Wednesday 23 October 2013

Grangemouth Petrochemicals to close

Well, that went well for McCluskey and his loony Unite friends at Grangemouth. The company, Ineos, losing £10 million a month, has decided to close the petrochemical part of the site as it can't make any profits on the products without changes to the organisation of the company. So that's 880 jobs then. In addition, it is hard to see the refniery staying open too much longer when the high-value added piece of hte jigsaw is next door and has closed down.

As noted in the comments to the previous post, Unite told their memebers and the world that their members would be better off on the dole than working. Funny that, the average salary in Grangemouth according to Adzuna is £35,000 a year, 12% above average - I wonder if all those well paid oil and gas jobs help boost that figure?

Even better the Scottish Government are looking for a buyer of a company they don't own. The treu face of SNP Marxism and Unite infiltration is never far below the surface.

There is a huge amount of nonsense written about race to the bottom; but this is a potentially competitive site, with a company willing to invest, being closed down by Unions and workers who don't fancy it. End of.

The sooner Scotland votes for indepdendence the better; in deed more so now as we will be able to sell them products from Southern refineries and pertochemical plants. The whole sotry also helps to frame the SNP claim's to endless funds from the North Sea oil. Grangemouth is having to look further afield for quality oils from which to extract gas as the North Sea declines and this is a big factor in its increasing cost base.

Reality seems far from intruding into this sad episode though.


hovis said...

I'm confused CU, it is unclear whether it is the infrastructure glut or the union action driving the closure. Is it now the latter in your view?

Ryan said...

They are likely to be better off on the dole because those workers will be fully paid-up on NI.

Anybody working in oil and gas gets paid "danger money" so the salaries are pretty good - but naturally they get taxed heavily too.

As I said before you only need to look at the pictures and you will see most of the union banner wavers are near the end of their working life. A few years on the dole and then their final salary pension kicks in.

Of course if Cameron was REALLY cunning he would pull the rug from under the feet of MCluskey/Milliband by waiting 6 months and taking the site into public ownership and offering the workers their jobs back on the same terms as they had before (no union/no strike deal of course). I'm guessing that they wouldn't want their jobs back, but it would probably be cheaper to keep the site open another 5 years or so than to allow these old-timers to claim dole money for the same period.

Ryan said...

By the way CU, I'm a bit concerned by the number of typos in many of your posts recently. Is everything alright? I'm not being funny, just that I had a close friend that had a serious illness and one of the first symptoms was bad typing together with struggling to find the right words when talking. Might be worth checking things out with the doc if you think it might be anything more than just writing too fast.

Anonymous said...

Ryan - CU is notorious for speed posting on an Ipad using the rather unreliable apple spellcheck.

Blue McEyes said...

CU spot on. Absurd situation. Len and Red Ed rescuing the UK economy once more.

I say the quicker we ditch Scotland the better. Can we English have a say?

OOI, if the jocks vote Out in Sept 2014, does that mean their votes won't count in the general election in 2015? Please say yes.

Nick Drew said...

It will be really interesting to see whether Salmond can come up with a creative and workable intervention. He'll be trying like hell to do so, because it's an outright nail in his coffin if he can't and, frankly, a bit of a coup if he can

it would be a very lame second-best to end up bleating "we wouldn't have let it happen if only we'd been independent"

quite a test of his self-styled political genius ...

Timbo614 said...

@Ryan I can tell who wrote a post here now within two sentences:

CU: bad/uncorrected spelling

ND: spelling OK grammar not bad scatters French or Latin phrases liberally.

BQ: good spelling/grammar lots of English colloquialisms.


Nick Drew said...

uh-oh, a new subsidy-race being called to the starting-line

"Energy Secretary [Davey] says if a business case is put forward for investment then Government 'will look at it very closely'" (DTel)

open season on financial blackmail in Scotland, then

Steven_L said...

I read in the paper it loses £150m and employs less than 1,500 people. So if it loses about £100k pa per employee then surely there is nothing they can do to the wage bill to make it profitable?

Is it so uncompetitive because of cheaper oil over the pond or higher taxes (such as VAT) in the UK? The 'jobs' thing is surely a distraction from the real issue here.

DtP said...

@Ryan - I think £35k in Scotland counts as danger money. Their safety record appears impeccable and its efficiency could have presumably been improved by the £300 mill investment. To that end, the unions have screwed it.

Every other company has got rid of finaly salary pensions; again, unsure of detail, but it's already being done in public service too and we all know what a cash cow that is. UNITE have fucked it. It's not completely about the deal but their method of negotiation. Similar to the US debt ceiling bollox, never gamble with something you can't afford to lose - it's bullshit.

If the new nuke deal announcement the day before wasn't a signal of techtonic shift, of global reorganisation and massive amounts of cash available if they played their cards right, well, I don't know what is.

It's just a niggle but it's more than likely UNITE etcetera can only get their bolshy fucking point across in (local) government because you can't just shut stuff down apparently! Yet as soon as these guys start operating in the real world - like at Heathrow or Corus or now, in Grangemouth - it becomes blatantly obvious that for these guys a professional meeting is when they try not to fart.

Maybe this may can yet be retrieved. Fat lady's aren't quite singing hopefully!!

andrew said...

the terribly sad thing is that it is heading towards the 30th anniversary of the miners strike. the affected areas in Wales and the North have still not recovered. these people have sentenced themselves to a lifetime of dole and much worse closed off their children's chances of getting a good job in the same area. they have learnt nothing.

CityUnslicker said...

Ryan - thanks for the concern. The main issue is the computer where I post will not let me use blogger except to post in HTML format, so no spellcheck and limited ability to add links and pics.

Plus I write posts in the nanonseconds I have spare between my currently insane levels of work.

