Monday, 28 October 2013

Grangemouth and the demise of the industrial correspondent

The last few weeks, and particularly the last few days have given trade unionists a fresh reason to mourn the demise of the industrial correspondent.  The causes and reasons for this are not the subject of this article.  But suffice to say there was a time when a major media outlet covering a dispute such as Grangemouth would have employed a political correspondent, a business correspondent and an industrial correspondent, each with a level of expertise and understanding which could be related to the reportage of a particular event.  That is no longer the case and balanced coverage of the trade union role at Grangemouth has been the main casualty.

There has for a long time now been a problem with language.  The last few days has included a liberal peppering of pejoratives. The union has ‘capitulated’ and ‘surrendered.’ Ian MacWhirter (whose particular poor article in this week’s Sunday Herald will be referenced a number of times in this piece) says “The result will have been noted by every industrial employer in Britain, as the highest-paid and best-organised (in a trade union sense) industrial workers in Scotland have been humbled”.

As research proves there is a very strong tendency in the media when talking of unions to focus on (perceived) negative and hostile emotional responses anger, fury, threat, threaten, battle and attack”. Unions are led by “bosses, barons and chiefs”. In this context it may seem natural to employ similar pejoratives when unions suffer a reversal, but it’s not good journalism.  By way of example contrast the use of language from BBC Business Editor Douglas Fraser who also uses the humble word in the context of the union but who was content to describe the Jim Ratcliff closure ultimatum of the Grangemouth plant as nothing more than “assertive”.

The specific nature of Ineos has been recognised by most of the journalists in the field - venture capital funded, lightly regulated, “too big to fail” in the context of the UK fuel market and the wider supply chain and with an aggressive management style. But there has been a near universal failure by journalists when judging the role of Unite within this dispute to apply any of this context in a way which might reach a more nuanced understanding of why things happened as they did or what the implications might be. This is probably due to a lack of familiarity with industrial relations and the dynamic of the workplace.

The quote from MacWhirter cited earlier is a case in point.
Industrial employers will certainly have noted what happened at Grangemouth. But they will also know, as most observers should, that the Ineos situation was in no way typical and or one from which generalised industrial relations conclusions should be drawn.  Put simply, the game changed when, in the middle of the dispute, Ineos threatened to ‘cut and run’ threatening thousands of jobs and a whole community. The bargaining position of the respective sides was fundamentally altered.  This is the context in which Unite’s subsequent actions must be judged.

For some like MacWhirter the position on this is straight forward. Unite ‘miscalculated.’ It could and should have known exactly what Ratcliff was prepared or planning to do.

 Unite failed to realise that Ratcliffe was serious about closing the Grangemouth petrochemical plant. If any of Unite’s officials had lifted a phone to call one of Scotland’s legion of oil analysts, or any business journalist, they would have been told that Grangemouth is on a distinctly shoogly peg; that its out-dated plant and history of poor industrial relations made it a likely candidate for the chop in a global business hit by falling prices and competition from low-cost countries in Asia.”

The presumption that the union was 'fiddling while Rome burned' is unsubstantiated nonsense.  That the plant faced challenges, required investment and existed within a changing global market was shared and mutually understood information by management, union and many others.  Far from being uninterested in this, the union conveners and shop stewards had, and continue to have, a highly sophisticated knowledge of their plant. They know the parts of the operation which are profitable and potentially more profitable, they know when and how this can happen. They know in great detail the implications of closure of the petrochemical plant for the operation of the refinery and surrounding industry. They know about the world market, about the balance between diesel and petrol and the implications of the new US shale gas supplies.

So when Douglas Fraser says (in the article linked earlier) “For unions, there's a need to see the context in which their sector works, and to see ahead to the direction their employers are heading. Change is a constant, so it's doubtful that digging in to defend the past is much of a long-term strategy.” he demonstrates a straightforward lack of knowledge of the industrial relations landscape he is describing, both in relation of the Ineos conveners specifically and the role of the union nationally.  (A couple of links to Unite’s strategy on refining and petro-chemicals are attached at the bottom of this article). 

So the conveners were acutely aware of the issues, but they were also highly sceptical about the negative gloss the company was putting on its current profit/losses. And in this they were far from alone. On the plant itself they were in full agreement with  Alex Salmond, John Swinney and many others - a bright future was possible.  They were also entirely willing to negotiate and to make concessions to secure the future of Grangemouth and the jobs.

What the conveners didn’t know, because no-one (including MacWhirter’s legion of oil experts and business correspondents) knew, or even now knows, is exactly how valid was the Ineos claim on monthly losses or the overall profitability of the company.  John Swinney on BBC Newsnight last week  insisted that the Scottish Government  had undergone due diligence in deciding to offer £9 million in funding to Ineos, but he didn’t for one moment suggest that he or any of his officials had been able to gather a complete picture of Ineos’s global finances.

 So a more nuanced picture emerges.  Over the weekend before last, when Unite was recommending that its members reject the company’s ultimatum it was still entirely possible a) that Jim Ratcliffe would, either of his own volition, or through the influence of key players such as Petro China, lenders and the respective governments, pull back from the brink b) that real progress would be made with the alternative buyer being courted by the First Minister c) that the Scottish Government would undertake to take the company into some form of public ownership if options a) and b) failed.

