More lessons from Grangemouth

Submitted by AWL on 30 October, 2013 - 3:08

The recent debacle surrounding the dispute at the Ineos petrochemicals plant at Grangemouth in Scotland could represent a significant defeat for the trade union movement. It certainly is a debilitating setback and an embarrassing climbdown. It raises some very worrying questions for socialists.

Shortly after launching an aggressive “leverage” campaign against Ineos, with 100% support from the stewards and just weeks after a massive vote of over 90% in favour of strike action against the employer, the workforce and their union, Unite, accepted a humiliating package of cuts and attacks on the union. What’s more, the Scottish and UK Governments agreed to hand over £134 million in aid to Ineos – Britain’s largest privately owned company, whose owner, Jim Ratcliffe, is a billionaire tax-exile.

If none of this had been predicted by Unite it would have been bad enough. But all of it was sketched out pretty clearly in the Union’s own internal research document and in their public leaflets – right down to the subsequent attack on Unite and the Union’s Grangemouth convenor, Stevie Deans, in the Murdoch press over “Dirty Tricks” surrounding the Falkirk Labour candidate selection (Sunday Times, October 27). So how was this capitulation allowed to happen?

Background to the dispute

Grangemouth is a hugely important economic asset. It accounts for 10% of Scotland’s economy and drives the pipeline that brings North Sea oil ashore. Fuel and products from the petrochemicals plant and the refinery it sits alongside are relied upon by many of the biggest names in retail and logistics. This vital national industrial facility was once a nationalised asset. Grangemouth used to belong to British Petroleum and was bought by Ineos in 2005, as the company grew rapidly into a petrochemicals giant through a wave of leveraged buy-outs.

The Unite shop stewards’ committee at Grangemouth described Jim Ratcliffe as a, “high-stakes operator”. He borrows vast sums of money to buy up companies and seems to get a kick out of taking massive risks with these sums of other people’s money and the futures of workers and communities where he invests. The shop stewards’ committee noted that he has off-shored his accounts to Luxembourg, Switzerland, the Channel Islands, Bermuda and Singapore – saving millions in taxes to the UK Treasury. The company’s accounts and research conducted for Unite by analyst Richard Murphy show Ineos Grangemouth Chemicals made an operating profit in 2012 and expects to make £500,000 million in the future, yet they wrote down the value of the facility to “nil”, a valuation confirmed by their auditors despite being at odds with their own accounts. In the run-up to the dispute they started claiming that the plant was losing £10 million a month in order to paint a picture of crisis and scare their workforce and the government.

Unite enjoyed a level of membership rarely seen since the days of nationalised industries and the closed-shop, from where this plant comes. In 2008 Grangemouth was the setting for a successful strike to save the final salary pension scheme. After the conclusion of that dispute, Ratcliffe is alleged to have promised the union stewards that he would “get you back for this”. This summer he appears to have seen his opportunity to make good on this promise.

Stevie Deans, Falkirk and a “loss-making” plant

In the early summer of 2013, Labour announced the suspension of the Falkirk Labour Party, Unite’s favoured candidate, Karie Murphy, and the constituency Chair, Stevie Deans. The Party not only announced an internal investigation but handed files to the Police. Both the Police and the Labour Party subsequently found no evidence of wrongdoing but Stevie was suspended from work. He was reinstated a week later and then in August the company informed him that they were re-intensifying their investigations. This seems to have given Jim Ratcliffe just the excuse he was looking for.

Unite found company documents showing that they wanted to provoke a strike in November – presumably because this is when they can expect to exert maximum pressure on the Scottish and UK governments over fuel supplies as winter closes in and also on the workforce and their families as they face a Christmas without wages and with an uncertain future.

About this time, company noises about the loss-making nature of the plant start to be broadcast with increasing frequency.

What was the company trying to do?

It seems that Ineos wanted to portray an embattled plant that could not continue without slashing workers’ pay and conditions and a massive cash injection in order to modernise. This could of course be paid for by Jim Ratcliffe. After all, even the Daily Mail estimated him to be worth £670 million. But much better that the tax-payer and the workforce should cough up (it is worth remembering here that on the millions their accounts claim were made by Grangemouth in 2012, £0 was paid in taxes)!

If Ineos could get a significant chunk of this £300 million from the taxpayer they can upgrade one of the “crackers” at the site to take feedstock from US shale gas without troubling their own pockets. This should make Grangemouth and incredibly cost-efficient, and incredibly profitable, plant.

So the plan seemed to be:

• Portray the plant as doomed and threaten the workforce, the community and the Scottish and UK Governments with ruin in the case of a likely closure

• Pick a fight with the workforce to provoke a dispute that completes the picture of an embattled operation and places the blame with the workforce and their union – using the phony issue of Stevie Deans and Falkirk as the pretext

• Smash the union and humiliate the workforce – finally getting revenge for the 2008 strike

• Blackmail the taxpayer into paying the cost of upgrading the facility – taking money that could pay for a hospital or some schools and giving it to a billionaire!

The union response

Despite being aware of this provocation, the stewards felt that they had no choice but to defend Stevie who was clearly being victimised by the company and in all likelihood facing the sack, so they balloted and won a huge majority for industrial action in defence of their convenor.

The Union was aware at all levels of the dirty tricks campaign by the company and the high stakes involved in any dispute. They even seemed fully aware of the record and hostile nature of Jim Ratcliffe and Ineos and the sort of tactics they seemed to be preparing to use against the union.

