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INEOS considers withdrawal of support for National Agreement for Engineering and Construction Industry (NAECI) as UK competitiveness is threatened

INEOS, the UK’s largest privately owned company and the world’s third largest Chemical company, has announced that it is considering withdrawing its support for the National Agreement for the Engineering and Construction Industry (NAECI) unless significant improvements can be made to aid competitiveness. INEOS considers the agreement is failing to provide a sound base for the future of UK manufacturing investment.

As a global business INEOS invests in its facilities worldwide but continues to experience poor productivity rates from UK engineering and construction contractors. At its Runcorn site the company is investing over £300m in a significant modernisation programme to improve its long-term competitiveness. In its experience, productivity from the firms it employs here in the UK can be up to 50% lower than contractors in the US.

The NAECI Agreement for the engineering construction industry has been in place since 1981. Agreed between the unions (TGWU, GMB and AMICUS) and employers, it sets wages and other conditions of employment for workers employed on engineering construction and repair and maintenance projects throughout the United Kingdom. It was originally intended to ensure that competitiveness is not at the expense of workers terms and welfare but INEOS believes the Agreement has now become counterproductive. It restricts the ability to differentiate and reward good performance and leads to a demotivated workforce, thereby making UK manufacturing uncompetitive.

INEOS is also concerned that as a consequence, the engineering sector is failing to attract young people to develop the skills necessary to support the future needs of UK industry. This is very bad news for the country and will lead employers to operate outside NAECI, or to employ more highly motivated overseas workers. 

Like many companies in the UK, we are concerned about the loss of industry’s competitiveness and we therefore want to work with the contractors and unions to find a sustainable solution. It must be possible to create an environment that rewards good performance, is motivating and attracts young people into the industry,” said Jim Ratcliffe, Chairman of INEOS. “The alternative is that companies such as ours will vote with their feet and will either avoid major engineering and construction projects in the UK or employ highly motivated workers from other countries. Both options are bad for long-term UK jobs and prosperity.

Unless we see a real commitment to change, INEOS will have no choice but to stop operating under the NAECI agreement - a decision other major companies have already taken,” he concludes.


For further information contact: 
Richard Longden – INEOS
Phone: +44 1928 513064 

Note to editors:

INEOS is a rapidly growing manufacturer of petrochemicals, speciality and intermediate chemicals and polymers. The company was formed by a management buy out of the former BP petrochemicals asset in Antwerp, which was led by Jim Ratcliffe, who is now its Chairman. The company has subsequently grown through a series of successful acquisitions and continues to build on businesses that have good people and assets, supported by strong market positions and a potential for further growth.

On the 16th December 2005 INEOS completed the purchase of Innovene, BP's olefins, derivatives and refining subsidiary. The acquisition creates a combined business with a turnover of around $33bn. The acquisition of the Innovene business fits with the INEOS strategy to create a petrochemical company that has the scale to compete globally. 

INEOS has 68 manufacturing facilities across 14 countries throughout the world. With 15,600 employees, the Company produces more than 30 million tonnes of petrochemicals, 20 million tons per annum of crude oil refined products (fuels) and sales of around $33bn.