Memorandum submitted to the Committee
by Falkirk Council
This memorandum is submitted by way of introduction
to the Council's position on BP's proposals to establish a new
global company from its Olefins and Derivatives division. The
BP Grangemouth site sits within the Falkirk Council area and makes
a significant contribution to the local economy.
In 2001 BP recognised that to secure a positive
future for the Grangemouth complex, significant change would be
necessary. This involved a full review of opportunities/constraints
and a reduction in staff from 2,300 to 1,400 over three years.
Falkirk Council and Scottish Enterprise Forth Valley joined BP
in developing the Falkirk Action Plan (FAP) through a collective
investment of £13 million over three years to increase diversity
in the local economy and reduce the areas over reliance on the
petrochemicals sector. The FAP has a new identity—My Future's
in Falkirk—and is delivering tangible improvements in the
local economy through new developments and new job opportunities.
A copy of the most recent Ministerial Brief produced for the Scottish
Parliament is attached.
BP's recent announcement with regard to the
formation of NewCo and the anticipated eventual split in businesses
on the Grangemouth site has caused some concern within the community.
Falkirk Council discussed the matter at a Council meeting on 30
June 2004 and has had briefings from BP's senior management locally
and from trades union representatives. We understand that opportunities
to retain the benefits of site integration will be maintained
to the maximum extent possible and that, particularly in the early
years, there will be very close collaboration between the respective
management teams. Whilst we understand the rationale for the move
there are some anxieties about the effects in the longer term.
These surround future capital funding and job security as well
as the impact on the supply chain activities and businesses that
exist locally and depend heavily on contracts from BP and Newco.
We have been assured by BP that the planned
changes will improve capital funding in both sectors as the Newco
will be able to invest in the Olefins and Derivatives division
in a way that is not justifiable at present. We will monitor this
carefully and be ready to raise any concerns with the new management
at an early stage. Similarly with regard to employee numbers,
we monitor and track the existing reduction programme and are
pleased to note that all employees affected by the recent restructuring
who were seeking new work have been able to do so and that no
employees have joined the unemployment register. We will want
to monitor job numbers closely in the future, especially in the
split process, to ensure that any changes are notified and discussed.
The Council and Scottish Enterprise Forth Valley,
supported by the secondment of a member of staff from BP, have
initiated a number of projects to develop supply chain activities.
This programme aims to increase understanding of the opportunities
to create new markets and for businesses to work together to secure
additional contracts. This experience is being transferred to
other work particularly with regard to Council contracts where
we are examining the potential to incorporate community benefits
criteria in our procurement processes. This is part of the diversification
of the local economy and seeking new markets for products and
services. In addition, Scottish Enterprise Forth Valley has created
Grangemouth Technology Park and assisted in the creation of Earlsgate
Business Park to encourage new businesses to grow and develop
using chemical related technologies.
The Council recognises that, whilst BP and the
other petrochemical industries in Grangemouth make a significant
contribution to our local economy, they are also of significance
to the Scottish economy. We note that Charlene O'Connor, Scottish
Enterprise Forth Valley, will give evidence in this context and
therefore we have confined our comment to the implications for
the Falkirk area.
The Council has excellent relations with the
management, staff and trades unions at Grangemouth and will be
hopeful of establishing a similar rapport with the management
team of NewCo in due course. Many of their employees will be local
citizens and we would seek to protect their jobs as well as those
within the rest of BP locally.
Maureen Campbell
Director
9 November 2004
| 
