Grangemouth refinery dispute

What footflaps proposes is just a race to the bottom for everyone.

and losing your jobs and becoming unemployed is not reaching ‘the bottom’?

If the plant was wondrously profitable and the jewel in Ineos’ crown it would still be open. The fact it is shut suggests that the business case wasn’t that strong, in which case why would you keep it running?

you seem to be ignoring the various points many other people have made which points to this decision having already been made regardless.

I’ll go out on a limb and suggest you think teachers are greedy for wanting to preserve their pensions and that they get too many holidays?

I’ll go out on a limb and suggest you think teachers are greedy for wanting to preserve their pensions and that they get too many holidays?

Not at all, and it’s hardly a valid comparison. Teachers are public servants and don’t have to make a profit.

Grangemouth is a privately owned plant in a competitive industry. If it makes more sense for the owners to mothball it than keep it running, that’s what happens…..

you seem to be ignoring the various points many other people have made which points to this decision having already been made regardless.

Given they could just shut the plant regardless, why bother with the hassle of the recent negotiations? Ineos are privately owned, they can pretty much do as they please (within the law) and there is no law saying Grangemouth must stay open. Unite didn’t seem to realise this.

I feel sorry for all the staff. Know how they feel. In this case it seems the company are guilty of gunboat diplomacy. I am a bit surprised at the speed of development. Ineos may or may not be losing money at the plant but seem very keen to shut it.

footflaps – Member

Given they could just shut the plant regardless, why bother with the hassle of the recent negotiations?

Which recent negotiations were those?

There were negotiations, they said they were going on through the night on the news last week anyway.

I find it VERY difficult to believe that the staff costs are one of a refinary’s biggest costs. There will be massive pressure coming down from on high to sort this out as there are significant implications for oil and gas revenue for the UK as a whole.

I remember a programme on the Radio a couple of years back that was saying that there was pretty much no money to be made in the refining business (for reasons that I can’t recall), and predicting that there wad a good chance of several going bust in the very near future.
You’d have thought it was a fairly simple business to make money from, but apparently not.

The rumour is that there will be no redundancy pay . If that is true you really wonder what protection the law provides employees.

It would appear that the PC plant and the refinery are quite separate corporate entities. I’d guess that it will cost INEOS less to liquidate the plant than to pay standard redundancy packages to all of those involved if they’d simply “shut” it.

bigjim – Member

There were negotiations

The ones where they delayed the date for ACAS meetings until the plant would have to shut regardless, and offered no concessions or compromise at all?

Gordimhor. Government stat redundancy pay. What you get depends on age, current salary and length of service. It is capped however and hardly an earth shattering amount.
Will also have to claim any outstanding pay and holliday pay. These are again capped.

well footflaps you can perhaps excuse my cynicism when you point the finger a a trade union whilst all the evidence in the public domain would suggest closure was a foregone conclusion.

Scapegoat Stevie Deans (already exonerated by Labour and Police Scotland for having done nothing wrong in the by-election candidate selection process) – force workforce to take industrial action to defend colleague who has done nothing wrong (see above) – blame workforce for putting fuel supplies in jeopardy – pre-empt strike by closing down plant – keep plant shut despite union cancelling strike – make union offer it knows it can never accept – refuse to negotiate – shut plant.

Yup, bloody unions right enough

Here’s a shocking thought, the business owners and managers own and manage the business. If they want it to do well they need the support their employees, secure employees are generally more productivity.

However if the employers / owners have had enough it’s their business to do with as they please (within the law). The unions and employees need to realise they only have any power if they are valued by the employer, push too hard and the employer holds the whip hand.

Might not be morally right but it’s a reality hence the reason a lot of manufacturing has long since departed these shores.

Isn’t the Ineos beef with Deans related to unsanctioned time off from work (and therefore only loosely related to the Falkirk by-election fiasco)?

Ineos is not a charity but an employer has an obligation to look after the people who make it money. In this case the company claims large losses are being incurred through current wage structure. If the plant needs 300 million in investment then perhaps some of the claimed losses could be attributable to this lack of investment?

They also have an obligation to the shareholders (who may well include the pension fund). If they make crap investment decisions then the pension goes down further, allong with a lot of other peoples (i.e. you and me).

£300 million buys a fair ammount of plant, why invest it in the UK where there’s relatively little growth, when £300 million goes a lot further in India, where there is growth. Whether they’d make a profit from Grangemouth with further investment is almost irelavent if they can make more profit from that investment elsewhere.

Ineos held all the cards, UNITE called a strike anyway (initialy over the sacking of someone involved in the corruption surrounding the Labour elections, not pay), Ineos (appear to have) made a decision that the plant isn’t worth opperating anymore.

And I’m saying that as someone involved in the industry so that many extra pairs of hands competing for fewer jobs is ultimately going to hit my pay packet too.

So it’s closing
A fine example of UNION industry destruction
And a fine example of MANAGEMENT/OWNER incompetence.

i disagree. It’s not theirs to do what they please with. Especially if they have been manipulating accounts to show a money-making enterprise is running at a loss.

