Grangemouth and the Limits of Trade Union Action
The recent conflict at the Scottish oil refinery shows who holds the whip hand under capitalism.
Grangemouth oil refinery and petrochemicals plant on a 1,700-acre estate on the Firth of Forth 25 miles from Edinburgh is owned by INEOS, the world’s fourth largest chemicals conglomerate, and also the largest privately owned company in Britain. The Grangemouth plant is Scotland’s only oil refinery providing 85 percent of Scotland’s petrol, processing about 200,000 barrels of oil per day, it also powers the Forties pipeline which supplies a third of Britain’s North Sea oil. INEOS, launched in 1998 is owned by its management, headed by chairman and chemicals industry veteran Jim Ratcliffe, and now has a turnover of $43 billion (£27 billion). PetroChina bought a stake in Grangemouth in 2011 in a deal that was meant to secure its future.
INEOS repeatedly stated that Grangemouth was financially ‘distressed” and that without more investment it would close in 2017. INEOS director Tom Crotty stated ‘We have a business that’s losing £10 million every month. We’ve put £1 billion into that business. We need to put another £300 million into it to get it sorted out, to build a new terminal that will allow us to bring new sources of gas in, because the gas in the North Sea is running out’ (Guardian 18 October).
The trade union UNITE released an analysis of Grangemouth’s finances by tax consultant Richard Murphy. He disputed INEOS’s claims and said Grangemouth Chemicals made a profit in 2012 and was expecting £117 million of tax gains that could only occur if the company earned £500 million over the next few years. Murphy said total labour costs, including exceptional pension expenses, were 16.9 percent of revenue and total labour costs ‘should not be a critical cause for concern’ (Guardian 16 October).
In 2008 INEOS production was subject to adverse economic conditions and in an effort to increase profits entered into dispute with the trade union UNITE over the pension entitlements of the workforce at its Grangemouth plant. INEOS decided to close the final salary pension scheme to new employees. UNITE stated that Grangemouth workers were paid £6,000 less than those at comparable facilities. A 48-hour strike that followed caused panic buying of petrol throughout the country and the Forties production pipeline was closed. INEOS has been accused by some of buying assets then cutting costs through the introduction of new working practices, lower wages, and terminating pension schemes. According to Ratcliffe, some 65 percent of salary costs at Grangemouth related to pensions.
In the summer of this year Stephen Deans, convener for UNITE at the Grangemouth plant, and also head of the Falkirk branch of the Labour Party, was suspended from his employment at Grangemouth by INEOS while they investigated what they said were accusations that he had been using company resources for political campaigning; this was related to recruitment of UNITE members in the INEOS workforce to the local Labour branch, where the selection of a new parliamentary candidate was taking place after a de-selection. This had nothing to do with proper trade union activity.
However, the Deans dispute became conflated with the production demands of the INEOS company and an industrial dispute developed with UNITE over changes to terms and conditions for nearly 1,400 workers at Grangemouth refinery. INEOS demanded abolishing the final salary pension scheme, freezing wages and scrapping bonuses until 2017, reducing shift allowances, overtime pay, holidays, redundancy terms, and new agreements with UNITE to have only part-time conveners. Workers were given three working days to agree to what has been called a ‘sign-or-be-sacked’ ultimatum if they wanted to secure the one-off compensation payments for the concessions. It is important to remember that unions cannot push wages up to a level that prevents profits being made and can only work with labour market forces, pushing them up quicker than they otherwise would or slowing down any falls.
Unions arise out of the wage-relation that is at the basis of capitalism. The working class are forced to sell their mental and physical labour in order to live. The wage which workers receive is the price of their labour-power and the price of this commodity fluctuates, like that of all commodities, around its value as determined by the amount of socially-necessary labour incorporated in it. The strike weapon is the only defence the organised working class has against the capitalist class. Strikes are necessary if the working class are to prevent themselves from being driven into the ground by the never-satisfied demands of profit. The working class must organise to defend and improve our wages and conditions of work. The strike is a weapon that can limit the capitalists’ aims.
