Ineos Unveils Grangemouth 'Survival Plan' with Job Cuts

Ineos announced what it described as a "survival plan" to keep in operation the petrochemical plant attached to its refinery in Grangemouth, Scotland, involving job cuts and changing pension plans to reduce costs.

The company would not specify the level of job cuts but said the closure of a naphtha cracker by 2015 and other parts of the plant would lead to a loss of headcount.

It said its pension scheme had a £200 million ($322 million) deficit.

The plan outlined to workers proposes closing a defined-benefit pension whereby workers receive a fixed proportion of their final salary, and replacing it with a defined-contribution pension to which the company puts in 11 % of salary.

"The current defined-benefit scheme costs 65 % of salary, which is off the scale ... We're doing this to catch up with the deficit," Calum MacLean, chairman of Grangemouth Petrochemicals and Grangemouth Refining, told Reuters.

He said cutting costs was crucial to securing a grant from the Scottish government of £9 million and a loan guarantee from the British finance ministry of £125 million.

Ineos is seeking such support to invest in a £300 million storage tank for shale gas imported from the United States, which MacLean said would be substantially cheaper than gas sourced from the North Sea.

He said the petrochemical plant was losing £50 million and the refinery £100 million per year.

"The shareholders are saying to the union that they will not contribute £300 million unless the high cost base is put under control."