As i type quickly I make loads of mistakes and don't have the time to pick them up. As a reader you can probably tell how buy I am from how badly spelled and punctuated my posts are!

CityUnslicker said...

even there, meant busy!

Yikes, I must improve this!

Timbo614 said...

well, Bluff called and it's looking like Unite will fold... the plot thickens.

rwendland said...

Does anyone properly understand the pension deal Ineos is offering the workers?

On the face of it, Ineos has has a pension fund deficit obligation of £150k per worker (£200m/1350). And it seems Ineos are asking the workers to trade this away for a "transition payment for pension change of between £2,500 and £15,000 depending on service".

If that is really the situation, I can easily see why anyone sensible aged over 40 would reject this. But I suspect it's more complex then that.

BrianSJ said...

A secretary I worked with had a poster by her desk "I type like I live - fast and with plenty of mistakes".
Historically Grangemouth safety record bit below 'impeccable'.

Ryan said...

CU: That's a relief. The friend I had with the typing problem had a brain tumour and it killed him, so you had me worried! Glad to hear it is nothing more than fast typing to blame!

Ryan said...

I feel what is happening at Grangemouth is this:-

1] existing employees really would be better off rejecting the deal, going on the dole and getting a good pension

2] existing employees got good deals back when oil refining was in its heyday

3] existing pay deals make no sense in the current climate for refining

4] if you got rid of the existing pay deals somehow, grangemouth could be a good employer for years

5] Ineos can't solve this problem - too expensive

6] The employees don't want to solve this problem - too expensive

7] Younger people not currently working at Grangemouth would likely be happy to get anything like £35,000 and a reasonable stakeholder pension but unless someone steps in from outside the ineos/unite/employee traingle this ain't going to happen.

8] Salmond has a lot to lose if this isn't resolved - he's promised Scotland will be rich on oil, but Grangemouth implies something very different.

9] The best soluton is probably for (Scottish) government to take over some of the costs of older employees on good deals so Ineos can continue to operate and offer fair deals to new people coming in. At the same time the deal should involve kicking Unite out of the process.

CityUnslicker said...

Ryan - I nearly posted this exact situation earlier today - great minds and all. The killer which mad eme laugh was point 9. SNP is UNITE, so no chance of a deal due to their interests. After all this whole thing started out as about the politics of the Falkirk Labour Selection - though an economic challenge, the politics is the problem as you spell out very succintly.

rwendland said...

> Ineos can't solve this problem - too expensive

From what I've read, it's not really "can't", but "doesn't want".

According the PWC (I think) assessment of the company accounts (union funded), Ineos Chemicals Grangemouth Ltd has a £117m tax deferral in the most recent accounts, which inplies it made around £500 million in profits over recent years. Interesting Ineos didn't choose to pay off the £200m pension fund deficit with those profits in recent years (tax-free). Also most of the losses the company has been talking about recently is a £400m capital write-down, rather than all operating losses. So it seems in reality quite a financially contorted story, not being well reflected by press release driven journos.

Electro-Kevin said...

Welfarism skews everything, CU.

It is a corrosive and disincentivising force. Those workers will already be living in close proximity to people on the dole who show no discernible differences in standard of living (as I have experienced despite being on a good wage.)

In truth people are not motivated by large pay packets. They are motivated by being rewarded above those around them. If slackers are getting as much for doing nothing then, eventually, the workers WILL rebel and chuck it all in - especially when what little reward gap there is becomes narrower.

It would be wrong to think of the Grangemouth employees as unionist lefties of the '70s ilk. This is, in reality, a rebellion against welfarism and all its iniquities.

Of globalism and workers having to compete better with Chinese: it would be wrong for politicians and City workers to look down upon manual trades and say "It's a tough world. You must take the hit." without applying the same to themselves. In fact much of politicians' work has been outsourced or become obsolete and they would be ripe for mass redundancy and pay cuts were they in industry.

Ryan said...

"It would be wrong to think of the Grangemouth employees as unionist lefties of the '70s ilk. This is, in reality, a rebellion against welfarism and all its iniquities. "

I think you're right EK. These guys have probably worked all their life and paid a lot in tax in a "proper" job. They are looking to get some of that NI back, and who can blame them? Their buddies living in the same street are laughing at them for working so long and hard.

Welfarism does skew everything, at every level. I have friends who choose to work only four days a week because working the 5th day would mean they get taxed at a much higher rate and lose child benefit etc. They've worked out that working 5 days only gives them a 10% increase in income - so they only work 4. For the same reason my doctor only works 3 days a week - no wonder I struggle to get an appointment is it? Britain needs our brightest and best to be encouraged to work more, not less.

Blair's Labour have managed to break the economy by pushing it into Neverland economics. But they don't care because underneath Labour are all 6th form Marxist revolutionaries.

Anonymous said...

rwendland makes some good points. It would be surprising if Ineos were being totally honest - just possible I suppose...

Ryan - "existing employees got good deals back when oil refining was in its heyday"

In relatively unskilled work (i.e. loads of people who could do it) we're starting to see a two-tier workforce

a) permies, been there years, terms and conditions negotiated in the good years
b) zero hour guys on minimum wage

When a permie retires, it doesn't open up a better paid full time role - just get another zero-hour guy


Bill Quango MP said...

Royal Mail full time staff have been told by the CWU that they can expect to go shortly. To be replaced by zero hour workers.

Not even really scaremongering. That has been happening there for at least 5 years. And in non public sector or non heavily unionised workplaces, for a lot longer than that.

We have spoken about zero hours before. Must do a proper post on it again one day. Although its not all bad at the moment, if in the future everyone has that deal, then it would be very bad.

Electro-Kevin said...

BQ - Bang would go the housing market if everyone went to zero hours.

James Higham said...

Shades of Liverpool.