Last night Radio 5 (that most esteemed purveyor of the inflammatory phone in for the partially informed) decided to run a feature on this dispute. Surprise, surprise, no mention of pension funds, but instead a series of fuel transport companies, road haulage companies, forecourt operatives laced with the odd angry from Ongar. The agenda? The rising cost of fuel. :suspect:
This morning the BBC web site is carrying stories that Ineos are saying that it will take 3 weeks to get back into full production, (in other words talking up supply side difficulties and trying to fuel a panic buy scenario). In addition they're also saying the plant needs £750M of new investment or otherwise 650 jobs will go. :suspect: Is this really the Union behind this dispute I'm increasingly wondering? Who might have the most gain?
I thought I'd do a bit of digging around. Ineos is two thirds owned by a reclusive and mildly eccentric Engineer come financier called Jim Ratcliffe, who is variously ranked between 10th and 50th in different 'rich lists'. Surprisingly he's resident in the UK and the company is registered in Lyndhurst, Hamsphire. I couldn't find any attributable political affiliation but he does have previous in terms of making demands on the government for tax payers money in return for not closing plants and thus safeguarding jobs.
In 2001 he brought ICI's Chlorine business at Runcorn and duly asked for £300M off the Treasury to keep it open or otherwise he would shut it with the loss of a significant number of jobs. In the end he walked away with a cool £50M of our money (the risks that the private sector take hey
). Last March he managed to extract £9M off the Scottish Executive in order to safeguard 410 jobs at Grangemouth. Perhaps it should come as no surprise then to hear him demanding £750M now, whilst holding a gun to the plants head. Is this really about a pension fund I'm wondering, or is it much more to do with the needs and demands of Ineos? Afterall, where has the figure of a government loss of £50M a day come from? Answer? Ineos. 15 days of lost preoduction equals the same shortfall in the Treasury's coffers that Ratcliffe is asking for by way of subsidy for risk investment that he'd rather transfer to us, even though he walks away with the profit.
The Ineos success story has largely been underwritten by aggresive and very opportune purchases of surplus options from a variety of industry competitors in both chemicals and petro chemicals. This has been financed by incurring huge debt estimated to be £9Bn, with Barclays Capital, Merrill Lynch and Morgan Stanley being responsible for over half of it (more of the latter named later, provided I can clarify a few things, as a little light went on when I unearthed their involvement, but need to make a few phone calls).
The pension fund at the centre of all this (allegedly), as I'm increasingly of the opinion that the whole dispute has been orchestrated by the commercial needs and financing requirements of Ineos, was actually one they inheritted from BP when they brought Grangemouth, and did so in the full knowledge. The borrowing they've undertaken and debt they've run up appears to have left a 'black hole' in the fund of £410M. There are other allegations that £40M has been pilfered from it (which is my 2 + 2 = 5 moment).
Now the pump price for fuel has been in the headlines, and there's no shortage of cheerleaders out there ready to do Ineos's bidding for them and apply pressure to the government at this opportune moment (as witnessed on radio 5). Ineos themselves have done little other than to talk up the level of disruption, in stark contrast to most disputes when the management normally adopt a contrary position. My understanding is that fuel is brought in advance too, so if you were able to buy it cheaply in the knowledge that you could manipulate a price rise at a later date, you're not going to be out of pocket.
By refusing to honour the agreement (safe in the knowledge that the union would respond in accordance with their members interests) and then talking up servere disruption to the supply chain, whilst simultaneously filibustering the union, you would have no difficulty manipulating a price rise at the pumps. This in turn will quickly translate into angry motorists, joe public and other affiliated industries such as haulage blaming the government and greedy workers (workers who incidentally aren't making any new demands other than simply wanting to have an existing agreement honoured - that's conservative rather than radical in my book). The inherent weaknesses of JIT supply will quickly ensure the vulnerability of the chain, and any costs will be passed onto the consumer in retail prices and crank up the pressure further on the government if the public aren't able to put the pieces together and work out whats going on.
I'd suggest that the pension fund is a detail, and that this is all about Ineos geting themselves into a negotiating position in recognition of the fact that they're over borrowed and are trying to screw investment out of the public purse (the level of which dwarfs the pension fund).
The usual suspects who were quick to condem the greedy workers, and praise the marvellous management and shower the unapproachable probity and moral integrity of capitalism might like to consider this possibility shrug::
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