Examination of Witnesses (Questions 130-139)
MR JIM
MOWATT, MR
RUSSELL GRAY,
MR STEPHEN
DEANS AND
MR PAT
RAFFERTY
17 NOVEMBER 2004
Q130 Chairman: Gentlemen, can I welcome
you back and apologise for the fact you have been held so long
today. It has been the nature of the business in the Commons today.
Can I firstly invite you to bring us up to date on what has been
happening since we saw you in July?
Mr Mowatt: Thank you, and thank
you for the opportunity to continue the dialogue, and I believe
you and the members of the Committee are coming up on site on
29 November. It goes without saying if you have read all the Scottish
papers this morning that we live in times of tumult and Grangemouth
is a great example. The whole world has turned round for our members
in the last 27 hours. The announcement was made yesterday round
about noon.[8]
You will remember the last time we put forward a large dossier
arguing cogently for the whole of the Grangemouth complex to remain
in BP, and I must say to you, that ambition remains. We would
wish the whole complex to remain within BP but realistically we
realise there is a gap between our members' aspiration and achieving
that. My role throughout the United Kingdom as a chief negotiator
in the industry is predicated on my ability to make judgments,
and it is my own judgment that BP will not reverse the global
decision to jettison the olefins and derivative businesses, but
I must say that in the light of circumstances the strategy that
we have adopted since we last met of a twintrack approach, and
in many ways we were forced into that, has been underpinned by
the belief that it is in the longer-term interests of our members
and the local community and the Scottish economy that the Grangemouth
complex remains as one manufacturing entity. I repeat what I said
the last time: it is maintaining synergies that makes Grangemouth
potentially a world class industrial site and gives it sustainable
development. Bringing you up to speed of where we got to yesterday,
tough though successful negotiations have been conducted in the
last six months, and it has had many advantages and I pay tribute
to Russell and Stephen and other convenors and shop stewards.
We achieved something that I believed was maybe just beyond our
grasp and that is the company, BP, has agreed that we will not
be a two-tier workforce, and that is a very big advance. I wish
I could say that for other organisations where I am the chief
negotiator like Syngenta, Avecia, etc. We have also had a declaration
from the company of no compulsory redundancies, a continuation
of the terms and conditions of employment, a replica pension scheme—something
I have never been able to achieve in 14 years as a national secretary—and
a continuation of some form of share save scheme, so the twintrack
approach of they want to be BP, that is our principal position,
but the pragmatism of getting on and negotiating the harsh reality
has seen some success. It has been very difficult, since the announcement
yesterday, for Pat Rafferty and our convenors. We have a situation
whereby we had an ambition to keep as many people in BP as possible—1,450.
We managed to keep 1,000 in BP and only 450 would be spun off
to NewCo, or, as some of them said, would be injected by rabies
by BP—because that is how they felt. They had worked their
whole lives for BP and suddenly they felt rejected. Now, there
is 1350 feeling rejected because of a volte face, and keeping
the whole complex as one integrated entity but selling off to
NewCo has come as a very big shock. We had to deal with a lot
of the concerns. We have been addressing them yesterday throughout
the night shifts and this morning. We have some outstanding concerns.
You yourself, Chair, addressed one of them which is the interface
between the Forties pipeline system and the New Company. That
causes us grave anxiety and I was interested to hear the chief
executive. There still remains an industrial haar of uncertainty
among the workforce and we are having to address it, and just
now we are undertaking an exercise to consult with every single
member we have on site, some 1,350 between the unions. Can I just
say also that I had a phone call from a convenor already referred
to, Mark Lyon, and he was telling me he is bombarded with people
who are asking him "What if?", and I had to assist him
here and explain to him that there is a very difficult proposition
to be confronted with, "What if BP do this? What if the Forties
pipeline, what if this and that", and you will remember that
Mr Kruschev, when he was General Secretary in the Soviet Union
was asked in the aftermath of President Kennedy's assassination
"What if you had been assassinated rather than President
John F Kennedy? How would the world be today?" He replied
that he "did not know but one thing's for sure, that man
Aristotle Onassis would not have married Mrs Kruschev", and
we are very much in that situation. That is why I referred to
that industrial haar of uncertainty, and there has been a very
useful exercise today because the company originally were not
going to appear here today, and we have had a comprehensive explanation
of the company's position by the chief executive, and that has
only come about because of your intervention and we thank you
for it. So we have a lot to do before we can make our position
concrete. Our present position is we still want to remain in BP
but our pragmatic position we are negotiating. Ultimately our
goal remains the same, and that is we want a profitable, sustainable
Grangemouth complex. We have other issues we have to address,
along with our colleagues from Scottish Enterprise Forth Valley.
