Grangemouth: ‘Unite the Union’ prefers collaboration to Class Struggle

‘There is probably no long-term commercial future for the oil refinery and associated petrochemicals plant at Grangemouth in Scotland even if the current owners, Ineos and PetroChina, can resolve their dispute with workers and the labor union.

Excess capacity in the refining industry, especially in Europe, and the shale revolution in North America will continue to pressurize Grangemouth and Britain’s other oil refineries.

It is hard to see what strategic advantage Grangemouth possesses that will enable it to compete with new refineries and petrochemical facilities planned or under construction in Asia and North America.

Every plant closure is a tragedy for those whose livelihoods are destroyed. Britain’s politicians are right to push for a compromise between Grangemouth’s owners and workforce if it can keep the site open a few more years. But they should resist the temptation to offer financial support to a plant that may eventually be doomed anyway’ (John Kemp: London Reuters, Oct 24^th 2013).

The above quote is an example of the speculation from financial ‘experts’ about fanciful hopes in the financial markets and expected trends in the gas and oil refining industries. These inveterate optimists see nothing bur shining vistas for capitalism and its supposed wonders. The reality is that capitalism is a crisis-ridden system wracked with the ever-asserting declining rate of profit, with panics in markets and tendencies towards collapse.

The projected prospect of the closure of ‘excess-capacity’ refineries in Europe especially through the inward flow of US shale oil is one that would lead to an increase in the price of oil and its products rather than a fall.

The above mentioned new refineries and facilities are targeting exports not only to Europe but also to Africa, which will have the result of freezing out of European exports to that Continent, To achieve this means reversing the decades long embargo of oil exports from the US, the result of previous price-hikes in Saudi Arabian oil.

Pressure will be on the price level of Brent Crude, an industry standard for a heavier grade of crude oil, the main grade produced from the Brent oil Field in the North Sea, hence its name. The higher price for Brent Crude, often in the $10 per barrel price bracket, is variously put down to restrictions in the pumping facilities in the North Sea and also to financial investigations going on in New York that this price having been ‘fixed’ for years.

In attempts to enliven profitability, ways of reducing prices through increased productivity as well as cheaper means of extraction from the ground has led to the development of shale oil production. The increased availability of shale oil and its products is having a big impact on the existing oil refinery plants across Europe. The European refineries are not only threatened by loss of markets in North America, the ultimate threat is to be reduced to be merely terminalling operations for the importation of refined petroleum products. This has already been the fate of the Croydon refinery on the Thames Estuary, with its wharfs, tank farms, pipelines being converted for importing purposes. There are six other existing refineries, two in the North East of England (Lindsey and Humber), two in South Wales (Milford Haven and Pembroke) and one each on the Mersey (Stanlow) and the English South Coast. (Fawley).

Grangemouth is a strategic operation which has three components: oil refinery, petrochemical plant and pumping station for the Forties off-shore oil field. The oil from the Forties Field comes on-shore near Aberdeen and then pumped down to the Grangemouth area. A long-term plan is required for Grangemouth for capitalism in general. A simple shut-down would create unnecessary difficulties – the bludgeoning of the workforce into meeting the restructuring of the site will have to be carried out.

The Development of the Grangemouth Site

The Grangemouth site was established in 1924 by Scottish Oils (which had already been purchased by the forerunner of BP. The paradox is that the Grangemouth site was the inheritor of the shale oil refining of 1850 near Bathgate which rapidly became outdated by oil refineries in Pennsylvania USA in the 1860s. During the First World War Britain helped to develop oil fields in Arabia to sustain its war effort. During the period up to 1939 the Grangemouth refinery had a through put of up to 400,000 tonnes per year. Oil refining was not possible from 1939-45 as convoys were routed to the West Coast of Great Britain.

With the start up of production in 1946 the site was expanded with an adjacent petrochemical complex in 1951 with Distillers Company Limited, by creation of a joint company, to create the first such operation in Europe. Many products resulted from this plant, from alcohol to animal feeds.

A further extension to the site took place in 1975 after the discovery of North Sea Oil – BP created the Kinneil Crude Oil Stabilisation terminal which pumped directly into the BP Forties Field in the North Sea. This facilitated the supply of crude oil to either third parties or to Grangemouth site itself. The refinery output had grown more than twenty times, having the ability to produce more than 10 million tonnes annually.

In 2004 BP decided to divest itself of the Grangemouth refinery and its interest in the petrochemical complex, retaining the Kinneil pumping operation, by the creation of Innovene Company. This new company was purchased by Ineos. In 2011 Ineos entered into a joint venture with the Chinese state owned PetroChina to form PertroIneos.

