Grangemouth Oil Refinery Closure

The BBC have just reported that the Grangemouth refinery has closed, this is as the result of industrial action this weekend by employees. I first saw this story on the news last weekend when they were I believe interviewing the refinery boss. From watching the news coverage then and listening to him I formed the opinion that the refinery was right and the employees were wrong in there demands.

The industrial action was due to changes in the pension scheme, it was being changed from a final salary pension and the employees were being required to make contributions to there pension scheme where previously they didn't. To me this seems very reasonable, there are stories all the time about companies dropping there final salary pensions and as far as I was aware pensions usually worked by employees making contributions and there employees matching it.

The refinery shutdown is going to cause a big impact on the local economy and possibly affect the UK as a whole, it is also going to cost the company a lot of money, more than they will make from the pension scheme reforms, this has left a lot of people asking why the company which makes a decent profit is not giving in. Well I think this is fairly obvious, the cost savings from the reforms aren't one off, they will save the company money in the long term, most people only seem to be considering the immediate impact. I also imagine the company is insured against loss of profits due to a shutdown outside of its control, so it may loose a lot of money but they will probably be able to get this back.

In order to get a balanced point of view I read some of the comments on the BBC's website, most of them seem to be by workers or those sympathetic to them. The comments are mostly emotional reactions and the main point they make is that the company and its bosses make a lot of money and they can afford it, this is one of the most stupid arguments you can make, so what if they can afford it, I am sure a large number of business out there can "afford" to pay there employees more but it doesn't make business sense to do so. Companies need to make healthy profits, this allows them to develop and invest in there business and to ensure the company survives in the long term.

Assuming this strike goes ahead and the talks don't work out there will probably be another strike in the near future, if this is within the 3 week period the plant is quoting it takes them to start up it probably wont be possible for them to do so, this will then turn a potential shortage into something more serious.