What's really happening at Grangemouth and what it tells us

The dispute at the Grangemouth oil refinery started with Labour's fight with Unite in Falkirk, and shows us just how broken Britain is.

Grangemouth oil refinery/wikimedia

There are three important lessons that we need to learn from the industrial dispute-going-on-catastrophe at the Grangemouth oil refinery. Firstly, industrial ownership in Britain is broken. Secondly, industrial relations in Britain is broken. Thirdly, London's capacity to understand or take an interest in the rest of Britain seems problematic.

Let's begin with the background. It is an accepted rule in Scotland right now that you write about Ineos (the company that owns the Grangemouth facility) with care. They have thrown around threats of defamation action (mainly towards the trade unions) with the abandon of the powerful who wish to silence those less powerful. People have felt unable to describe what they see. So allow me; if Ineos was a person, the characteristics would strongly suggest it was a psychopath. It has demonstrated no empathy, no interest in reaching mutual outcomes, no momentary doubt that any course of action it believes to be 'necessary' is anything other than a divine calling, no concern about what weapons it points, where it points them or who it points them at, and a chilling certainty from day one about the course of events.

As we shall see below, if you are reading this anywhere other than Scotland you probably don't know all of this but there was no threat of industrial action against Ineos until Ineos made it virtually unavoidable. It began when Ed Milliband handed a report on the claimed irregularities on candidate selection in the Falkirk bye-election to the police. Since one of the key organisers maligned – and subsequently cleared – in that action is a shop steward at Ineos, the firm decided that if Ed Milliband can cast aspersions, they can act. Ineos suspended Stevie Deans on the grounds that it was believe he may have used a work email address to carry out some Labour Party business. (God help us all if using a work email for non-work purposes can get you suspended...) I shall refrain from elaborating further for reasons of care on specific allegations; suffice to say, there was more done to provoke the union.

Given what can only be described as the political suspension of Deans, what position did Unite have to play? To accept it? To leave open unchallenged the impression that any union activists is fair game with no defence to be mounted? If Ineos did not recognise that these actions – absolutely unrelated either to the subsequent claims about the plant's profitability or the terms and conditions of its employees – was bound to push the union towards some form of response then it is shockingly naïve. And that is an adjective that has never been associated with Ineos.

So let us assume that this was an intentional provocation. The union balloted and threatened strike action. The response of Ineos? To close down the plant. Switching off a refinery is a big deal and it may now take more than two weeks to get the plant operating again, if Ineos ever decides to restart. Thing is, the union had called off the action. This plant was not closed down by a union; it was closed down by the owners. Immediately after that they claimed the industrial-action-that-never-was was costing them a fortune. It is at this point that suddenly we are regaled with a PR drive which suggests the company is in severe distress and that employees must take significant cuts to pay and conditions. To cut a long story short, it goes to ACAS, the union claims a deal was close but/so Ineos walked out. It imposed a new contract on workers and told them they had three days (individually, not through the union) to agree the new contract or workers would be sacked and the plant (or half of it) closed down.

A majority of workers rejected the deal. So today Ineos decided it was closing the petrochemical half of the plant (the bit it claims is loss-making) and keep the refinery open – but only on condition that workers sign away their right to strike in the future. And accept the imposed contract. That's for the profitable bit of the business, and it is far from clear that the rest of the plant is really as loss-making as is claimed. Ineos is majority owned by Jim Ratcliffe. In 2008 when the company was in some financial distress (possibly the result of finance strategies) it requested a one-year delay in payment of a VAT bill. The UK Government refused, so he paid for the relocation of his entire central staff to move to Switzerland. This is not a man who likes losing. It means that Ineos's financial situation is opaque – even business analysts (no friends of the trade unions) have been raising doubts as to how confident we can be in the claims that individual bits of the business are not profitable. What is certainly the case is that if there is financial distress it's not due to wage bills which make up only 1.6 per cent of costs. Is it worth mentioning that Ineos has avoided  tax in Britain since 2010? You may well have assumed that anyway.

