A dispute between workers and management at the UK Grangemouth refinery and chemical plant worsened on Thursday as owner Ineos rejected union counter-proposals to a cost-cutting plan, a source close to the negotiations said.

Ineos says the petrochemical plant has been losing money for four years and will have to close unless it can lower costs by cutting jobs and renegotiating pensions.

Unite, Britain's largest union, this week presented its own alternative proposals. In a dispute that is notionally separate but has contributed to a climate of mistrust, Unite is also locked in an industrial dispute with Ineos over claims of unfair treatment of an organizer and the use of casual workers.

"They rejected an offer of a transition plan, they rejected an offer from Unite to pay for an independent financial study of the refinery and plant, and they rejected again an offer to go to ACAS (independent arbitration over the union organizer)," a union source said.

He said the union's offer had included renegotiating pay and pensions for an interim period. "We need a period of reflection to decide what our next move is," he said.

A spokesman for the Swiss-based oil refiner and chemicals company said: "We are focusing on trying to save the plant."

On Monday, staff across the complex began working to rule and refusing overtime in a dispute over Ineos's treatment of union organizer Stephen Deans.

On Thursday Ineos restated its position on the case.

"There is an investigation into Stephen Deans following standard process and, until that concludes, going to ACAS is a pointless exercise," a company spokesman said.

The union has said it could still escalate the dispute to a full strike, which would be likely to shut the Forties Pipeline System as the Kinneil oil processing terminal, where Forties oil comes ashore, relies on Grangemouth for its steam and power.

Ineos says cutting costs is crucial to securing a loan guarantee from the British Treasury of £125 million, and a grant of £9 million from the Scottish government.

It says it is investigating whether Deans's political activities with the Labor Party contravened company policies, and that it will announce its findings on Oct. 25.

The union says both the Labor Party and the police have found no evidence of wrongdoing.

The refinery that the chemical plant is attached to processes 210,000 barrels of oil per day and provides most of Scotland's fuel. It is owned jointly by Ineos and PetroChina.