Grangemouth petchems ops to restart following union climbdown

25 October 2013 16:48 Source:ICIS News

(adds reaction in last four paragraphs)

INEOSLONDON (ICIS)--The Grangemouth, UK, petrochemicals complex owned by INEOS is set to reopen after trade body Unite agreed on Friday to the Switzerland-based chemicals producer’s survival plan for the facility.

The union has agreed to a raft of pension, wage and industrial action changes for workers at Grangemouth, as well as a reform of union representation at the site, in exchange for INEOS agreeing to bring the plant back online. The petrochemicals unit is to reopen immediately, the company added, as is the Grangemouth oil refinery.

The volte-face comes after INEOS announced that the complex, which has been offline since early last week, would remain closed after insufficient Grangemouth workers voted in favour of the survival plan.

The site, which had been taken offline in anticipation of a 48-hour walkout starting 20 October, was kept in cold standby by INEOS after the strike was abandoned. The company said that the complex and associated oil refinery would stay shut down while employees voted on proposed site reforms.

INEOS said that the complex would stay closed if employees failed to vote in favour of the measures, a tactic Unite described as “cynical blackmail” as recently as this week.

Despite half of the site’s 1,370 employees – predominantly shop floor workers, according to INEOS – voting against the changes, Unite has agreed to include a pay freeze for three years, and a shift from a final salary pension scheme, to a defined contribution pension scheme.

The updated pensions agreement means that pensions will be built up over the course of an employee’s career, instead of being determined by salary at retirement.

Unite has also agreed to no strikes for three years, and changes to union agreements including no full-time union convenors on site, INEOS added.

The company had also been requesting grants and loan-guarantees from the UK and Scottish governments to fund upgrades to the site’s infrastructure to allow the import and storage of shale-derived ethane from the US, which it says it has now secured.

INEOS has received an assurance of £9m (€11m, $15m) in grant funding from the Scottish government, and a £125m loan guarantee from the UK government, which the UK Treasury indicated that the site had pre-qualified for before INEOS announced that the complex would stay offline on 23 October.

The survival plan also calls for £300m of investment towards the site upgrades, which will be invested by shareholders, the company said. The petrochemicals complex is wholly-owned by INEOS, while the oil refinery is joint-owned by INEOS and PetroChina.

"Grangemouth is important to the Scottish economy, the UK economy and most importantly to the local economy where 800 jobs have been saved and the local community has avoided a major blow," said UK Energy Minister Edward Davey.

John Cridland, director-general of the Confederation of British Industry (CBI), said: “This is great news.

“We welcome the decision to restart operations at Grangemouth with immediate effect. The site is a major employer in the area with a vital role in the wider economy of Scotland and the UK.

“The decision by INEOS to go ahead with its planned £300m investment in the site demonstrates an important commitment to the long-term future of Grangemouth, its employees and the chemicals industry.”

Steve Elliott, chief executive of UK industry body the Chemical Industries Association (CIA), said: “Let the long term future of Grangemouth be secured so we can all get on with developing further the future of the country’s hidden gem - the chemical industry”.  

($1 = €0.72, €1 = £0.85, $1 = £0.62)

By Tom Brown