If Unite had believed other than that Grangemouth had a strong future (irrespective of the detail of any final deal on terms and conditions) it is entirely clear to me that, as subsequent events demonstrate,  its position prior to that weekend meeting would have been different. 

But by Tuesday morning there were developments and/or a lack of developments which made the situation even more acute than it had been prior to the weekend a) Ratcliffe had decided to go ahead with closure b) whilst discussions between the Scottish Government and an alternative buyer continued, the potential remained unclear and it was undoubtedly still the First Minster’s preference that a deal with Ineos be reached c) it seemed highly likely for constitutional or financial reasons (or probably both) that the Scottish Government could not take Grangemouth into public ownership and meanwhile the UK Government was palpably continuing to adopt a minimalist approach to intervention. (The latter point about whether the Scottish Government actually had the powers to take the plant into public hands was almost universally ignored in the media).

According to MacWhirter, the only way the situation was ultimately resolved, was when “the workers effectively sacked their own union leaders”.  But that’s not true.  The situation was resolved when the Unite conveners made a new offer to the management.  MacWhirter needs to imagine that some sort of overthrow of power was effected or it wouldn’t sit with his view that Unite were in this dispute for reasons of “obstinacy and self-interest”.  But to repeat, what he says happen, didn’t happen.

Commentators are entitled to argue that somewhere within the range of unknown intentions and fast moving events described above, there was the potential for a better calculation on the part of the union.  But to imply, as MacWhirter and a whole host of other commentators have, that the union’s options were somehow easy to calculate and unhindered by difficulty doesn’t stand up to scrutiny.

The real story of Grangemouth is still ‘what Ineos tells us about power in Britain today’ - as blogged here by STUC General Secretary, Grahame Smith on Sunday 27th October. We are still awaiting a nuanced analysis from a Scottish journalist of how trade unionism and the events in Grangemouth really fit into that picture.
The result will have been noted by every industrial employer in Britain, as the highest-paid and best-organised (in a trade union sense) industrial workers in Scotland have been humbled.

Sunday, 27 October 2013

What Ineos tells us about power in Britain today.

This week’s events reveal all we need to know about where power lies in Britain today, and it is frightening.

Jim Ratcliffe’s decision not to proceed with the closure of the Ineos Petro-chemical plant following the workforces’ acceptance of his ‘recovery plan’ has been variously described as another illustration of the lack of union power and influence.

The real story of Grangemouth is that it was Government that was powerless to prevent one individual deciding the fate of a strategically vital national industrial asset, its1,300 strong workforce, and thousands more workers besides, and the fate of a local community.

Despite all the cajoling of Alex Salmond, Ed Davy and Alistair Carmichael, it took the Ineos workforce and their union Unite to take the decisive step that made it impossible for Ratcliff to walk away as he was determined to do just two days previously. It is beyond belief that one of the supposedly most powerful nations on the globe was incapable of stopping the closure of the Grangemouth plant.

The closure of a community centre in Grangemouth would have required a more extensive due process, and greater transparency and accountability than was involved in the decisions to close a vital industrial facility.

Far from being a crisis for the trade union movement, this is a crisis for democracy, political and industrial democracy.

When a union, on behalf of a workforce, and an employer enter into a collective agreement it is a form of industrial democracy or, although in no sense equal, of workplace power sharing. With it comes a responsibility on both sides to negotiate to resolve differences and, on union members, a legal requirement to demonstrate through a secret ballot that there is support for any industrial action proposed if agreement cannot be reached.

It has been lost amongst the many other issues involved at Ineos that the ballot of Unite members had a turnout of 86%, exceptional by any standards, with 82% in support of strike action and 92% in support of action short of strike. Implicit in this legal requirement on the union to ballot is the expectation that the employer will recognise its outcome and the strength of feeling it demonstrates and respond accordingly.

Despite voluntarily entering into a collective agreement with Unite, Ineos simply refused to negotiate at every turn, issued a take it or leave it ultimatum and, its response to the outrage of its workforce at the treatment of one of their colleagues and the rejection of its ultimatum was to shut the plant.

It has been suggested that the level of investment proposed by Ineos at Grangemouth justified its actions. The company has presented this as if Jim Ratcliffe intends to write a personal cheque for the £300m involved.

The truth is that, as is the way with private equity companies, the money will come from the markets not from earned income. As Ineos is so highly levered it needs to use earned income to pay the interest on its debt. New borrowing for Grangemouth demands the minimum of lender risk. That risk has now been transferred in large part to the Scottish and UK taxpayers and, given the sacrifice they made to keep the plant open, the workforce.

It is important to look to the future and to the success that we all know the Grangemouth facility will be. But we cannot ignore the fundamental issues thrown up in the last week about where power should lie and how the will of the people in a democracy should be exercised.

The Scottish Constitutional debate, the debate about where power should lie and why, will be of little real relevance if Government, wherever it sits, does not have the power to prevent private equity capital threatening the stability of a country’s economy, or a workforce is unable to influence the actions of an employer.

Grahame Smith STUC General Secretary