Till yesterday it seemed inconceivable that Grangemouth, representing 2% of Scotland’s GDP and 8% of its manufacturing capacity, could be closed down by an industrial dispute, with 800 jobs lost and another 600 nearby plus 2,000 contract staff severely at risk. The dispute reached rancorous levels from the demands of Ratcliffe, billionaire hedge fund owner of Ineos and apparently orchestrating evens from his yacht on the Cote d’Azur, for the workforce to accept a pay freeze for 2014-16 (and hence probably a real terms pay cut of some 5%), the ending of bonuses till 2016, a lower shift allowance, and the termination of the final salary pension scheme, in addition to demanding that Unite accept a no-strike deal. The ruthlessness with which Ratcliffe is trying to enforce his will, regardless of the consequences, may now threaten both fuel and chemical supplies in Scotland as well as devastate local businesses.
The dispute and now closure raises several fundamental issues. First, should a private hedge fund, intent on maximising short-term gains, be allowed to hold Scotland’s industry to ransom by laying down a series of non-negotiable demands that no workforce or union could conceivably be expected to concede to? This dispute shows once again that key elements of a nation’s industrial infrastructure cannot be entrusted to private markets where the national interest becomes a bauble at the mercy of tycoons’ financial brinkmanship. It is clear that when Ineos bought Grangemouth from BP, Ratcliffe knew very well the financial state of the petrochemical plant, but calculated he could bully the union and the workforce into submission so as quickly to secure a major pay-off.
Second, faced with this high-handedness the government has exhibited again its ideological prejudice in refusing to contemplate public ownership in order to save a huge plant that is part of the lifeblood of Scottish industry. Saying, as Downing Street has, that this is a matter for unions and owner to resolve shows once more the laissez faire approach of leaving corporate power to get its way, whatever the cost to individual workers or indeed to surrounding industry.
Third, since the refinery is almost half-owned by PetroChina, this whole episode highlights the folly of selling off, as has been done repeatedly over the last 30 years since Thatcher, large elements of Britain’s industrial infrastructure which may mean that at times like this key decisions are made, as here, not in Grangemouth but in Beijing (as happened just a few days ago with the Hinkley Point nuclear plant funded 30-40% by China). Essential parts of the nation’s manufacturing network are put in play, to be settled by foreign interests which may be far removed from giving priority to the welfare of Britain.
Fourth, and most troubling of all, this disaster reveals the desperate need for a proper industrial strategy to safeguard and steadily enhance the nation’s manufacturing capacity. This dispute reveals the appalling consequences which flow from unconditional belief in private markets and the need for a strong supportive State role as exists in all successful economies today.