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ckn

Grangemouth distillery

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Telegraph linky

 

Here's what happens when you allow a key part of the UK's oil infrastructure to be owned by companies only interested in the commercial value of it.  The unions are being pig headed by refusing to negotiate.  The company are being pig headed by refusing to negotiate.  The company has all the power though, they've canned part of the site permanently to prove a point and they've made it very clear that unless the unions and employees buckle under then the rest of the site gets canned.  The owners don't have to be elected again next time round and there's absolutely no incentive for them to hold on to an asset that's not going to make them money.

 

Essentially, the employees (not the unions) have a choice, accept the new terms en-masse or get in the queue to sign on.

 

There are some things such as this and, oooh, maybe nuclear power plants, that you really want to be state owned.

 

Also, have the unions not cottoned on that the days of private sector final salary pensions have gone and aren't returning?  The only reason the public sector still has them is that the government is too scared to tackle the unions.

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Telegraph linky

 

Here's what happens when you allow a key part of the UK's oil infrastructure to be owned by companies only interested in the commercial value of it.  The unions are being pig headed by refusing to negotiate.  The company are being pig headed by refusing to negotiate.  The company has all the power though, they've canned part of the site permanently to prove a point and they've made it very clear that unless the unions and employees buckle under then the rest of the site gets canned.  The owners don't have to be elected again next time round and there's absolutely no incentive for them to hold on to an asset that's not going to make them money.

 

Essentially, the employees (not the unions) have a choice, accept the new terms en-masse or get in the queue to sign on.

 

There are some things such as this and, oooh, maybe nuclear power plants, that you really want to be state owned.

 

Also, have the unions not cottoned on that the days of private sector final salary pensions have gone and aren't returning?  The only reason the public sector still has them is that the government is too scared to tackle the unions.

And the race to bottom gathers pace.

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SO if it doesn't make money, who do you think is going to be interested in running it?

The state?

Didn't we do that in the 70s?

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SO if it doesn't make money, who do you think is going to be interested in running it?

The state?

Didn't we do that in the 70s?

Some things should be run even if we can't make money from them.  Critical infrastructure such as this should be included in the same "must keep going" category as the NHS, military and the like.

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Some things should be run even if we can't make money from them. Critical infrastructure such as this should be included in the same "must keep going" category as the NHS, military and the like.

I agree, The two biggest chemical companies in the world are BASF and Dow. It wasn't always the case ICI was once the biggest, until it was broken up to make a few people millionaires (Digby Jones for one.)

Grangemouth is strategely important for the northern area of Britain for petrochemicals. If this was still part of BP or a bigger consortium then it would not be as vunerable to recessions. But the break up and sell off of British companies is finally coming home to roost in that we could lose a strategic asset to the long term security of the country, just so a hedge fund can make a few bob.

In the meantime we continue to devalue skilled workers in a race to the bottom where everyone is on the same low pay and conditions.

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SO if it doesn't make money, who do you think is going to be interested in running it?

The state?

Didn't we do that in the 70s?

 

Is it actually making a loss or is it just not making as much money as the company would it like to?

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They want to close a distillery in Grangemouth???

That's a disaster, especially coming after the news that Ineos want to shut their petro-chemicals plant. ;)

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They want to close a distillery in Grangemouth???

That's a disaster, especially coming after the news that Ineos want to shut their petro-chemicals plant. ;)

If oil goes in one end and fuel products come out the other then it's a distillery to me...

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Some very rough maths on a snippet heard yesterday on LW Radio Four whilst on tour with my band.

The 1200 or so workers were threatening to strike. The owners say they're losing £10m per month and need to address the wage bill.

I'm not an expert but I don't think the payroll was the problem.

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You don't just distill spirts to drink.

Crude oil contains a vast array of hydrocarbons and these are separated out via distillation.

Agree the more common term is refinery since the crude oil is refined into more usable components but this is still done via distillation.

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Eric Joyce's blog has some interesting views on the matter. Can't link cause on mobile!

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Is it actually making a loss or is it just not making as much money as the company would it like to?

No one is really sure. Unite had their financial expert look at the accounts to verify what the Ineos management were claiming and he found the way they presented their accounts so convoluted that he couldn't separate out Grangemouth's figures.

It isn't just financial, though, there are more serious technical issues. As I understand it, the refinery at Grangemouth treats crude oil piped in from certain North Seas fields. The by-products include certain gases that the petro-chemical plant next door converts into sellable products. As the oil field has matured the nature of this gas has changed and Ineos say that it is no longer suitable. They need a new 'feed' source, and have proposed cheap shale gas from America. The only problem is that the plant would need to be converted to take this new feed, and Ineos had been trying to get up to £300 million from the state to help with the restructure.

