The secretive and opportunistic Dr No at the centre of a political row
May 13, 2008
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A fortnight ago, hardly anyone outside the petrochemical industry had heard of Jim Ratcliffe, the boss at the centre of the Grangemouth refinery dispute. He turns out to be a shop steward’s dream. The villainous possibilities of “a secretive tycoon” with “a ruthless appetite for risk” are endless – and unions have been quick to exploit them.
They call Ratcliffe “Dr No” for his constant refusal to compromise, says The Mail on Sunday. But, as the bitter strike over pensions threatened to escalate into a national fuel crisis, that was the least of the insults that came his way. Ratcliffe and his fellow directors epitomise the “idle rich”, claimed one striker. Another described him as an “economic terrorist”.
Hero or villain? Ratcliffe, 55, is probably a bit of both, says William Rees-Mogg in The Times. His achievements are remarkable. In less than ten years, Ineos (now Britain’s largest private company) “has created a new British petrochemicals industry” by stitching together cast-off relics of companies like BP and ICI. It is the largest producer of plastics in Europe and third largest petrochemical company in the world. Ratcliffe “has saved a declining British industry and thousands of jobs”.
But it’s the way he’s done it that exercises critics. Management claims Ineos is an “ordinary” company. Yet it bears all the hallmarks of a classic private-equity operation. Ratcliffe’s ten-year acquisition spree was financed by debt – some £9bn at the last count – and he’s a master at stripping out costs, once describing his strategy as “completely opportunistic”.
Ineos has made Ratcliffe extremely rich: his two-thirds stake is now worth around £3.5bn. But apart from his private jet (arguably a necessity given Ineos now has some 50 companies around the world) and an £8m house in Hampshire, he does little to flaunt his wealth. Indeed, Ratcliffe, who has a degree in chemical engineering, has never lost his love of the oily cloth. “One of the things that Jim always says is ‘love your machines’,” a colleague told The Sunday Times. And he practices what he preaches: he has “a curious passion” for collecting “sit-on lawnmowers”, says The Mail on Sunday.
Ratcliffe, who is divorced with two adult sons, has other eccentricities too. He sometimes summons managers to breakfast meetings, only to keep them waiting while he disappears for a jog, returning to “bark orders” still in running gear. Still, these details shouldn’t detract from Ratcliffe’s sharp nose for deal-making, honed at private-equity group Advent International in the early 1990s, where he specialised in chemicals. His first solo venture was typically ambitious: he led a management buyout of BP’s specialist chemical division, renaming it Inspec and listing it in 1994. After a flurry of deals, Inspec’s value soared, says The Sunday Times.
Ratcliffe sold out to rival Laporte for £611m, going on to form Ineos in 1998. “Having never warmed to the City” he resolved to keep his new company private. And it still is – despite transformative deals as his £5.1bn acquisition of BP’s petro-chemical division in 2005, which brought him the Grangemouth refinery and quadrupled turnover. No doubt Ratcliffe would prefer to continue operating in privacy, says Rees-Mogg. But “oil is always political” and, whether he likes it or not, Ineos is now “in the politics business”. Ratcliffe better get used to it.
Jim Ratcliffe gears up for a high-stakes poker game
The strike at Grangemouth may be over, for now. But there’s no sign yet of an end to the row: unions say they plan a further two-day strike next week. Their chief gripe, says The Guardian, is that plans to bar new employees from the generous final-salary pension scheme, which Ineos inherited from BP, are the thin end of the wedge. Henceforth, all workers will pay more into the scheme and early retirement won’t be an option.
Ineos is hardly alone in imposing tougher terms – final salary schemes are a dying breed in the UK. But unions maintain that the chief impact will be to benefit directors who “base much of their profit on stripping out costs, with shopfloor workers bearing the brunt”.
Ratcliffe is “no stranger to high-stakes poker games”, nor strong-arm tactics, says The Economist. He has history of wresting favourable deals from the Government. When Ineos bought ICI’s big Runcorn chemical plant in 2001, it threatened to close it down, with big job losses, unless it received a hefty grant. The Government coughed up. And given the disruption and anxiety that another strike would cause, public sympathy for the strikers may be limited – particularly given their comparatively favourable working conditions. Many Grangemouth employees, on an average salary of £40,000, have also benefited from share awards.
Perhaps, says the Evening Standard, but at Ineos, which has “surely the most complex share register at Companies House”, there are shares… and shares. There are actually no fewer than 21 different classes, including the aptly-named B Phenols, C Oxides or D Chlorvinyls. The ones that “really matter” are the D Oxides. No prizes for guessing who owns most of them.
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