INEOS Shuts Scotland's Grangemouth Refinery and Petrochemical Plant

---

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Scotland's only oil refinery has been shut down by owner INEOS (Switzerland) just a week after strike action was narrowly avoided.

The company has decided to halt operations at the oil refinery indefinitely until the threat of industrial action is removed by unions and it has decided to place its petrochemical operations into liquidation, with the potential loss of 800 jobs. The Grangemouth refinery and petrochemical plant employs 1,370 people. The refinery provides most of the fuel to Scotland, the north of England and Northern Ireland and there are now fears of a fuel shortage looming. A 48-hour strike was narrowly avoided last week. For additional information, see October 17, 2013, article - Scotland Avoids Fuel Crisis.

The company blamed the decision on a negative vote by employees for its controversial 'survival plan' for the loss-making operation. Earlier this week, the Unite union said around 680 of the site's total 1,370-strong workforce rejected the proposals. These included the scrapping of the final salary pension scheme, a pay freeze for the 2014-16 period, reduced shift allowance and the removal of a bonus up to 2016.

INEOS said that employees were asked to support the changes necessary to save the business and 'made it clear' that rejection of change would result in closure. The outcome of the employee vote on the company's Survival Plan was a 50/50 split, wherein almost all of the administrative staff voted for the company's plan but a large majority of shop floor employees voted to reject it. As a result, INEOS said, 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.

"This is a hugely sad day for everyone at Grangemouth," stated Calum MacLean, Grangemouth Petrochemicals Chairman. "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".

INEOS said it has invested over €1.2 billion ($1.65 billion) since taking over at Grangemouth in 2006 but it has not stopped losses of over €176 million ($242 million) each year for the last four years. The plant is losing €12 million ($16 million) per month. It claimed that the site pension scheme is now around €235 million ($324 million) in deficit and pension costs are at an 'unsustainable 65% of salary'.

Scotland's First Minister, Alex Salmond, said: "This announcement by INEOS is hugely disappointing. It is, however, the position we always feared as it became apparent that the stalemate was not going to be broken. It has been a growing danger since the plant was shut down last week and the emergence of a virtual deadlock between workers and management over the weekend. This is the outcome that matches our worst fears which is why we urged getting the plant fired up instead of lying cold. In preparing for this extremely difficult position we have been pursuing the contingency of potential buyers -- we will now be actively exploring this as the main option as a matter of urgency."

Pat Rafferty, Scottish secretary of the Unite union commented: "Unite and our members at Grangemouth are devastated by the announcement this morning of the closure of the petrochemical plant. It has confirmed our fears that this was the intention of Ineos all along. Discussions have taken place with the company this morning and will continue over the course of the day. We have made further proposals in a last-ditch effort to stave off these catastrophic job losses which we believe are tantamount to economic and industrial vandalism".

View Plant Details - 1021435

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. To contact an office in your area, visit the Industrial Info "Contact Us" page.