A placard floats in a puddle in a car park in front of the Grangemouth refinery

Grangemouth petrochemical site to close

The petrochemical side of the giant Grangemouth site in Scotland is to close following a bitter row over pay and conditions.

Workers were given the news at a meeting with Calum MacLean, chairman of Swiss owner Ineos, who said the firm made the decision after workers were split 50/50 on a survival plan for the site, which included accepting a pay freeze and changes to pensions and other terms and conditions.

The 210,000-barrels-per-day refinery, which provides most of Scotland's fuel, will remain open, but Ineos said a decision to restart production at the site, which has been closed for the past week, will depend on any threat of industrial action.

"This is a hugely sad day for everyone at Grangemouth. We have tried our hardest to convince employees of the need for change but unsuccessfully. There was only ever going to be one outcome to this story if nothing changed and we continued to lose money," said McClean.

"We still struggle to comprehend what has happened here. The employees were offered a chance to secure substantial new investment in the company, preserve their jobs and keep their salaries. Sadly this will no longer be the case."

On the banks of the Firth of Forth in east Scotland, Grangemouth is one of only seven refineries left in the UK and is the biggest industrial site in Scotland and about 1,400 staff work at the 2.7-square-mile site, with 800 employed at the chemical plant and hundreds more employed as sub-contractors.

The Unite union said about 680 employees had rejected the company's proposals, which include a pay freeze for 2014 to 16, removal of a bonus up to 2016, a reduced shift allowance and ending of the final salary pension scheme. Ineos had said those who supported the survival plan would receive a transitional payment of up to £15,000.

The plant, which has been shut down since last week because of the dispute, is losing £10m a month according to Ineos, but they were ready to invest £300m in Grangemouth if workers agreed to the new terms and conditions.

Unite has accused the company of playing "Russian roulette" with the future of Grangemouth, the biggest industrial site in Scotland, and is backing any efforts by the Scottish Government to find a new buyer for the oil refinery and petrochemical complex.

"Unite and our members at Grangemouth are devastated by the announcement this morning of the closure of the petrochemical plant. It has confirmed our fears that this was the intention of Ineos all along,” said Unite’s Scottish secretary, Pat Rafferty.

"Discussions have taken place with the company this morning and will continue over the course of the day. We have made further proposals in a last-ditch effort to stave off these catastrophic job losses which we believe is tantamount to economic and industrial vandalism.

"Make no mistake – one man is holding this workforce and this country to ransom and that man is the Ineos owner, Jim Ratcliffe. Unite cannot do any more. The ball is now in the court of Jim Ratcliffe and the respective Governments in Edinburgh and Westminster and we await their responses."

Ineos said that following the breakdown of talks at the conciliation service Acas last week and Unite's "refusal" to provide a no strike guarantee, the company decided to approach workers direct.

"Employees were asked to support the changes necessary to save the business,” said a statement.

“Management held direct meetings with all employees to explain the very serious nature of the problem. The company made it clear that rejection of change would result in closure. Regrettably, the union advised union members to reject any form of change.

"The outcome of the employee vote on the company's survival plan was a 50/50 split. Within this, almost all of the administrative staff voted for the company's plan but a large majority of shop floor employees voted to reject it.

"The shareholders met yesterday to consider the future of the business following the result of the employee vote. Sadly, the shareholders reached the conclusion that they could not see a future for Grangemouth without change and therefore could no longer continue to fund the business."

The company added that the directors of the petrochemicals business have engaged the services of a liquidator, with the liquidation process expected to start in a week.

Prime Minister David Cameron's official spokesman said: "This is a disappointing outcome. We would continue to urge both parties who have been involved in the dispute to try to find a way to continue their dialogue.”

Asked whether there was a possibility of the plant being nationalised, the spokesman replied: "No."

Asked what contingency arrangements had been made in case petrol supplies were halted, the spokesman said: "Fuel supplies are continuing to be delivered, so that's the actual situation. Of course, Government has contingency plans for a range of scenarios, as you would expect."

Scotland's First Minister Alex Salmond said he is convening an emergency cabinet meeting to discuss the situation.

He said: "This announcement by Ineos is hugely disappointing. It is, however, the position we always feared as it became apparent that the stalemate was not going to be broken.

"It has been a growing danger since the plant was shut down last week and the emergence of a virtual deadlock between workers and management over the weekend. This is the outcome that matches our worst fears, which is why we urged getting the plant fired up instead of lying cold.

"I will be speaking again to management and unions today to try and seek any further resolution we can. I will also convene an emergency cabinet meeting with relevant ministers later today to discuss the ongoing situation.

"In preparing for this extremely difficult position we have been pursuing the contingency of potential buyers – we will now be actively exploring this as the main option as a matter of urgency.

"The Scottish Government strongly believes the site has a positive future and we will continue to work with the UK Government and all other parties concerned to find a solution that supports the workers affected and the wider Scottish economy."

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