We have to look at this position where hundreds of millions of
pounds have been spent in Grangemouth and the Scottish economy
is only deriving £17 million out of £600. That needs
to be addressed and we think that the new management may be more
amenable to looking at training, incubation, innovation and investment
and, as I say, they are only on the agenda because of parliamentary
representation, so we thank you for that.
Q131 David Hamilton: My first question
has been answered in your opening remarks which is how do you
feel in relation to the changeovers taking place; does that mean
that you are optimistic in relation to the future. I think you
have answered in the positive that yes, you are a lot more optimistic,
but the second question which I was intending to ask is about
the assurances that you still need from BP about employers' rights,
health and safety, etc, and you have answered that in part by
saying you still have a haar there, and I can imagine the local
representatives having a major problem because people will be
asking all these different questions, and you are now at a point
where you have a question of trust in some cases; you deal with
what you have and see how it goes from there. The question I will
ask is about the immediate response by the workforce represented
in the name of yourselves and other unions there. Do you see it
as a pragmatic way forward and could you, even if you cannot answer
it now, as you progress through this discussion and the negotiation
with a company because I think it would be appropriate, Chair,
keep us briefed on how that process has gone because obviously
we intend going up there as a Committee, but even after that I
think it will take some weeks before it begins to clarify and
that haar lifts and the folk begin to see their lives develop.
Also, concerns in relation to the proposal have been put forward
but it is an awful lot better than what it was looking like in
July, so we wish everybody the best. But do you still have those
major concerns in relation to the health and safety issue and
all the rest that goes with that?
Mr Gray: Obviously there are loads
of concerns. The announcement yesterday took the majority of the
workforce by surprise. Probably 500 of the workforce—well,
we knew it was happening for the last six months so for the rest
of the site the announcement yesterday was something of a shock
and obviously my colleagues and Mark Lyon cannot be with us today
because they are at Grangemouth. So I have not had a chance to
really sit down and talk to Mark so I do not know how they are
feeling but I can imagine they are a little bit shell-shocked.
I think we are looking for guarantees on a number of things and
I am not that assured that we have heard all of them today. I
think there are issues not just necessarily about the workforce
but the associated stuff with procurement and stuff that goes
with it, where a company just spends 70% of the government spend,
so I think we need to speak to the likes of Ralph Alexander and
ask if we can get that doubled, for example, or can we spend more
money on the Scottish economy, where are we regarding shared services,
the likes of fire stations, stores, labs, and all that type of
stuff. What is the long term view for that? Is he going to outsource
any of that with a lot of good quality jobs going out of the area?
So there is a raft of concerns still out there for us. For example,
what market are we going to be benchmarked against, because there
are two different markets, the home market and the chemical market.
We still have not got anything worked out about share schemes
and we still have not got any guarantees, so there is a raft of
concerns still out there and a lot of questions have not been
answered.
Mr Rafferty: I think you made
a very relevant point about the trust and confidence, and the
trust and confidence probably between the workforce and their
employer over the last past two or three years has taken a real
severe dent. We went through the securing the future at BP Grangemouth;
we thought we had a deal at that particular time with 700 job
losses only for the company to come back and get another 250 job
losses, so to say that you would trust the company—at that
particular time they would say "black" when we thought
it was white, and it is about trying to build up that trust and
confidence again. Do we trust the company and trust Mr Conn sitting
here today and saying all the things he is saying? We do not have
crystal balls unfortunately. Maybe there is hindsight and there
are crystal balls, but time is going to tell with that, and just
have to see how that develops. Certainly emotions are mixed. The
boys on the chemical side felt mixed emotions at that time and
the boys on the refinery side will be feeling that just now.
