Analysis

What the Grangemouth closure really means for Scotland

by | 27 Nov 2023

If we look at the longer history of strife at the Grangemouth refinery we get a clearer picture of Scotland's place in the world. It makes clear the need to build Scotland a new place in the coming world.

First published in The National

To get a sense of what is happening to the Grangemouth oil refinery now it is helpful to look back at the last dispute at the plant ten years ago. When you do you’ll realise that tackling climate change is not the only reason we need to accelerate a ‘just transition’.

In 2013, Grangemouth owner Ineos had fairly clearly been preparing for a deliberately-engineered showdown with the unions. When some petty internal Labour Party in-fighting involved one of the main shop stewards at the plant, it gave Ineos a pretext to suspended him. Quickly after that came a number of other clear provocations of the union. Ineos was looking for a fight.

The unions had no choice but to fight back, but when they threatened industrial action, Ineos threatened to switch off the whole plant (this is a big deal in petrochemical processing – you never close down the plant and it can take weeks to restart it). When the union called off threatened industrial action, Ineos switched off the plant anyway. It was the owner who was leading the shut down.

This is important; sometimes a business owner will bluff about a lack of commitment to a facility to increase leverage, but no-one involved in the dispute thought Ineos boss Jim Radcliff was bluffing. He had a track record of taking brutal decision which cost him, but which cost his political opponents more.

The workers were offered a take-it-or-leave-it new contract which greatly reduced their pay and conditions. They rejected it, it went to negotiating body Acas . After days of negotiation, the unions reported that a deal was was all but agreed – so Ineos walked out. It permanently closed half of the plant and gave a final ultimatum to those working in the other half – sign the contract or lose their jobs.

They had no option. They signed, and the union was humiliated. The Scottish Government at the time played a bad hand well, but in the end it had to bribe Ineos to keep the facility going. There was good reason then to doubt Ineos’s claim that the plant was loss-making, but it became really apparent that the Grangemouth facility just wasn’t important enough to Ineos’s global operation.

I remind you of this history because I’m very pessimistic about Grangemouth’s future. While Ineos is now only part-owner, neither it nor its overall Chinese owner seem to have enough interest in a plant that basically only supplies fuel to Scotland and the north of England. In dating parlance, they’re just not that into us.

It’s not just that we didn’t get our act together in building a renewable energy industry over the last 20 years, it’s that we’re singularly failing to get our act together now

I remind you of this to try and make clear that the ‘transition’ part of a ‘just transition’ is about decarbonising the economy, but the ‘just’ bit of it is to make sure that the transition benefits the people of Scotland. It is the ‘just’ part of the equation that the Grangemouth situation points to.

Put really simply, in Scotland, oil and gas is a declining industry. Its decline will come in fits and starts, influenced by global oil prices and the whims of Westminster in issuing or not issuing more drilling licenses. We will continue to produce oil for probably another 20 years, but global markets mean even this is unpredictable and we simply aren’t going to see sustained growth in the sector.

A very big part of this is because of how our oil industry was set up. If drilling and processing had been done in a way that retained domestic Scottish ownership, the calculus today would have been very different. But it wasn’t, and that’s where we are.

What is not in decline is our need for energy; in fact that will increase. This is the potential growth industry in Scotland. If Scotland had got its act together over the last 20 years, we would have that industry now, growing and looking for a workforce. This weekend we would have been looking at a transition plan for Grangemouth workers to help them move into that growing, high-skill manufacturing workforce.

But we didn’t get our act together and so we don’t have a booming industry. I doubt that nationalising the Grangemouth plant is viable (unless the UK chooses to do it for fuel security reasons, which I doubt will happen). In reality this is probably a Ravenscraig scenario. We’re just trying to manage the harm.

What this should really do is shock us into action. It’s not just that we didn’t get our act together in building a renewable energy industry over the last 20 years, it’s that we’re singularly failing to get our act together now. We are privatising the next generation of our energy resources hand over fist – the failure to build a sustainable business at BiFab, the ludicrous ScotWind auction, the decision to le a Norwegian company send our green hydrogen straight to Germany with little benefit for Scotland.

Look at Norway and compare. They took control of their own future while Thatcher privatised Scotland’s. The likely end of Grangemouth is just a 50-year hangover of that decision. We must – absolutely must – not repeat that mistake. If the Scottish Government doesn’t make a serious U-turn on its energy privatisation spree and begin implementing an industrial strategy to transition our economy and create new high-value industries, we will repeat this mistake. And we will deserve to have more failure baked into our fututre.

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