We’ll never know as they refused to allow an external audit of the accounts to see if the claims were justified.

The Union claims the company wrote off the value of that plant to show a loss and that, actually, the plant operated at substantial profit in 2011 and 2012.

lostneverfound. Can I ask why you think it is an example of union industry destruction?

btw, nor do I see it as management incompetence. I think they have been extremely cunning.

Athgray was just wondering how ineos intend to avoid paying redundancy pay to those who may be entitled to it if the rumours are correct.

i disagree. It’s not theirs to do what they please with. Especially if they have been manipulating accounts to show a money-making enterprise is running at a loss.

I think you’ll find that as the owners, it very much is theirs to do what they please with, regardless of whether its making a profit or a loss!

Athgray was just wondering how ineos intend to avoid paying redundancy pay to those who may be entitled to it if the rumours are correct.

IIRC, there’s a ‘force majeure’ clause that allows companies to pay statutory redundancy, rather than custom and practice (e.g., in the past, redundancies from the company might have been 1 month/year – stat is more like 1 week/year)

I remember a programme on the Radio a couple of years back that was saying that there was pretty much no money to be made in the refining business (for reasons that I can’t recall), and predicting that there wad a good chance of several going bust in the very near future.
You’d have thought it was a fairly simple business to make money from, but apparently not.

Worldwide there is overcapacity in refining as well as specifically overcapacity within Europe so that is one reason why it is difficult to make money. Another is that the price of the raw material, oil, has risen sharpely (by a factor of 10 in that last decade or so) as has the cost of energy and this is very enegy intensive process. With all those factor conspiring to push costs up and prices down it is easy to see why it can be difficult to make money and that’s before you start being creative with accounting practices. There are of course other factors at play, like the desire many countries have to limit its relience on other countries for fuel so for the sake of fuel security retaining an otherwise loss making facility makes good political sense.

Specifically for this case however there is the added complication that the Forties Pipeline system relies on this refinery for its utilities so if it closes there is a further knock on effect on north sea oil, which is still a very significant source of income for the UK government.

Im not 100% on the facts around this. But if a union asked to have an external audit done on my accounts then id tell them where to go too

of course, you are correct about that, Ninfan.

I should have written that it SHOULD not be theirs to do with as they please when they use complex accountancy procedures to show a loss – or minimal profit – when the company is doing rather better and to avoid paying tax or to use it as a tool to hammer a workforce into accepting lesser conditions.

Should be a nationalised industry in my opinion, run for national benefit.

But if a union asked to have an external audit done on my accounts then id tell them where to go too

If it were a random thing then yes you would have a point. If you were claiming that you were making a loss and had to make significant changes to your staffs T&Cs then that is different matter.

Ordinarily perhaps i’d agree with you Sancho but I think it would depend on the reasons behind the request and the scale of the problem. In other words the alleged loss making at Grangemouth is being laid at the door of the workers because they are being paid too much and their pension conditions are too expensive. The workers are disputing this and are standing up for themselves asking for justification of this claim as they claim the operation is profitable and so why should they be forced to accept lesser conditions with the threat that if they don’t their jobs will be lost.

In this context I don’t think it is an unreasonable request for Unite to have made.

Sorry I should have said I was wondering how INEOS intend to avoid paying statutory redundancy pay to those who are entitled should the rumours be correct.

gonefishin beat me too it

Grantus – I think you are missing the point re the accounts and the ‘write off’.

The statutory accounts of the entity are required to be independently audited, and have been, by PwC. There is no obligation on Ineos to allow another ‘independent’ audit as the only people with a right to request that are the shareholders.

However, the PwC audited accounts are historical so are completely silent upon future forecasts of profit or loss. The fact the plant was profitable in 2011 and 2012 tells me little about 2013. Where the unions and management must disagree is on the forecast profitability of the plant, so the PwC audit is irrelevant here.

The ‘write off’ in the accounts is also entirely irrelevant and unfortunately shows the union’s lack of understanding. For one thing it doesn’t affect the calculus of how profitable Grangemouth is – any write off would be recognised in the accounts of the company that purchased Grangemouth and is an accounting entry only (not a cash loss).

Furthermore it is entirely possible that the investment could be written off even if Grangemouth was profitable, for example if Ineos purchased the site for£100m in 2007 on the expectation that it would make £10m profit a year, you would have to recognise an impairment if profits failed to meet that level, even if the plant was still profitable (in other words £1m a year wouldn’t justify your original £100m purchase price).

All this boils down to the fundamental issue – Ineos bought the plant with certain expectations about future profitability which have proved to be wrong (there are huge structural issues in this market at present and many closing refineries etc.). It is presumably now not worth keeping, especially with a bolshie workforce.

I’m surprised any heavy industry bothers with the UK at the moment because of the insane green and energy policies of successive governments, which prevent energy intensive industries from being economic here (especially compared to the US with shale gas).

