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800 Job Losses As Grangemouth Petrochemical Plant To Close

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Sky/Yahoo 23.10.13

'The owner of the Grangemouth petrochemical plant is to close the operation permanently and keep shut, for now, its major oil refinery amid a continuing pay dispute.

The move threatens up to 800 jobs at the petrochemicals business, which makes products used in everyday items such as packaging and plastic bags, unless it can be sold.

The Grangemouth site's owner Ineos said while it would retain the refinery, which produces 80% of Scotland's petrol and diesel, production would remain shut down until the threat of industrial action was removed.

Workers were given news of the closure at a meeting with Ineos petrochemicals chairman Calum MacLean following the passing of a deadline on a survival plan which asked all Grangemouth staff to accept changes to pensions and other terms and conditions.

The Unite union said around 680 of the site's total 1,370-strong workforce rejected the proposals, which included a pay freeze for 2014-16, removal of a bonus up to 2016, a reduced shift allowance and ending of the final salary pension scheme.

Following the meeting with staff, one worker who did not want to be named, said: "I feel sick. It's gone."

The worker, who appeared close to tears at points, told Sky News he could only listen to about 10 minutes of the meeting, before he felt he had to leave.

"There's no livelihoods left and we don't even know if we're going to get redundancy out of it. I hope they're happy with themselves," he said.

Unite has accused the company's owner Jim Ratcliffe of playing "Russian roulette" with the future of Grangemouth, the biggest industrial site in Scotland, and said it would back any efforts by the Scottish Government to find a new buyer for the petrochemical complex.

In a statement, Ineos blamed the union's opposition to its survival plan for the decision to close the petrochemical plant - saying shareholders could no longer fund it.

Mr MacLean said: "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.

"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."

The company added: "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."'

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Couldn't believe they were still on a final salary pension scheme! Surely one of the last in the country?

No winners here, it's a big blow to Scotland as a whole.

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Almost certainly more to this than "Pay and pensions cuts = jobs, no cuts = no jobs".

And I'd expect it to become a political football very quickly indeed with the referendum being so close.

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A swing of only 5 people voted against it :o

I imagine a second vote - now these people realise their jobs will actually be gone - would result in a very different outcome.

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Sky/Yahoo 23.10.13

'The owner of the Grangemouth petrochemical plant is to close the operation permanently and keep shut, for now, its major oil refinery amid a continuing pay dispute.

The move threatens up to 800 jobs at the petrochemicals business, which makes products used in everyday items such as packaging and plastic bags, unless it can be sold.

The Grangemouth site's owner Ineos said while it would retain the refinery, which produces 80% of Scotland's petrol and diesel, production would remain shut down until the threat of industrial action was removed.

Workers were given news of the closure at a meeting with Ineos petrochemicals chairman Calum MacLean following the passing of a deadline on a survival plan which asked all Grangemouth staff to accept changes to pensions and other terms and conditions.

The Unite union said around 680 of the site's total 1,370-strong workforce rejected the proposals, which included a pay freeze for 2014-16, removal of a bonus up to 2016, a reduced shift allowance and ending of the final salary pension scheme.

Following the meeting with staff, one worker who did not want to be named, said: "I feel sick. It's gone."

The worker, who appeared close to tears at points, told Sky News he could only listen to about 10 minutes of the meeting, before he felt he had to leave.

"There's no livelihoods left and we don't even know if we're going to get redundancy out of it. I hope they're happy with themselves," he said.

Unite has accused the company's owner Jim Ratcliffe of playing "Russian roulette" with the future of Grangemouth, the biggest industrial site in Scotland, and said it would back any efforts by the Scottish Government to find a new buyer for the petrochemical complex.

In a statement, Ineos blamed the union's opposition to its survival plan for the decision to close the petrochemical plant - saying shareholders could no longer fund it.

Mr MacLean said: "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.

"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."

The company added: "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."'

Lol talk about cutting off your nose to spite your face.

Union scumbags, got what they deserved!

Edited by eztiger

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Couldn't believe they were still on a final salary pension scheme! Surely one of the last in the country?

TUPE from BP days?

A swing of only 5 people voted against it :o

I imagine a second vote - now these people realise their jobs will actually be gone - would result in a very different outcome.

Only figures against given, no information on votes for, or non-voters.

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Offshore private equity scumbags.

Precisely the sort of people the Bullingdon club love running out 'industry'.

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Lol talk about cutting off your nose to spite your face.

Union scumbags, got what they deserved!

Highly unlikely that the difference between the business being viable and not viable was the employee compensation package for the plebs. But it provides a convenient excuse/distraction for the owners and management to exit from an enterprise that they had difficulty turning a profit from (for whatever reason).

Wonder what the employee compensation packages are like for the talent at the helm? :huh:

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Almost certainly more to this than "Pay and pensions cuts = jobs, no cuts = no jobs".

Somebody is overborrowed, overleveraged and looking for a scapegoat/escape route/rescue.

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Lol talk about cutting off your nose to spite your face.

Union scumbags, got what they deserved!

And this is why we have a minimum wage imposed by the state, you old leftie.

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Heard various rumours - that Ineos are restructuring all their supply chains and plants, they apparently closed a plant in Hull just recently. Also that there is big overcapacity in European production now, as well as new refineries coming on stream abroad. Have no sources for these suggestions though.

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Highly unlikely that the difference between the business being viable and not viable was the employee compensation package for the plebs. But it provides a convenient excuse/distraction for the owners and management to exit from an enterprise that they had difficulty turning a profit from (for whatever reason).

Wonder what the employee compensation packages are like for the talent at the helm? :huh:

The problem here is that you have a perfect storm.

1. The oil refinery business has been historically low-margin to begin with. Indeed, that is one of the reasons BP jettisoned this part of the business years ago.