The Grangemouth refinery had become a strategically important site by supplying the majority of Scotland, Northern Ireland and a large part of Northern England. Grangemouth’s strategic position, if it was likely to be affected by strikes, would be unacceptable to the capitalists and their Government(s).

The combined site, in order to reassert management’s control, and profitability in general, was being prepared for a sort-out, and it would be the workers in the firing-line. The three parts of the Grangemouth site were to be separated out for confronting the workers.

The Pension Fund Issue

Across many industries the Pension Fund issue has become an important source of contention between management and workers. Many Pension Funds were contributory (the workers having to pay a percentage of their salary) while the rest were non-contributory (the workers were not expected to contribute). Some Pension Funds decades ago (especially during the Thatcher period) had surpluses, that is more in their reserves than they needed to pay out. So began a series of Pension Fund ‘holidays’ whereby Companies were allowed not only to make contributions for some years (running down the reserves) while in some cases “raids” of Pension Funds took place when excesses were removed. These sums were then transferred to profits and distributed to shareholders. The effect was to buttress declining rate of profit in the short-term. But the reducing returns in the financial markets did not make up for the shortfalls. Deferring the Pension Fund shortfall problems for future years means that it will have to be faced sooner or later. And that time arrived by the start of this century.

The attacks on Pension schemes began in the Private sector with the demand for the end of final salary scheme (based upon the rate of pay at retirement) as well as raising the amount that workers contributory payments should be raised. As these schemes were part of terms of conditions of employment they could only be relinquished by agreement. The pressure was on to have new employees registered in the new scheme, which would be based upon average earnings during their working life, as well as increased contributions. Hardest hit would be women workers who took time off to raise a family, or those who needed to look after sick or disabled relatives. The impact is to drive a wedge in between the workers on the old scheme and those on the new arrangements.

Of course this did not apply to the Directors of these Companies who could walk away with multi-million pound pension deals, even if they nearly bankrupted the Companies concerned. They were part of contractual liabilities, which Directors can agree amongst themselves for anytime including the future.

Once the attacks had been well under way in the private sector, it was time to start on the public sector. Previously the presumption was that pay was poorer in the public sector, but at least those workers in the public sector had more security. The same attacks upon pensions in the public sector (increased contributions and the end of final salary schemes) was recommended in the name of fairness – if the private sector had to take the hit so should the public sector.

When BP divested itself of the rest of the Grangemouth site it was left to the new Ineos management to deal with the pension issue. There had been a generous non-contributory pension scheme in place at Grangemouth, which had been placed there to keep the workers loyal and working hard. BP has recently ‘caved in’ on the pensions issue at the aviation fuel supplier it has sold, leaving the new owner DHL to meet the costs.

Ineos tried to change the pension arrangements in 2008. The resulting two-day strike over changes in the pension scheme led to panic-buying of petrol across the North of the British Isles. This strike also temporarily led to the disruption of oil production in BP’s Forties Field. With the failure of this attempt Ineos obviously began to prepare for a new attempt to enforce changes.

Shenanigans in Falkirk

As readers will appreciate we don’t usually spend much time dwelling upon the internal affairs of the Labour Party. The Falkirk Parliamentary Constituency has the Grangemouth site within its boundary.

The current ‘disgraced’ MP for Falkirk Eric Joyce had been suspended from the Labour Party, and is now sitting as an Independent MP and he has promised not to stand at the next election. What seems to have caused the suspension from the Labour Party was a fight in the Strangers Bar of Parliament, when Joyce hit a Labour Whip who was trying to restrain him. After a further bar room incident Joyce was barred from being served alcohol in all the eight bars in Parliament. The appointing of the next labour candidate for Falkirk has led to controversies. Getting the candidacy for a safe Labour seat is usually an attractive prospect for a politico on the make.

There have been wrangles going on for some months about attempts by members of the Unite union (a combination of the Transport & General Workers Union and Amicus in 2007) to ‘fix’ the election for the next Labour candidate in Falkirk for the 2015 General Election. Charges were made of ‘packing’ the Falkirk Constituency Labour Party in order to ensure that the Unite union’s preferred candidate would win. This apparently included Labour Party members being enrolled and paid for by Unite union, with some being reported as having no idea that they had been put forward for membership.

The furore over the accusations at Falkirk had raised its head from time to time, incited by accusations in the Media. The Leader of the Labour Party, ‘Red Ed’ Milliband, whose election was achieved by the voting block of trade unions such as Unite, has been accused of being under the control of the trade unions. Is Ed Milliband his own man or are the trade unions pulling the strings? The attempts to rig the ballot at Falkirk were to be the subject of an internal Labour Party enquiry, then mention was made about it becoming a Police matter, then everything dying down again. A report by BBC News states that Unite had been cleared of electoral rigging. The Chairman of the local Constituency Labour Party, Stephen Deans, was also the Unite Convenor at Grangemouth as well as being the Chairman of Unite, Scotland. Deans is reported to be standing down as the Chairman of the local Labour Party at the end of the year.

