UPDATE 1-Ineos unveils Grangemouth 'survival plan' with job cuts

Mon Sep 30, 2013 4:47pm BST

Related Topics

* Ineos seeking govt financial support for shale gas storage

* Union scathing of plan

* Refinery says losing 100 mln pounds/year, chemical plant 50 mln

By Simon Falush

LONDON, Sept 30 (Reuters) - Ineos announced what it described as a "survival plan" on Monday to keep in operation the petrochemical plant attached to its refinery in Grangemouth, Scotland, involving job cuts and changing pension plans to reduce costs.

The company would not specify the level of job cuts but said the closure of a naphtha cracker by 2015 and other parts of the plant would lead to a loss of headcount.

It said its pension scheme had a 200 million pound ($322 million) deficit.

The plan outlined to workers proposes closing a defined-benefit pension whereby workers receive a fixed proportion of their final salary, and replacing it with a defined-contribution pension to which the company puts in 11 percent of salary.

"The current defined-benefit scheme costs 65 percent of salary, which is off the scale ... We're doing this to catch up with the deficit," Calum MacLean, chairman of Grangemouth Petrochemicals and Grangemouth Refining, told Reuters.

He said cutting costs was crucial to securing a grant from the Scottish government of 9 million pounds and a loan guarantee from the British finance ministry of 125 million pounds.

Ineos is seeking such support to invest in a 300 million pound storage tank for shale gas imported from the United States, which MacLean said would be substantially cheaper than gas sourced from the North Sea.

He said the petrochemical plant was losing 50 million pounds and the refinery 100 million pounds per year.

"The shareholders are saying to the union that they will not contribute 300 million pounds unless the high cost base is put under control."

SCATHING REACTION

Initial reaction from the union to the plan was scathing.

"Not one line in that document is acceptable," said Mark Lyon, vice chair of the Unite union.

"People would leave in their droves if these terms were agreed."

The company is already in dispute with Unite, whose members voted last week to strike due to a disciplinary matter involving an employee at the plant.

Lyon indicated that industrial action short of a strike would be proposed to members, but added that this could change after canvassing opinion at a meeting due for Tuesday.

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