Of course, this is my interpretation of what has happened and as always it's worth noting that I am not likely to have sympathy with aggressive management techniques. However, I find it virtually impossible to believe that Ineos did not begin with the desire to provoke strike action for which they had prepared extensively (both in terms of business planning and PR strategy) and it is certainly hard to see anything in its behaviour that suggests it wanted a peaceful resolution.

And so to the three lessons. First, this is a facility that provides 80 percent of Scotland's fuel – and it is in the power of one man to close it down at will. It is to the great credit of the Scottish Government that (given its limited powers) it has put pressure on the company, has looked to find a buyer if Ineos won't agree to operate the plant and has refused to rule out public ownership. While this last course of action is unlikely, it is another sign of the SNP shifting away from the free-market orthodoxy of British politics. This is not a facility (virtually a monopoly industry) about which we can afford to have no views or opinions about ownership. There is now a serious debate in Scotland about whether our key infrastructure is safe in private, often foreign, hands. The behaviour of Ineos has intensified that debate. Britain is in denial about the importance of the ownership of the economy. It is most obvious in the monopoly utility sector but the Grangemouth dispute shows that it's not just the power and phone lines that keep us moving. Should one man be able to cripple Scotland? The last time he tried to break the unions petrol stations ran dry. The energy companies have put this issue on the agenda UK-wide through their actions. In Scotland at least the questions are spreading further than this. Ownership in Britain is broken. We are one of the few countries in the world where key infrastructure is mainly owned overseas.

But not as broken as industrial democracy in Britain. It's not like we're a bit bad; we're truly awful. The European Participation Index (EPI) has calculated the participation of workers in 27 EU and EEA countries by combining the aggregate scores of their plant-level participation, board-level participation, collective bargaining coverage and trade-union density. Britain scores 26th out of 27, second bottom with only Lithuania worse than us. In Denmark (for example) 65 per cent of companies with more than 500 employees have voluntarily committed to having a third of management boards made up of workers and have cooperation committees made up of half-worker, half-management and these manage day-to-day matters in the company. And here's the thing; all the countries in the EU with the best indicators of social and economic development come in the top half of the EPI league table and all the worst performers come from the bottom half. Studies have shown that like-for-like companies are 19 per cent more productive if they are unionised. Britain, of course, lags the average productivity of advanced economies by almost 20 per cent. At some point we will wake up to the fact that Britain is a basket-case when it comes to industrial democracy and our economic performance is poor as a result. Remember, we live in the second-lowest pay economy in the developed world.

Finally, if you come from Scotland it is hard once again not to be shocked by the myopia of London. On Sunday when our media was absolutely dominated by a dispute that threatened to cut off 80 per cent of Scotland's fuel (and large proportions of the fuel supply to the North of England too), not a mention was made on the main BBC news bulletins. Apparently the Westminster parlour games of Nick Clegg pretending to be a little bit cross with Free Schools is of greater national significance of the possible collapse of both oil supplies and one of the last major industrial sites left in Scotland. Across the whole piece coverage has been negligible. To my shock, a new news anchor on BBC today asked the correspondent in Grangemouth “there's clearly great anger – is it directed towards the management or the union?”. Even the correspondent on the ground looked shocked – it was a question that could only come through the London looking glass. Workers all reported that the manager that broke the information to workers was smirking throughout as he told them they were going to lose their jobs, their houses, their childrens' Christmas. Angry at their union? Does the BBC no longer have any understanding of working people at all? Do they all live in a Spectator-tinged alternative universe? Today at PMQs no mention was made. When there was an emergency question, David Cameron left the chamber. The Scottish Government has been all over this dispute; London appears to have done nothing other than press its 'randomised industrial dispute quote generator'.

What is there left to be positive about in the British economy? People genuinely talk as if this might be the future, that we may need to accept total dominance of employers with no recourse at all by workers. This is a vision of Britain where we're all like Mexican immigrants waiting at the side of the road for a truck to drive up and its driver to say 'one day of work – you, you and you'. But, as is par for the course in Britain with its far-right media and utter lack of understanding of how the world works beyond our shores, people seem to think we're normal. Yet one more time, the Grangemouth disaster shows one thing above all – Britain is not normal. Not at all.


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About the author

Robin McAlpine is director of the Jimmy Reid Foundation