According to press reports fresh evidence of the attempts to influence the election of the Falkirk candidate was provided by Ineos. This was reported to be in preparation for the disciplinary hearing over the conduct of Stephen Deans, about the allegation of misusing Grangemouth resources (emails were handed over to a Sunday newspaper) for an outside purpose. (The Times 29^th October 2013) Stephen Deans resigned his job at Grangemouth twenty-four hours before he faced the accusations at a formal disciplinary hearing. There was a clear expectation of Deans being dismissed.

Ineos had been organising an investigation about Deans’ activities for the previous 18 months. The trawling of computer use against employees has all the hallmarks of the employment of ‘independent’ industrial consultants who investigate the ‘target’ in order to establish the case against the worker concerned. This service does not come cheap. Whether there is more material which was gathered by computer monitoring, but not yet publically released, remains to be seen.

Other accusations were made by Ineos of a group of men mounting demonstrations against Ineos Directors outside their homes or hotels were meetings were being held. References were made in statements to harassment against these Directors and their families. This group of demonstrators has been referred to as The Leverage Team.

The accusation by Ineos of harassment against its Directors is not because they would be against its use in principle – it is just that they don’t want anybody in the workforce using such measures. No doubt many bosses would regard harassment as a Management prerogative: part of Management’s Right to Manage. Deans is now out of it – it would not come as a surprise if he ends up with a plum-job in the Labour Movement. It will be the remaining workers at Grangemouth who will be on the receiving end for such treatment.

The Prepared attacks against the Grangemouth workers

Earlier in October talks were taking place in Glasgow between Ineos and Unite at the conciliatory service ACAS about a threatened two-day strike starting on October 20^th over the disciplinary procedure of Stephen Deans. Stephen Deans was being represented by Unite’s Regional Secretary for Scotland, Pat Rafferty.

In preparation for the threatened two-day strike Ineos announced the start of turning off of some units at the Grangemouth site so the refinery and petrochemical plants can be shut down in time for the strike to start. Ineos was opting for a ‘cold’ rather than a ‘hot’ shutdown – a hot shutdown keeps some parts of the plants functioning while a cold shutdown would take several weeks to restore full production. Ineos is the full owner of the petrochemical plant and the majority owner of the refinery (just over 50%, with PetroChina owning the rest).

The complete closedown of both plants at Grangemouth emphasised the demands by Ineos for cuts in wages by the workers to sustain profitability. Ineos claim that the petrochemical plant is losing £10 million a month (this figure has been disputed because of alleged accounting manipulations). The petrochemical plant will be closed by 2017 if the union does not agree to slash wages, pensions and jobs. A deadline of the following Monday was given to accept this demand. The value of the plant has been “written off” by being reduced from £400m to nil so Ineos can just walk away from the abandoned site, with the loss of 800 jobs. Liquidators were to be brought in to start the closure of the petrochemical plant.

Within two days Unite had backed off and cancelled the two-day strike. For some reason Unite expected Ineos to be ‘reasonable’ and go for a ‘hot’ shutdown so that both plants would restart quickly. Unite also offered a guarantee there would be no strikes until the end of the year if Ineos withdrew the Monday deadline.

Ineos were back tabling the same demands on Thursday 17^th October, for cuts in pay, jobs and pensions to ‘save’ the petrochemical plant. The cuts of pay had now included a pay freeze, with no bonuses being paid, for three years, with the end of the company’s final salary pension scheme. There was a plan for the investment of £300m in the Grangemouth site, and the workforce had until the following Monday to accept the deal or the both plants would remain closed. The Ineos (£300m) was backed up by Government funds with the British Treasury underwriting £125m infrastructure loans.

While Unite tried to go for some ‘last-ditch efforts’, such as a guarantee of no strikes for a longer period, to find a compromise, Ineos had a meeting with the workers of both plants on the following Wednesday. BBC News reported that Ineos stated to the meeting that the petrochemical plant was to close. A vote at the meeting showed almost all of the admin staff voting to accept the offer and a hostile rejection from the shop-floor workers. This seems to be because it would be the shop-floor workers who would be at the sharp end of the attacks. Ineos emphasised that liquidators for the petrochemical site would be appointed within a week. The Chairman of Ineos separately stated that once the petrochemical plant closed, then the refinery was likely to go as well. Unite was to come forward with fresh proposals to keep the plants open.

