Oil on troubled waters

In 2008, the management of Ineos, the plant's owner, had been forced into one of the most humiliating reverses in UK industry since the 1970s. The union's strike over efforts to scrap the final salary pension scheme had shut down the Forties pipeline, one of the main arteries to the North Sea, bringing the country to its knees as forecourts emptied and leading politicians hurriedly tried to negotiate a solution.

For Ineos head Jim Ratcliffe, the lesson was that all the restrictions to worker power introduced since the 1980s mean nothing when national security is at stake. Clearly he had no intention of being humbled a second time.

Ineos actually went into battle this year much weaker than on the previous occasion. Following the Lehman collapse, the £6 billion debts that it had built up in a decade-long buying spree almost pulled Ineos under.

By 2013, the company had stabilised but was still heavily indebted. Ineos had been negotiating with Unite since the year before over Grangemouth. It was still seeking reduced employee terms, but talks had stopped and started several times without reaching a conclusion.

Grangemouth, which is just one of 51 facilities in 11 countries, comprises two businesses - a refinery, which processes crude oil into fuels such as diesel, petrol and naptha; and a petrochemical plant, which converts gas and naptha into numerous vital industrial chemicals through a process called cracking.

Ineos had sold half of the refinery to PetroChina in 2010 as part of the debt-cutting drive but the company still wholly owned the petrochemical side. Both businesses were under pressure but profitable.

Petrochemical was under fire from cheaper rival products from the Middle East, US and China, which are expected to put many of Europe's 46 petrochemical plants out of business in the next few years.

The North Sea feedstocks on which it depended had also been dwindling, forcing the site's main cracking plant to run at just half capacity.

Ratcliffe had been quietly developing a plan to solve this problem by taking advantage of cheap US shale gas to import feedstocks for the first time. When his current supply deal with BP ran out in 2017, this would enable Ineos to cut feedstock costs by 30% to 50%.

Grangemouth only had this option because it was one of only four European facilities that could crack gas as well as naptha, but it still meant a £300 million conversion.

However, Ineos was still considered too much of a credit risk to borrow all the money from the banks. So Ratcliffe and his team had been in talks with the UK Government to get them to underwrite £125m. For good measure, it was also seeking a £9m regional development grant from the Scottish Government.

It was made clear to both London and Edinburgh that the alternative was that the petrochemical operation would close in 2017, raising the prospect that the refinery would go under, too. In short, failure to help Ineos risked a major energy security problem. It might also have damaged UK-Chinese relations by ruining ­PetroChina's investment.

This was where Stevie Deans moved centre-stage. Shortly after the Falkirk West row reached its peak in July, the union rep was suspended, reportedly for using company time for Labour-related duties.

Unite leader Len McCluskey phoned the management threatening to call the whole plant out on strike unless Deans was reinstated. In effect, this was a reminder to management that Grangemouth was not a place where they could overstep the mark.

Ineos lifted the suspension but continued its investigation into Deans. This might have been a stalling tactic while it awaited the outcome of a secret meeting between Ratcliffe and senior UK Government officials in London in early September. Sure enough, Ineos came away with strong indications that the Government would underwrite the investment. This meant the most important piece was in place.

It had also received similar signals from the Scottish Government a few months earlier. During everything that followed, this meant that the only doubt was whether the staff would accept reduced terms. This would save another £20m a year - relatively little for a plant of that size.

Later that month, the union secured a full mandate for industrial action from the site's near-1400 employees and announced a work to rule for early October. Ineos unveiled its vision for the site, making public its warning about 2017 closure and the need for deals with the two governments and employees.

The management claimed that the plant had lost £150m a year for the past three years, but later had to backtrack. This "loss" referred to cash flowing out of the business, principally to pay for investments, which are always treated separately in accounting.

Unite then announced a strike for Saturday October 19 and Sunday October 20, amid press reports that they were threatening national chaos over just one man.

The two sides held talks at dispute resolution agency Acas on October 14 and 15, while Ineos began shutting down the plant to prepare for the closure. When the talks collapsed, with Ineos walking away, it became clear to Unite that the company actually wanted the plant to close.

Hastily the union called off the strike. Ineos duly announced that it would keep the plant closed over the weekend while staff considered a new package that included a three-year pay freeze and scrapping the final salary pension. It ignored calls from the Scottish Government to get back around the negotiating table.

In effect, it was now the company that was on strike. And because the union had agreed out of goodwill to provide the steam and power to BP to keep the Forties pipeline open, closure was not as serious in the short term as it had been in 2008.

With encouragement from the union, 65% of the workforce rejected the offer on the evening of Monday 21. They were gambling that the management would back down. Others were not convinced, with both Alex Salmond and UK Energy Secretary Ed Davey stepping up efforts to find alternative buyers.

Staff found out their fate at a site meeting on Wednesday, October 23. Ineos Grangemouth chairman Calum Maclean confirmed that the petrochemical plant was now closing, putting 800 jobs at risk. There were tears and disbelief outside as punch-drunk workers staggered into the sunlight. Within hours, the union took the only course of action left. McCluskey said it would accept the new terms "warts and all" if the management would relent.

The company made the country wait until the morning of Friday 25 before it agreed. By this time the company had used the threat of closure to secure an improved feedstocks supply deal with BP that would save another £40m a year.

There was no clemency for Stevie Deans. He resigned the following Monday once it became clear that the investigation was going to lead to his dismissal.

With that, coda, Ratcliffe and his managers finalised their recapture of Grangemouth. The only outstanding question was whether Ineos really would have closed the plant if the union had not backed down. Ratcliffe's track record for carrying out his threats would suggest so. If so, considering Government assistance was virtually certain, Grangemouth nearly went to the wall over a £20m annual saving. Perhaps this would have tipped the scales in favour of some other potential investment elsewhere in the group.

But it is hard to dismiss the suspicion that the management were acting as much out of revenge as necessity.