INEOS shut down the Grangemouth plant on supposed safety grounds in the face of threatened industrial action by UNITE. UNITE attacked INEOS for going ahead with a ‘cold shut-down’ that would put Grangemouth out of action for a month even after the plant was reopened. The union had called for a partial ‘warm’ shut-down during its strike to allow the plant to tick over and resume operation quickly. A strike at the plant requires an orderly shut-down for safety reasons. INEOS could have used a ‘hot’ shut-down where the plant is on standby so that operations can be quickly restarted. The closure could also disrupt the flow of North Sea oil into Scotland because BP’s giant Kinneil processing terminal next door relies on Grangemouth for its power. But despite the union’s decision to cancel its strike, INEOS went ahead with its shut-down and upped the stakes by raising the prospect of permanent closure putting 800 jobs on the line by declaring the permanent closure of Grangemouth’s petrochemicals site.
INEOS director Tom Crotty said the company would be ready to reopen Grangemouth if it received formal assurances from UNITE that there would be no strike between now and the end of December 2013. Grangemouth’s Labour MP Michael Connarty said ‘This isn’t 1970s management; this is 1920s management. Big companies shouldn’t be able to hold our country to ransom. Major national assets shouldn’t be left to the whim of a couple of hard men from the chemicals industry. INEOS acquired the plant when the economy was booming, enjoyed a year or two of bumper business and then suffered as demand fell in the global recession. They made the mistake of buying these things when the world economy was turning down and now they blame the workforce’ (Guardian 16 October).
UNITE official Pat Rafferty said the union was willing to abandon the working class strike weapon; ‘We would happily sign up to having no more strikes until the end of the year. We will enter happily into an agreement right now that will take us to Christmas, where we will have no industrial action and no ballots. In return for that, all we ask the company to do is sit down with us at the negotiating table over the next 45 days and look to try and seek agreement. The plant should be turned on. There’s no reason right now why that plant shouldn’t be turned on, because there’s no industrial action’ (Guardian 18 October).
Scottish First Minister, Alex Salmond agreed with Rafferty and urged INEOS to ‘fire up the plant and do it now. I think UNITE should give a no strike without strings guarantee. Once that is done INEOS should fire up the plant and then the various discussions, negotiations, consultations on terms and conditions, should take place against the background of a working plant, not a plant that is lying cold’ (Guardian 20 October).
INEOS said that Grangemouth was losing £10m a month and the workforce would have to accept changes for a planned £300m investment plan to be viable. INEOS rescinded their decision to close Grangemouth when the trade union UNITE hurriedly acceded to INEOS’s demands. INEOS will now make a £300 million investment after UNITE agreed a three-year no-strike pledge and pensions overhaul linked to a three-year pay freeze, moving to a ‘modern’ pension scheme and changes to union agreements on the site including no full-time union conveners. Stephen Deans, the UNITE official at the centre of the Grangemouth industrial dispute quit his job rather than face dismissal over his political activities at the plant.
Trade unions are defensive organisations of the working class with the limited role of protecting wages and working conditions and it is by this criterion that the actions of UNITE at Grangemouth and their effectiveness or otherwise ought to be judged. Trade unions are open to criticism when they depart from the principle of an antagonism of interests between the working class and the capitalist class; when they collaborate with the capitalist class, the state or political parties notably the Labour Party in the running of capitalism or support the interests of a particular section of working class above that of the general interest of the working class as a whole.
Marx argued that ‘Trade Unions work well as centres of resistance against the encroachments of capital. They fail partially from an injudicious use of their power. They fail generally from limiting themselves to a guerrilla war against the effects of the existing system, instead of simultaneously trying to change it, instead of using their organized forces as a lever for the final emancipation of the working class, that is to say the ultimate abolition of the wages system.’
Capitalism cannot be made to operate in the interests of the working class as is very evident by events at Grangemouth. Unions can achieve limited victories for the working class in capitalism. They can and do generally enable the working class to get the best available price for their labour-power, but they cannot stop the exploitation of the working class. This exploitation is inherent in the wages system and can only be abolished along with it through the conversion of the means of production into common ownership under the democratic control of the whole community. And that requires political action.