Strike Action at Scottish Oil Refinery

1,200 workers at the Grangemouth oil refinery in Scotland staged a forty eight hour strike, following a dispute over changes to the company pension scheme. It is estimated that the strike could have cost the economy £100 million.


Pension change

Ownership of the refinery switched from BP subsidiary Innovene to Ineos in 2005 and the new owners announced that it was their intention to close the final pension salary scheme to new employees. The new owners also wanted existing employees to start contributing six percent of their earnings to the scheme; at present employees make no contribution to the scheme.

Ineos General Manager, Gordon Grant, has argued that the current scheme is not sustainable in the long term. He stated: "This pension was inherited from BP. BP are an upstream oil company. We are a petrochemical company and we have to have a pension that is competitive in the market place that we operate in….petrochemicals is a difficult market place and we have to be competitive in everything that we do."

This version of the situation was called into question by the National Officer of the Unite Union, Phil McNulty. He has claimed that the move by the company is merely a way of cutting costs and increasing their profits; he also estimated that the plant makes approximately £1 million per day.

A ballot was taken by the Union on strike action and 97% voted in favour of the strike. The forty eight hour strike was taken on April 27th – 28th and was the first strike at an oil refinery for seventy three years.


Disruption

The temporary shutdown of the plant was preceded by a slowdown in production, lasting seven days to lower the temperature and depressurise each plant; this was necessary to ensure there were no safety issues whilst the plant was closed. An employee at Ineos stated that it would be a further three to four weeks after the strike ended before production would be back to 100%, as the start-up process would also be a gradual process.

The Grangemouth plant is the main supplier of oil to Scotland and the North of England and processes 210,000 barrels per day. There were fears that the disruption in supply would mean shortages at some point before the plant was back to full production, but this claim was refuted by Retail Motor Industry Federation who stated that there were approximately seventy days worth of fuel. Some garage forecourts did report shortages, due to panic buying, but there were no major shortages. The Scottish government also imported 65,000 tonnes of diesel from Europe to ensure there was no gap in supply for the emergency services.

Perhaps the biggest disruption caused by the strike was the knock-on effect that it had on North Sea oil extraction. The Forties Pipeline System carries about one third of the UK daily output, equating to 700,000 barrels of oil and 80 million cubic metres of gas. The pipeline goes to BP’s Kinneil plant, near Grangemouth, and cannot operate if the Grangemouth plant is out of action as steam from the plant helps power the pipeline. The strike at Grangemouth meant that oil from seventy sites in the North Sea had to halt production until the plant was reopened. The disruption in production contributed to oil reaching a record high price of $120 per barrel.


A significant victory

The strike has been hailed as a significant victory, both for the workers at the plant and the union movement in general, as Ineos released a statement confirming that they had shelved the plans to change the pension scheme on the proviso that there would be a commitment to negotiation on future reform.

The power of the unions has been in terminal decline from the 1970’s onwards and many of their leaders are hoping that the victory can show workers what they can achieve if they make a stand against unilateral decisions taken by management. One union leader commented that, "This will be a real morale booster. It shows that when people are prepared to put up a fight, they can win. We have more muscle than we give ourselves credit for, and loss of confidence can become a self-fulfilling weakness."

Some right-leaning newspapers, such as the Sunday Express, are fearful of the unions regaining the power they were able to wield in the 1970s with headlines claiming that the country was being held to ransom. This is a fanciful notion as the Grangemouth workers are in a unique bargaining position. In an economy heavily reliant on oil, a strike of a week or longer could bring the country to a halt. Few private sector workers can have such an impact.