I guess that if there is no money left in the kitty, then it’s the liquidators role to sell off enough assets to pay that redundancy (hence my point about the PC and refinery being separate corporate entities). In any case, it’s going to be cheaper for Ineos to do that than to pay them whatever had previously been agreed.

ok i’m not an accountant but the point is if – as Unite claims – the plant operated at a profit of around 30 million in 2011 and 2012 then how can it go to losing 10 million a month now as a result of workforce conditions? the conditions haven’t changed since that period (as far as I can gather).

The issue with the write-off is not whether it is procedurally correct or not – more to do with the fact that it has been claimed by the other party that this has been done to deliberatley paint a bleak picture as to the viability of the plant i.e. to sow the seed for closing the plant down not, I guess, because they are losing money but because 30million a year isn’t enough for them

I think that is right Scotroutes although employees will have to stand in line for money with other creditors. They may find thenselves near the back of the queue. IIRC then funds from one part of an organisation do not have to be redirected to fund another if they are registered as seperate businesses.

I’ve never seen unions do anything worthwhile.

regarding the redundancies – I don’t understand how that can happen? If Ineos is the parent company of ineos grangemouth or whatever it’s called then how can they absolve themselves of responsibility to pay redundancy to the workforce if they decide, for commerical reasons, to shut one of their plants?

From what I’ve read they have lost a number of customers so arenot operating at enough capacity to make profit but overheads have remained the same hence the losses and the attempt to process the American shale gas

From what I’ve read they have lost a number of customers so arenot operating at enough capacity to make profit but overheads have remained the same hence the losses and the attempt to process the American shale gas

and the attempts to reduce costs by negotiating the terms of the pensions.

But Unite saved the day and has won a moral victory so we can all rejoice!

Since there’s lots of wild opinion being chucked around, here’s another.

Ineos’s main concern isn’t actually changing terms and conditions. The way they’ve gone about this shows that- they’ve entered into no real discussions, engagement or negotiations, none of the things you do if you want to make a mutually satisfactory change. Instead they created a massive distraction, and orchestrated the closure of the plant, followed by a 3-day ultimatum and summary death sentence.

So what are they actually doing? Do they just want to close it no matter what? Presumably not- why make it more complicated? They’re within their rights to close it after all.

So. The threatened (and cancelled) strike action was all to do with a dispute about Ineos’s treatment of a single union worker. Not pensions etc. But what they learned from that is that if they act unreasonably and try to bully their staff, the union will act and the workforce will back them.

Conclusion- their requirement for keeping the plant open isn’t pension cuts or changes of shifts, per se. They don’t want a negotiated settlement, in fact they’ve taken steps to make that impossible. The only thing they want is a cowed and bullied workforce that’ll take whatever shit is shovelled at them, regardless of how badly they’re treated. Learning that they don’t have that, they’re taking their ball home.

I predict Alex Salmond, Scottish politician and current First Minister of Scotland to step forward as the saviour of Grangemouth, backed up with tax payers money as the plant will be seen as a strategic UK asset. Jim Ratcliffe, or should that be ‘Sir’, will reluctantly accept ‘our’ taxpayer money and be seen to be magnanimous. (my mate Dave will have a word behind the scene to smooth things through) The plant infrastructure will be upgraded and UNITE will advise its members to do-a-deal which will screw new employees to the plant. All will be well in the world, after the spin doctors sprinkle their fairy dust….

Well said that man,grangemouth will be sold to the tax payers as a national scotish asset, as scotland is hoping to make all its money from oil revenues, a bit difficult when you dont have anywhere in scotland to measure and charge for its import and export.Otherwise alltmhe fuel and petro chemical product will need to be imported.

It will also be a nice bribe to some of the guilible scots ,look what (sir) alex has done for us,best vote for him.

Given they recently moved the Grangemouth plant into a separate UK company so it could qualify for regional aid and started negotiating for said aid, this suggests the plant closing wasn’t a foregone conclusion as moving assets between companies isn’t ‘free’ and takes up lawyers and accountants times.

To me it looks like they were hoping for some flexibility from the staff and instead just got stubbornness from Unite, so thought bugger this we’ll invest somewhere else.

Well said that man,grangemouth will be sold to the tax payers as a national scotish asset, as scotland is hoping to make all its money from oil revenues, a bit difficult when you dont have anywhere in scotland to measure and charge for its import and export

As far as Grangemouth is concerned the oil landing facilities are at Kinnel, a separate entity that is still owned and operated by bp. There is also Sullom Voe and then there are the pipelines that land in England too (these currently land oil from Norway so taking oil from another country won’t be an issue) so this won’t actually be a problem as far as oil production is concerned.

Fuel security would be another issue though and I do fear that it could be spun to appear as a pro independance point.

footflaps – Member

To me it looks like they were hoping for some flexibility from the staff and instead just got stubbornness from Unite,

That doesn’t really make any sense, considering the lack of discussion and negotiations on the subject.