Grangemouth after the refinery: lessons from history in how we make a just transition real

Anyone who lives in or passes through central Scotland must have seen it – the Grangemouth oil refinery dominates the landscape. An industrial behemoth on the Firth of Forth comprised of intermingling pipes, giant cooling towers and roaring flare stacks which light the night sky orange for miles around.  

Since 1924, residents and workers have taken pride in sustaining the nation’s only operating oil refinery. It is hard to imagine the town of Grangemouth without the refinery; the two have been synonymous in public discourse. But in a few short months it will become a striking reality - after 101 years of existence, the refinery will close in the summer of 2025.

Petroineos, a joint venture by Sir Jim Ratcliffe’s INEOS and Chinese state-owned PetroChina, announced the closure in September. The reason given was the refinery’s supposed lack of competitiveness globally given there are larger, more modern sites in the Middle East, Asia and Africa. Another reason is that the capital expenditure to maintain its operating licence is comparatively much higher. All in all, they claim the plant is unviable, losing around $500,000 daily.

For Scots, the story is all too familiar. In the latter half of the 20th century, Scotland endured rapid and wide-ranging deindustrialisation, moving away from an industrial manufacturing economy to a service-based one. The magnitude of that transition was keenly felt across the nation given the deliberate pace and scale of deindustrialisation in the 1970s and 80s, and the absence of any plan to support workers and communities in that transition.  

From the shipyards of the Clyde to ‘Silicon Glen’s’ microchip manufacturers, Scots found a livelihood, identity and sense of community through their work. But with much of that industrial capacity either gone or severely diminished, it was the working class who powered the nation’s economic engine that were left to pick up the pieces and suffer the long-term negative consequences.  

Today, we see that Scotland’s former industrial heartlands in Glasgow and the West of Scotland suffer higher rates of deprivation, higher rates of unemployment and lower life expectancy. Scotland’s drug-death crisis has brought this into full view. Many men and women got caught up in this socioeconomic transition, which hit its zenith in the 1980s, succumbing to ‘deaths of despair’ thanks to unheeded social concerns, and a lack of compassion and opportunity in the aftermath of deindustrialisation.

For Grangemouth, if we are to avoid the very worst of deindustrialisation for the community and its workers, we need a concerted plan of action and sufficient resource: a genuinely just transition. Thanks to the efforts of the workforce, the issue of the refinery’s closure has reached the top of the political agenda, with the Scottish and UK governments committing £25m and £200m respectively to support future investment and the Project Willow initiative examining what a green industrial future looks like for Grangemouth post-refinery.  

These are crucial steps and show some lessons have been learned from the last half century. However, ask any worker at the refinery, and they are likely to be both anxious and frustrated with decision-makers. In Scotland today, workers are not empowered in the same way as many of their European counterparts in decision-making, representation on company boards, or having a direct stake in ownership and control. Rather, judgements are almost exclusively handed down from top to bottom. Scotland is hardly a model of industrial democracy.

Not only are key decisions about Scotland’s economic future being made over the head of workers locally, the fact that the refinery is partially owned by the Chinese state-owned PetroChina means that decisions over Grangemouth’s future are not even being made in the UK but in Beijing. Meanwhile, sectoral and national-level bodies like Forth Valley Regional Economic Partnership, and the local Falkirk council, have neither the resource nor the capability to effectively intervene on behalf of workers or the local community. There is a desperate need for a clearer governing structure across all Scotland’s regions.

Because none of this was clear or established in the long decades of industrial relations between workers and plant owners in Grangemouth, it is understandable that workers, fearing unemployment and suffering a fate similar to the many workers of Scotland’s former proud and esteemed industries that preceded oil and gas, have worked as hard as they have initially to secure an extension to the life of the refinery, and now any future for industry in Grangemouth. No worker in Scotland should be made to feel that losing their job is an existential threat to them and their community.  

Currently the Scottish government has an institutional support structure to help quell some of these worker concerns. PACE The Partnership Action for Continuing Employment (PACE) is an initiative designed to offer workers and employers support and advice to deal with real or potential closure situations by coordinating with a range of public sector agencies. PACE was originally intended to intervene before redundancies become unavoidable, but this requires companies to engage at a much earlier stage than has been the case in most closure situations.

Given the emphasis placed on a just transition, there is scope to build on the experience of PACE to develop enhanced support mechanisms for workers across Scotland in transitioning industries, most obviously in the energy sector. This could take the form of a ‘Just Transition Labour Exchange’ to more effectively coordinate job-to-job moves and provide quality retraining opportunities. The new body could identify and assist in creating pathways for workers currently employed in high carbon sectors into emerging low carbon industries, so they can make that transition seamlessly without the risk of unemployment or financial insecurity.  

What’s more, for where redundancy is an unfortunate consequence of industrial transitions across Scotland, the safety net should be strengthened to protect industrial workers under the threat of redundancy from financial insecurity should they lose their job. This means, for the UK Government, charting a new direction on replacement rates for out-of-work benefits.  

The UK languishes around the bottom of the list of western nations in the percentage of earnings a newly redundant worker can receive in out-of-work benefits (as low as 12 per cent of average earnings for a single person unemployed for two months) to sustain their household’s financial security following the immediate economic shock of losing a job. Assuming this newly redundant worker is also receiving universal credit, the overall replacement rate does come closer to a third of average earnings. Nonetheless, from the US (34 per cent) to France (67.8 per cent), other countries sustain significantly higher equivalent replacement rates for out-of-work benefits while maintaining overall more dynamic economies. Meanwhile, the Scottish government should look to ramp up investment in (re-)training schemes to help redundant workers, particularly those employed in vulnerable high carbon sectors, back as quickly as possible into productive employment.

Making sure these support mechanisms are in place for workers at the Grangemouth refinery, and for anyone else in employment across Scotland, is crucial. Not just because it is right, but because as a nation, we need to prepare ourselves for similar localised transitions in the future. In the net zero transition, jobs will be lost and others created. We need to strengthen worker security, bargaining power, and social security to avert the social devastation wrought by unjust transitions of our past. The closure of Grangemouth oil refinery is our first big test of that just transition. If it is to mean anything, we need to see it bear fruit now.