2. There has been a race to the bottom with increased capacity coming online globally. The likes of India, China and Russia have all been ramping up their refinery capacity in the last few years. With their costs so low, even after shipping costs, they are more competitive than Grangemouth.

3. High salaries and defined benefit pensions are legacy items that competitors don't have to deal with. It's definitely a factor, but like you said, it's hardly the only challenge here.

4. The global recession has reduced demand for refined oil products, especially in Europe. Reduced demand in a low margin business like this usually means heavy losses.

The workers who voted to strike are still in the wrong though. You can have a go at management all you like, but at least they did try to make a proposal to keep the plant open. It's hard of the workers of course, but they clearly had their heads in the same on this. It was common knowledge that the pension deficit was sky high and that the Grangemouth plant was losing lots of money. Did these guys really think they could maintain their salary and benefits indefinitely?

What the staff should have done was accept the cuts while the plant was still losing money. One of these days, the economy in Europe will start to turn, and when that day comes, oil refineries will start turning a profit. At that point, I am sure they could be in a position to get some of those cuts reversed.

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Heard various rumours - that Ineos are restructuring all their supply chains and plants, they apparently closed a plant in Hull just recently. Also that there is big overcapacity in European production now, as well as new refineries coming on stream abroad. Have no sources for these suggestions though.

I'll almost certainly get an email from someone who has the next office to Ratcliffe sometime today. He is as a previous poster pointed out massively overleveraged, in plant which is outdated, poorly maintained and in a region of the World where little expansion is likely to be seen. He was lucky not to go under in 2008

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Scottish news saying that many of the workers were on "very good" money, so most of them should have savings of at least a couple of years living expenses? Although one guy was saying people "will be out of their hooses by Christmas". If you are earning any kind of money nowadays you need to be putting a good wedge away somewhere IMO. This is a blow to the independence camp, probably better it happened now to focus voters minds?

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BP pay and benefits are notoriously generous. It wouldn't surprise me if some experienced yet barely skilled operators were on £100k+ when shift allowances were taken into account.

I would bet that the vote for/against strike action runs clearly along generational lines i.e. the older crew with the better pay and benefits voting to keep them. We have a similar thing here - ex ICI business, you've got older end lab technicians on better pay and terms (ICI terms) than young middle-management who've worked their way up over the last 10 years.

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3. High salaries and defined benefit pensions are legacy items that competitors don't have to deal with. It's definitely a factor, but like you said, it's hardly the only challenge here.

The straw that broke the camels back...

This will cause major issues for certain industries (having to source feedstock elsewhere) and possibly lead to lots of knock on job losses elsewhere.

The refinery only really makes sense on a operational level if the chemical plant can turn some of the waste from refining into useful products if the chemical plant goes the refinery looks shakey too.

UK (and Europe) are short on diesel and aviation fuel refining capacity but long on petrol production capacity, so any refinery closure will ratchet up the cost of diesel.

The UK trade number will look horrifically worse.

This is a massive kick to the the independence campaign and the unions (it could make many reconsider if the membership is worth it).

Is this decision final i.e. could either government persuade the union to have a 2nd ballot and would Ineos take any notice of the 2nd vote?

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This email came out of Ineos head office this afternoon so they were expecting the workforce to accept the agreement

There was a deal on the table for the future of the site that could have worked, but to carry on as is, was not an option. Site voted against carrying on to the surprise of everybody.

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This email came out of Ineos head office this afternoon so they were expecting the workforce to accept the agreement

There was a deal on the table for the future of the site that could have worked, but to carry on as is, was not an option. Site voted against carrying on to the surprise of everybody.

How big a pay drop were the workers expected to take? And what kind of money had they got used to?

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How big a pay drop were the workers expected to take? And what kind of money had they got used to?

I've seen quoted elsewhere (therefore unsure how true) £55k average salary plus £30k annually per worker for the pension scheme...

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could this lower house prices in the area? with a knock on effect on the economy as well as pushing diesel prices higher?

Imagine it will decimate house prices in the immediate area that relies on it for work, one guy on sky was saying people would be turfed out of their homes by Christmas, so many must have spent the big salaries as they came in, and also been mortgaged to the hilt? As there will be people probably from all over the UK and Scotland working there, the local BTL industry will most likely tank as well?

Edited by dances with sheeple

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I've seen quoted elsewhere (therefore unsure how true) £55k average salary plus £30k annually per worker for the pension scheme...

Sounds about right, although those in more technical/skilled positions who had been there a long time probably on more than 55k? The pension sounds mental on such a loss making enterprise.

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INEOS overpaid for most of its assets and the debt load on the balance sheet is huge.It is almost a hedge fund really.

The pay and pensions of a site like that will probably cover around 8% of operating cost.Its likely the interest bill on the debt is far higher.

They set the workers up here,no doubt about that.

Its the same old story about blaming workers for trying to defend a decent wage etc.

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Imagine it will decimate house prices in the immediate area that relies on it for work, one guy on sky was saying people would be turfed out of their homes by Christmas, so many must have spent the big salaries as they came in, and also been mortgaged to the hilt?As there will be people probably from all over the UK and Scotland working there, the local BTL industry will probably tank as well.

Most people live to their means, so probably some big mortgages. will they have the interest paid on the mortgage though?

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Sounds about right, although those in more technical/skilled positions who had been there a long time probably on more than 55k? The pension sounds mental on such a loss making enterprise.

I have friends who work for INEOS,,average wage for a production/process operator will be about £33k including shift allowance.

They will have a lot of overpaid managers though who instead of being sacked over the years will of been put on "projects".

That will explain why the office staff voted for the cuts,many will of been on a cushy number while the lads on the plant are doing the graft.

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