Appeals to the Scottish Government

Pat Rafferty, Regional Secretary of Unite Scotland, declared that the two-day strike had been called off ‘in the national interest’, that the ‘cold’ shutdown was against Health & Safety and against the economic interests of the country. Rafferty, playing the Scottish Nationalist card, raced off to the Edinburgh Government to confer with Scotland’s First Minister Alex Salmond (leader of the Scottish Nationalist Party), looking for Government intervention.

Rafferty placed a ‘Unite Scotland’ website as part of Unite the Union’s UK website. Its purpose was as ‘a tool to curate a discussion and debate between union members and the wider Scottish left community’. The ‘Unite Scotland’ website hasn’t been updated since January this year. An attempt to preserve Unite members jobs when Scottish Coal went into administration in April this year led to an appeal to the Scottish Government to reverse closures. Nothing happened about Scottish Government inyerventions preventing closures. Some Scottish Government consultations about the regulation of the coal industry was announced in September, in the wake of the closure of Scottish Coal.

The illusion which had been doing the rounds, that Scottish Independence would be historically ‘progressive’, that the Scottish workers could get some relief from an Edinburgh Government rather than a London one has looking more unrealistic as time goes by. The once much vaunted Northern Arc of Prosperity (Norway as an oil producer, Iceland as an off-shore centre of banking and the Irish ‘Celtic Tiger’ economy) has disappeared. The Icelandic banks went bankrupt and the booming Irish economy, based upon property speculation, sank into depression, requiring a bail out from the European Union. Part of the debt incurred by ‘toxic’ loans of the Eirean property speculation bubble was with Ulster Bank, a subsidiary of the Royal Bank of Scotland (RBS). A fully Independent Scotland would have to pick up the £40+ billion debts racked up by RBS.

On October 24^th Unite announced that it would accept Ineos demands to prevent Grangemouth closure and save all the 1,499 jobs. Len McCluskey, General Secretary of Unite, stated that they were putting forward a positive response to the survival plan of ineos. Scottish Government officials met with representatives from Unite and Ineos in an attempt to broker a deal. Now Ineos was stating that the combined site (of the refinery and the petrochemical plants) was making a loss. Now the future of the refinery was also at stake. Ineos was now challenging both the London and Edinburgh Governments and threatening to shut all of Grangemouth down.

Part of the reorganisations at Grangemouth was the alterations to the facilities so that different gas can be imported from US rather than use gas being pumped from the North Sea. The long-term survival of Grangemouth sites may require the switch to cheaper supplies of oil, rather than those from North Sea oil fields. The SNP Government has been proclaiming a bright future for an ‘independent’ Scotland with its oil reserves, not wanting to talk about these changes to international oil and gas supplies. In previous TV adverts Alex Salmond declared that what Scotland needed was ‘Nats’ (abbreviation of Nationalists) – it seems that all Scotland has ended up with are ‘gnats’.

Unite’s Climb-down

Within 24 hours Unite had completely climbed down, offering more than what Ineos were demanding, Ineos announced that the Grangemouth closure had been reversed with the £300m investment package going ahead in order to secure the future of the petrochemical plant. The Unite deal with Ineos was a three year pay freeze (with a reported end to bonus payments), a three year ‘no strike’ pledge with the ending of the final salary pension scheme. There were other changes to ‘union agreements on the site including no full-time union convenor’ [Guardian on-line, October 25^th]. Stephen Deans had been removed as Convenor at Grangemouth a week before he resigned employment with Ineos.

Unite had been trying to give the impression that they are a ‘campaigning’ union supporting its members at work and ‘in the community’. All that has gone, certainly at Grangemouth. Unite will be collaborating with Ineos in making Grangemouth profitable. It will be the workers at Grangemouth who will pay the price. With wage rates falling over the next three years some employees will protect their jobs by sub-contractors losing their jobs.

The deal Unite has done with Ineos is not unusual. It is similar to what the TGWU (fore-runner of Unite) did on the docks – operating as a partner with the employers. With the deal with Ineos, and maintaining the closed shop, means that the workers will have to remain members in order to keep their jobs, with the union fees being deducted from their wages.

Len McCluskey, leader of Unite, may continue to speak at Anti Austerity meetings across the country. Obviously he won’t be pointing to the enforcing of austerity at Grangemouth.

For the workers at Grangemouth they can only look towards organising themselves at the shop-floor level, creating their own links with other workers, whether employed or not, rather than the bureaucratic structures of Unite, and its so-called communities.

Unite at Grangemouth is an open collaborator with the bosses, and little different from the share-holders of Ineos, a share of the profits aside.