In any case, I think the plant has only been working at about 60% of capacity and Ineos were talking about it closing in 2017. Into this situation came a little "local difficulty". You may remember a few months ago that there was a bit of trouble in the Falkirk Labour Party over the selection of a candidate to be a Westminster MP. There were allegations of the Unite union signing up union members to the Labour Party without there knowledge. Right at the centre of the issue was a Unite convenor at the Ineos plant, and I believe he was suspended from the party whilst the issue was investigated. The police became involved but they didn't find sufficient evidence of wrongdoing and the case was dropped.

The management at Ineos also became involved as it believed that the union convenor had been doing this on their premises, in their time, on their computers, etc, etc. They started disciplinary procedures against him and Unite and the workforce retaliated. Things escalated and in response to the threat of a 48 hour strike last weekend Ineos closed the plant. The union, taken aback, cancelled the strike and asked for the plant to remain open, to no avail. In fact the management had been playing hardball, trying to reduce costs, and by way of a 'rescue plan' they went ove the heads of the union and put severely reduced terms directly to the workforce. The response of the employees was negative and the management took the decision to close the petro-chemical plant down permanently. The oil refinery may remain open - they haven't taken that decision yet - but the finances of the refinery without the petro-chemical plant are severely diminished.

The response of both the Holyrood and Westminster governments is to look for another buyer. I'm not sure nationalisation is on the cards. Holyrood receives a certain amount of funding from the UK government, but not the sort of budget that would allow hundreds of millions to be spent on industrial intervention, and I'm sure the Westmister government wouldn't want to spend the money on a concern that may not have a healthy future.

This issue relates to another debate that was on here about vital infrastructure being owned by foreign investors. Although Ineos is registered in Switzerland, it is effectively a British private equity organisation. This British concern, though, is effectively holding both Scotland and the UK to ransom. In contrast, its partner in the oil refinery, Petro-China, as the name suggests a Chinese concern, today pleaded for all parties to sit down and reach a consensuus.

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Eric Joyce's blog has some interesting views on the matter. Can't link cause on mobile!

Link for you.  For an MP, he certainly doesn't sit on the fence!

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Some things should be run even if we can't make money from them.  Critical infrastructure such as this should be included in the same "must keep going" category as the NHS, military and the like.

Who ran the infrastructure when we had the 3 day weeks in the 70's?

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You don't just distill spirts to drink.

Crude oil contains a vast array of hydrocarbons and these are separated out via distillation.

Agree the more common term is refinery since the crude oil is refined into more usable components but this is still done via distillation.

The refinery part of the complex isn't closing - yet!

It is just the closure of the petro-chemicals plant makes the demise of the refinery more likely.

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If oil goes in one end and fuel products come out the other then it's a distillery to me...

I can see your point but you've got to be so careful with the terminology - we'll drink anything from a distillery around here!

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Many years ago, I used to deal with an ICI chemical works.

 

The plant's total output comprised only a small proportion of finished saleable product. It primarily made, on a very large scale, feedstock products for  chemical processes conducted at other ICI plants.

 

The parent company regularly told the workers that the plant wasn't meeting its financial targets. However,  those were only notional targets as the gate fees at the receiving plants were set by ICI itself.  The overall processes made a decent profit and there was no way the receiving sites could outsource cheaper feedstock reagents in the requisite volumes and quality.

 

I always have reservations about the claimed economic situation for plants such as this one at Grangemouth. Profit-and-loss figures in multinational organisations are relatively easy to rig.

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I can see your point but you've got to be so careful with the terminology - we'll drink anything from a distillery around here!

Pah, shareholders and their single malts.

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Some things should be run even if we can't make money from them.  Critical infrastructure such as this should be included in the same "must keep going" category as the NHS, military and the like.

Neither the NHS nor the military are businesses. I'm not sure what makes this so critical. We buy in so many things what makes energy so different?

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Many years ago, I used to deal with an ICI chemical works.

 

The plant's total output comprised only a small proportion of finished saleable product. It primarily made, on a very large scale, feedstock products for  chemical processes conducted at other ICI plants.

 

The parent company regularly told the workers that the plant wasn't meeting its financial targets. However,  those were only notional targets as the gate fees at the receiving plants were set by ICI itself.  The overall processes made a decent profit and there was no way the receiving sites could outsource cheaper feedstock reagents in the requisite volumes and quality.

 

I always have reservations about the claimed economic situation for plants such as this one at Grangemouth. Profit-and-loss figures in multinational organisations are relatively easy to rig.

Why would they wish to close it down if it was making a profit?

Companies don't work that way.

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Why would they wish to close it down if it was making a profit?

Companies don't work that way.

They wouldn't but they would use the apparent non- profitability / high losses to bully the workforce to accept lower pay and conditions. When in reality the business is viable and profitable

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