As negotiations seemed to be going nowhere and as the company seemed intent on a dispute, Unite ordered the Organising and Leverage Department to prepare a leverage campaign (a campaign of demonstrations targeting investors, clients, joint-venture partners, the directors and other decision-makers associated with the company, in order to force change. This resulted in an in-depth analysis of the company, its directors, investors, partners etc., and the points of vulnerability to aim for within this complex. A campaign was indeed launched and demonstrations took place across the UK and Europe that forced responses from some big investors and joint venture partners and made sure neighbours of Ineos’s directors and even guests to Jim Ratcliffe’s birthday party and members of his sailing club knew all about the campaign.

Yet at the same time as the Union was preparing this detailed and quite impressive response and was effectively declaring war on the company, it was publicly offering continued talks and conciliation, was responding to company attacks in the press and called off a planned 48 hour stoppage in the desperate hope that the company would reconsider its decision to close the plant in the light of such “reasonableness”.

There may be a debate about whether or not the union should have called the strike, or should have considered other forms of action than a 48 hour stoppage, knowing that the company wanted them out in November, but having done so, calling it off looked like a show of weakness.

The end-game

Instead of appreciating the reasonableness of Unite the company instituted what was effectively a lock-out of the workforce and presented them with a “take it or leave it” package, including a pay freeze, cuts to benefits such as overtime payments, the introduction of a two tier workforce and the closure of the final salary pension scheme. This “offer” was made over the heads of the recognised union, Unite, direct to the workforce.

The majority of the workforce, despite all the threats, despite the lack of alternative employment in the area and despite knowing that Ratcliffe had shut down plants before, voted to reject the company’s proposals. However a 90% majority was now just a majority.

Within 24 hours of receiving the vote from the workforce the company announced that it would close the Grangemouth petrochemicals plant, with the likely closure of the refinery and the pipeline to follow.

That same day, Unite announced that they were preparing an “offer” to the company.

The following day Unite announced that they would accept just about every attack and humiliation the company had proposed, in order to save the plant from closure.

By the end of the week a further announcement was made, to very little fuss, that the tax-payer would foot the bill to upgrade the plant for Ineos and Mr Ratcliffe.

How did this happen?

1) Ineos’s threat carried weight. If Grangemouth closed, nearly 1,400 workers and their families would lose work. With very few alternative employers nearby, the effect on the community would be devastating. And he had done it before. The most likely calculation was that Ratcliffe never wanted to shut the plant but was playing a game of brinksmanship, aimed at screwing the workforce and the taxpayer and walking away with a supine workforce and a newly upgraded plant that would be a licence to print money. But if he thought he wouldn’t get all that he may well have shut the plant and concentrated on other opportunities to further enrich himself. However there were alternatives.

2) Very quickly the resolve of an apparently militant and well-organised workforce collapsed. They told the stewards to accept whatever the company wants and the stewards told “the union”. The Union did as asked. To some extent this seems reasonable – after all we are for union officials doing as their members tell them. However, leaders have a responsibility to lead. If each move made by Ratcliffe and Ineos was anticipated by Unite’s leverage research, why was this not understood by the workforce? Where were the phone-rounds, the home visits, the mass meetings the letters, texts and emails to explain Unite’s view to the workforce and the community and the politicians? Why no daily dispute bulleting? A workforce properly prepared and inoculated against this attack would not have collapsed so quickly.

3) Unite’s strategy had pointed in two opposite directions: on the one hand open warfare through their leverage campaign and on the other hand, conciliation and apology from the leadership in Scotland. This must have been as disorientating to the workforce as it was encouraging to the company directors.

4) Unite’s message had been garbled – responding to every question from the employer and a hostile or ignorant media instead of sticking to its own core message – “Labour costs are a tiny proportion of the operating costs, therefore there is no need for this attack, it is a phoney war aimed at screwing support from the taxpayer to upgrade the plant. Don’t fall for it.”

5) Unite failed to call for public ownership. Ineos’s threat to close only carried weight because there appeared to be no alternative. But surely the Scottish Government could have nationalised the plant and ensured the jobs remained and the money to upgrade was secured? What’s more, according to Ineos’ own accounts (or at least one set of them) the plant was worth nothing so they could have done this for free. Unite had strong leverage here to push the SNP and the Scottish Labour Party into supporting this option and apparently there is some support for this in both parties.

What now?

Stevie Deans has been subjected to a disgraceful media witch hunt by his employers. He should expect our support.

The employer is likely to attempt to spread this victory, adopting similar tactics elsewhere in its empire. Other bosses will no doubt have been watching. We should oppose them at every turn.

Further media attacks on Unite, Len McCluskey, and the Labour link must be likely. We should oppose these attacks and make the case for working-class political representation.

We should point out the scandal of this billionaire holding the country to ransom and receiving a hand out from the public purse.

We should argue how this débâcle shows the need to take vital economic assets – refineries, ports, banks, utilities companies – into public hands.

Lessons for socialists

1) Organisation is important – and that means more than just high membership but also involvement in activity and discussion.

2) Industrial disputes must be fought as such – they are wars. There is no relationship between a union and an employer in a dispute. It has broken down completely. All and every effort must be focused on defeating an industrial enemy in a dispute.

3) Rank-and-file leadership is important but the simple formula of right-wing bureaucrats vs a radical rank and file plainly wasn't the case here. The rank and file was behind the reps and officials in this case. We need to work to educate and develop, even in apparently militant and well-organised workplaces.

4) Politics matter – there may never be a clearer case for nationalising a strategic industrial asset than this. It is a scandal that such an asset can be left in the hands of an irresponsible billionaire and even more so that the taxpayer should foot the bill to improve profitability at one of his investments! Only a workers’ party can make this case with sufficient weight for it to be carried through and only an educated trade union membership will fight for political demands such as this.

5) A clear strategy and political and organisational vision is needed for fighting back in the unions. We must take responsibility for helping to develop one.

How deep a wound this defeat inflicts on the labour movement remains to be seen. Learning the lessons will help us ensure the best recovery possible.