Q132 Mr Sarwar: After assurances from
BP, it seems that the job prospects for existing employees are
more secure. Is there still concern that the petro chemical plant
at Grangemouth might eventually be closed down by NewCo?
Mr Gray: Yes. I understand that
Olefins and Derivatives carried out what we would have termed
a polymers worldwide review of their assets, and as a result of
that one of their plants, Rigidex 3, is closing in the first quarter
next year. We also have grave concerns that another plant at Grangemouth
may close, Inmovene 2, and 75 jobs are associated with that, and
obviously we are gravely concerned on that. I think we are seeking
assurances that is not going to be the case. There is a sort of
knock-on effect from Rigidex 3 shutting, for example. When you
have maybe £2.5 million worth of spares, and you buy these
spares from companies, the knock-on effect is not just 75 jobs,
and you will have a knock-on effect again with another plant.
I think on the 19th, when the Select Committee is on the site,[9]
I believe Ralph Alexander is on site that day, and we are going
to be seeking assurances from Ralph on the future of Inmovene
2, so to answer your question we are still concerned about the
assets at Grangemouth.
Q133 Mr Weir: We all heard Mr Conn this
morning talking about BP's link with NewCo and this, as you call
it, feedstock security and you talked about the Forties pipeline
and gave us a glowing report of the integration of the site, but
do you have any indication that BP might eventually seek to sell
off a closed-in oil refinery at Grangemouth, and what effect is
that liable to have on the site as a whole?
Mr Mowatt: My own judgment is
that BP will abandon refining and go for exploration, and this
has proved to be an opportune moment to get rid of two of the
refineries, Lavera in southern France and Grangemouth, and I think
I would be buying commodes if I was working for BP and other refineries
because I think this is the first tranche of an exit strategy
from refining, in the same way as their announcement on 27 April
was a signal that they were coming out of the petrochemicals businesses
which they call O & D. So the situation is they are getting
out of refining and they are selling it to themselves under the
guise of NewCo because remember, NewCo is BP. This is a financial
artifice. They are negotiating with each other. There is some
assurance in that because they are not going to cheat themselves,
and I believe the chief executive when he says they want to get
the best price. The only thing is they want to send out a signal
to other parts of the business that they may sell off in the future
because how you treat people who are leaving a company has an
enormous impact on the people that remain in the company. We know
they are going to sell off parts of the business in Grangemouth
in the future—that is a normal part of activity like coal
mines getting exhausted and power stations coming to the end of
the line—so how they do this will have an enormous impact
on how the remaining workforces, not just in the United Kingdom,
perceive their intention. If I may say so, a low analogy is the
mark of a second rate mind. I love analogies, and the analogy
with BP, when you asked Pat just now, is about having a wee dinner
party, as they say in London, and you invite somebody and then
you notice that your partner's purse is missing and you accuse
somebody and then the next day you find the purse. People are
not very happy when you phone them up and say, "I am sorry,
Steve, that I accused you, mate; I have found the purse".
There is still that atmosphere and that is why we have to rebuild
the trust. If I may say so, and stick my neck out, the complex
director, Robin McGill, has played a blinder. He has been very
straightforward with us, he has certainly proved resilient and
patient with us and with his bosses, because there is no doubt
he has been waiting for the green light to make a certain announcement
and he has been held back, and now that announcement is made I
feel that is a step forward.
Q134 Mr Weir: I understand what you are
saying and accept that, but Mr Conn talked about floating off
NewCo as a separate identity and a stock float-off some time in
the future. Clearly when that happens, depending how many shares
BP continues to hold, it becomes a completely independent entity
and the situation changes dramatically when that happens.
Mr Mowatt: I think they are umbilically
tied to each other. There is a synthesis, a mutuality. It is in
both their interests to do well. It is a bit like conjoined twins—if
one goes down the tube, so does the other.
Mr Rafferty: The point about the
refinery is that I think it is clear that Grangemouth in Scotland
needs a refinery at Grangemouth. Scotland as a whole needs that
refinery at Grangemouth. It is the hub of the Scottish economy.
