October 17, 2013 10:45 am

Ineos shuts Grangemouth refinery despite cancelled strike

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Vapor rises from the from Grangemouth Refinery, operated by Ineos Group Holdings Plc©Bloomberg

Ineos has shut down its Grangemouth refinery and petrochemicals complex in Scotland, suggesting it might not restart unless workers rally behind the UK group’s plans for the site.

The announcement sparked concern about the future of what is one of Scotland’s most important industrial sites. An extended shutdown at Grangemouth would have “serious economic consequences”, said John Swinney, Scotland’s finance secretary.

The surprise announcement of a “cold shutdown” at the complex came just hours after the Unite union called off a two-day strike planned to start at the weekend over a dispute centred on the political activities of a union official at the plant.

A three-day stoppage at Grangemouth in 2008 was said to have cost hundreds of millions of pounds in lost production and led to panic buying at petrol pumps as supplies dwindled.

Ineos said the abortive strike had inflicted “significant further damage” on the company as it grappled with the future of a site that was already “financially distressed”.

“Grangemouth is shut down and will remain shut down,” Ineos said, adding that it would put a proposal to its workforce on Thursday and expected a response on Monday ahead of a discussion with shareholders on the refinery’s future on Tuesday.

“We need the employees committed to our plan to save the Grangemouth site,” said Tom Crotty, Ineos group director.

Asked if it was conceivable that both the refinery and petrochemicals operations at Grangemouth might not restart, Mr Crotty said: “I honestly don’t know at this stage. Anything could happen.”

Ineos said in a statement it had agreed during failed talks with Unite that ended early on Wednesday morning to restart the Grangemouth plants on condition the union promised not to take any further industrial action before the end of March.

The company said it could not accept the potentially dangerous prospect of repeatedly having to shut down and restart the plants. But Unite said it had pushed for the plants to be put in “hot standby”, which would be safer and easier to reverse than the cold shutdown imposed by Ineos.

The company’s shutdown was “reckless, unnecessary and bordering on economic vandalism”, Pat Rafferty, Unite Scotland secretary, told the BBC.

Jim Ratcliffe, Ineos chairman and biggest shareholder, told the Financial Times last month the company was considering closing the Grangemouth plant because of rising costs and the decline in production of gas from the North Sea.

The company has unveiled a “survival plan” for the complex, saying that unless it is adopted the petrochemicals plant will shut by 2017 at the latest.

The plan would involve Ineos investing £300m at the site over three years but also calls for employees to accept changes to pay and pensions and for government grants and loan guarantees totalling £150m.

Relations between Ineos and Unite have been complicated by tensions centred on Grangemouth refinery senior shop steward Stevie Deans. The company has been investigating Mr Deans over allegations linked to a dispute over selection of a Labour parliamentary candidate in Falkirk, where he is chairman of the local constituency party.

However, Ineos said that during talks at Acas, the arbitration service, Unite had agreed not to take further industrial action over the dispute involving Mr Deans, no matter what the outcome of its investigation.

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