London letter: Unions and industry clash in Scotland
The closure of Grangemouth refinery has shocked Scotland
Grangemouth oil refinery in east Scotland, which is threatened with closure with the loss of 800 jobs. Photograph: Russell Cheyne/Reuters
The Strangers’ Bar in the House of Commons is an overly bright, wood-panelled room, with a small bar counter at one end.
Its best attribute is the terrace leading from it, looking on to the Thames – a haven popular with MPs and others during sultry London evenings, when they come. Last March, a Falkirk MP, Eric Joyce, worse the wear from alcohol, went “berserk” in the bar, as a court was later told, hitting three other MPs, before he was eventually brought to ground.
Ever difficult, Joyce had already been suspended by the Labour Party. Later, he quit the party, announced that he would not be standing in the 2015 general election,but refused to quit early. Labour set about selecting his replacement, running into a storm of allegations that the Unite union had fixed the contest by packing the local Falkirk party branch with its own people.
The chairman of the branch is Stephen Deans. He was suspended, but eventually cleared by a controversial party inquiry. However, in his day job, Deans is the Unite convenor in Grangemouth. Grangemouth is Scotland’s biggest refinery and petro- chemical plant, owned by Ineos, controlled by the yacht-owning, secretive billionaire Jim Radcliffe.
Though Labour and the police had stopped probing Falkirk Labour, Ineos launched its own inquiry into Deans. The union threatened a strike; 80 per cent of the workers voted for one. Escalating the tension, Ineos said the petrochemical plant was losing heavily, demanding loan guarantees from the British and Scottish government to back investment.
Then it demanded wage freezes and an end to defined pensions, shut down the plant and warned that it would close permanently unless the workers gave in. Having announced a 48-hour strike, two-thirds of the workers, mostly paid £50,000-a-year in a region where £25,000 is the norm, rejected the management’s terms.
On Wednesday, Ineos said it was closing down. A company executive grinned as he told them, Unite complained later – a charge denied. Outside, others fumed that Unite had walked into a trap. Yesterday, workers stood disconsolately outside the gates of the sprawling 2,000-acre plant, some visibly upset, most of the rest stunned.
Many shadows fall over Grangemouth, not just a bar-room brawl in the Commons. Economics that have held in the petrochemical industry for nearly 50 years are in turmoil. Grangemouth’s refinery handles oil from the Forties field in the North Sea: gases released are turned next door by the petrochemical plant into useful products.
But European refining is ailing. Last year, Coryton in Essex, which supplied one-fifth of the fuel used in London and the southeast, closed.
Grangemouth has been here before. One hundred and fifty years ago, James Young arrived nearby, having noticed earlier the drips of mineral oil from the roofs of Derbyshire mines.
In time, Young, later known in life as “Paraffin” Young during restful years yachting after his money was made, established the first commercial oil-refinery in the world.
Within a few years, however, the industry was forced to change, since the abundance of supplies in Pennsylvania – first dismissed, then feared – changed the economics of trade. Supplies from Persia kept refiners around Grangemouth busy in the years after the first World War, while the world’s first soap-powder was produced locally in the 1930s from a byproduct of oil.
And then came North Sea oil, though the declining store of ethane in its remaining supplies means that Grangemouth has not worked at full capacity for some time. Having written the plant’s value down to zero – a contested calculation, to put it mildly – Grangemouth’s owners wanted to import liquefied fracked gas from the US.
Before Wednesday, Scots found it difficult to believe that Ineos, which has grown into a multibillion dollar corporation within two decades, would close its Grangemouth’s operations.
Scotland’s first minister, Alex Salmond, believed he had a deal at one point, whereby Unite would withdraw the strike threat while the company would reopen the plant.
The union mishandled, and Salmond exaggerated his gains. Now he seeks a buyer for Grangemouth, which supplies 70 per cent of Scotland’s petrol, along with fuel for North of England and Northern Ireland.
However, loans guarantees will be needed, £300 million worth of them has already been promised by the British government, compared with much smaller offerings from its Scottish counterpart. More will probably be required, if Ineos is to be tempted back or another refiner found.
For now, politicians of all hues are working in tandem, or close to it. Soon, however, Grangemouth, like much else in Scotland, will play into the independence debate – depending on whether London or Edinburgh is credited or blamed for Grangemouth’s final end.