That is the heart that beats in the Scottish economy. We have
seen it not that long ago and there was a baptism of fire in me
as an officer when the fuel protesters came along to Grangemouth
and put a protest line outside the Grangemouth tanker terminal,
and the country was going to be drawing to a halt within about
a week. We need a refinery at Grangemouth. Scotland needs a refinery
at Grangemouth, and we should not underestimate the need for that.
Q135 John Robertson: When you were talking
about BP wanting out of refining, would you say the decision has
now been made somewhere else and this is a global thing, and really
the people who are implementing these things are not the people
you are talking to?
Mr Mowatt: I think NewCo is pivotal
to that decision-making process but that is a London and American
decision, as is the decision to put the O & D business centred
in America and floated on the New York Stock Exchange.
Q136 Ann McKechin: Is this not happening
throughout the entire oil industry, with BP competitors also moving
out of refining?
Mr Mowatt: Normally in the oil
industry there are trends, and BP are usually the first in the
trend. By the way, we have been the victims of that trend. They
were the first to derecognise us 10 years ago! I think it was
a different government at the time, though.
Q137 John Robertson: The thing about
it is the link between the two companies. They are two entirely
different companies, the magnitude of which is entirely different.
One is a multinational; one will be—if it sells up in part
and then by a majority—a relatively big company but nothing
in comparison to BP, and if it does sell off, the shareholding
becomes a different body and we have seen that taking place in
a whole host of industries, and that concern I think has been
alluded to by the Committee. Whilst we have this negotiation around
the table with themselves and, yes, they will make a deal which
is going to be beneficial to BP immediately, over a period of
time if that NewCo begins to move against what is in the interests
of the multinational company, are you seriously saying that if
they have a major stakeholding in the company they are going to
allow that to happen? They will not, surely? The bit I cannot
get my head round is why would BP allow a subsidiary company,
as it will be to start with if they have a majority shareholding
in it—would they not stop that NewCo from expanding in a
way that might not be in the long term interests of BP?
Mr Mowatt: No, because I think
they are not in competition with each other. They could complement
each other. If they work together, they could win the prize. That
is our view.
Q138 John Robertson: I know there are
a lot of papers but I would really like it if you could do a paper
in relation to how you would see that and where those lines could
be severed and why you think it still would work. That would be
very helpful, from our point of view.
Mr Mowatt: It would be a pleasure,
Chairman.
Q139 Mr Sarwar: I am a bit concerned
about all these terms and conditions and pensions and all that,
because BP is going to have majority shares for the next two years
and after that, NewCo is going to become an independent company.
Then the commitments made by BP are irrelevant. How do you see
that?
Mr Mowatt: We would have to engage
them in the traditional trade union negotiating process which
we call the Mars Bar syndrome, and that is "What we have
we hold". It is difficult enough to deny your children a
Mars Bar at 5.30 in the evening before they have their dinner,
but you try taking a Mars Bar off them when they have chomped
through half of it. It damages the nail polish. That is what we
do with NewCo. We know where our members are. We are the Praetorian
Guard of the labour movement. We enjoy the best terms and conditions,
the best pensions, and our members are not going to give that
up. It is a source of pride. In fact, it is an incentive for people
to join trade unions, the fact that we can pipe people ashore
with such dignity. The 75 people at Rigidex 3 that are going will
either be offered a job or get a very handsome severance package.
We have negotiated that. That is what Russell and Steve and Pat
have done and we are proud of that. I think we have enough confidence
in ourselves and our members that we would not allow that erosion
to happen. That is why we are very pleased that at this juncture,
very early on, they did not introduce a two-tier workforce. I
have just come back from Derry in Northern Ireland where they
have introduced a two-tier workforce. Lots of companies are introducing
cheaper labour that way, and in fact I think there is a reception
we have been invited to about how that happens with gang masters
later today, so we are well aware of that—and so are our
members, if I may say so.
8 BP Press Release. Not printed. Back
9
The Committee visited the site on 13 December and did not meet
with Mr Alexander. Back
|
