.

Ineos said Unite had made a "dramatic U-turn" and had agreed to a three-year pay freeze, no strikes for three years, and moving to a "more modern" pension scheme and changes to union agreements on site – including no full-time union conveners. Earlier, Unite's general secretary Len McCluskey said shop stewards had decided to accept the company's survival plan "warts and all" in the wake of the closure decision.

Jim Ratcliffe, the Ineos chairman and majority shareholder, said: "This is a victory for common sense. Unite advised employees to reject change and vote for closure. Thank goodness people finally came to their senses. Grangemouth now has a great future."

Grangemouth is the largest remaining industrial employer in Scotland
Grangemouth is the largest remaining industrial employer in Scotland

“The majority of people there are good guys, very hard-working, who genuinely want Grangemouth to succeed,” he told the FT. “They were led in the wrong direction by Unite. They have a history of listening to their unions, but this time the unions got it wrong and gave very poor advice.”

Ratcliffe said the dispute highlighted the parlous state of labour relations in the UK and the government’s manufacturing policy. “You’d never have a situation like this in Germany,” he said. “Manufacturing needs to be encouraged and putting high taxes [on energy] just frightens manufacturing off.”

Ineos is Britain’s largest chemical company, employing 3,500 people across five sites and with annual UK turnover of £7bn. Apart from Grangemouth, it has plants at Runcorn and on Teesside. The group has global sales of £27.5bn.


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