As part of minority owner Sir Jim Ratcliffe’s efforts to reduce expenses at Old Trafford, Manchester United intends to eliminate 250 positions prior to the commencement of the season, as announced by interim chief executive Jean-Claude Blanc to the staff this month.
Blanc’s address to staff was short and to the point. After he stopped talking, the room fell silent. The mood was understandably solemn, even if the news was not especially surprising.
At the last count, in March, United’s workforce stood at an average of 1,144 monthly employees — the largest in the Premier League.
In May, INEOS aimed to reduce its employment by twenty percent. The club’s non-football staff, led by Blanc, addressed the workers in a succinct and straightforward manner. After he finished speaking, there was stillness in the room. The mood was inevitably solemn, even though the news was not too shocking.were essentially offered the opportunity to accept a voluntary redundancy package that included an early annual bonus in exchange for their agreement to leave. Not many people accepted the club’s offer.
These employment cuts were therefore somewhat anticipated. The Manchester United Foundation is the only organization that is protected by ring fencing. This affects every other department and level in the club.
Following United’s appointment of consultancy firm Interpath Advisory to identify “non-essential” tasks and assess areas where savings could be achieved, the club has implemented broader cost-cutting measures, including the redundancies.
Subsequently, INEOS revoked employee credit cards and demanded that employees cover their own costs for the FA Cup final in May. The club did not raise the bar during a recent farewell party for departing senior management members.
However, with between 25% and 25% of posts projected to be eliminated, this wave of layoffs will have the most effect on the lives of regular club employees. Although the situation is dire, people who have worked for INEOS in the past are aware that the company’s first cost-cutting effort may be unforgiving.
They might refer to it as “right-sizing” in the world that Ratcliffe and the other executives at INEOS live in; it basically means reorganizing an organization to better suit its demands.
That is a rather polite way of putting the swingeing cuts at Old Trafford and the labor condition adjustments that United’s minority owner has demanded since assuming control of the team’s commercial and football operations.
Individuals who have dealt with INEOS’s right-sizing strategy before are aware of the Ratcliffe strategy, which calls for starting a difficult cost-cutting phase early on in order to eventually build a smaller, more effective organization.
“You rip off the Band-Aid early if they’re losing money,” says one former employee — who, like others in this piece, spoke on the condition of anonymity to protect relationships — who sympathises with the logic. “His whole mantra has always been to strip out the costs and run a very decentralised company. It actually works well.”
It became the standard after INEOS acquired BP’s petrochemicals subsidiary Innovene for $9 billion (£6.9 billion) in late 2005. This made Ratcliffe’s young business the third largest of its sort globally, up from a very small position.
The cutting-edge global headquarters of Innovene, located in downtown Chicago and opened just seven months ago, was shown to executives. However, one of Ratcliffe’s first actions was to close the headquarters and additional offices in Lisle, Illinois, and Staines, a southern English town.
According to the company’s accounts, this was a part of a reorganization exercise to align Innovene with INEOS’ “business plan.”
Over the next seven years, INEOS spent about €220 million (£184.7 million, $239.9 million) at plants and refineries, after initially spending it all throughout the corporate side of the firm. This cost-cutting was mostly achieved by paying out severance and early retirement benefits to departing personnel.
Employees at Innovene were aware from the beginning that INEOS would constantly be looking out for its bottom line. Corporate credit cards were revoked, and employees were cautioned not to splurge on necessities like office supplies, in line with United’s actions.
Examining working practices was another task. Ratcliffe discovered that the business had a 9/80 schedule in which employees worked 80 hours over nine working days in exchange for a Friday off every other week. Ratcliffe is reported to have “chafed” and “chuntered” at such approach because he was accustomed to every employee being accessible every day of the workweek.
INEOS’s skepticism regarding the advantages of telecommuting is not surprising to individuals who have worked in its open-plan offices, which are intended to foster collaboration and the exchange of ideas and data among coworkers. Consequently, instead of being securely tucked away in private offices, even the most senior executives are now positioned among the rank and file.
These policies are not always well-liked. Individuals who are unable to adjust to INEOS’s work style usually leave, which only helps the management team’s efforts to right-size the organization. “You are either in this and understand what the mission is, or it is not for you,” is the message.
The first few months of INEOS’s tenure at United have demonstrated this much. The club’s interim chief executive, Patrick Stewart, whose retirement after more than 18 years at Old Trafford was confirmed in April, rejected plans to discontinue working from home.
Stewart was filling in for outgoing CEO Richard Arnold, who was also let go by INEOS. Chief financial officer Cliff Baty, director of football John Murtough, director of communications Ellie Norman, and director of alliances and partnerships Victoria Timpson have all gone.
Several employees at INEOS questioned the company’s early forays into sports, thinking that investing billions of dollars in motor racing, sailing, and football was at odds with Ratcliffe’s penchant for leading lean, agile, and cost-effective organizations.
For those who work around Ratcliffe, however, it is difficult to overstate how important sports are to him. He pushes his staff to live healthier lives; in fact, INEOS’s Swiss headquarters in Rolle renovated a floor to accommodate free bikes and a workout center.
Ratcliffe has even occasionally canceled business meetings in order to work out. According to one insider, “you would be in a meeting with him and then all of a sudden, it was time for him to go work out.” says one source. “You’d see him running by.”
Normally, that would only occur when Ratcliffe’s feet were beneath the table—both literally and figuratively. Delegation usually replaces an initial hands-on approach once he has a reliable senior management structure in place underneath him.
The first few months of INEOS’s leadership have been dominated by United’s efforts to hire senior executives. Omar Berrada, the next CEO, will begin work alongside Dan Ashworth, the sporting director, Jason Wilcox, the technical director, and Christopher Vivell, the interim head of recruitment. Apart from the game, United is also anticipated to name a chief financial officer who would answer to Berrada.
It is difficult to determine whether INEOS has previously been successful in implementing such procedures based solely on public reports because Innovene was absorbed into the larger corporation.
Prior to being acquired by INEOS, Innovene had a $1 billion pre-tax profit in 2004 after having previously reported a $133 million loss. Following the acquisition, INEOS’s earnings peaked in 2007 at €325.2 million, but in the midst of the 2008 financial crisis, they fell to a €735 million deficit.
Some former workers contend that such losses could have been greater and praise Ratcliffe for correctly timing its right-sizing decision, which helped it weather the 2008 financial storm better than its competitors.
“They were right-sized in the number of people they had,” says one person familiar with the organisation. “That was to be commended because LyondellBasell and Shell and others, lots of them had huge layoffs in the 2008 downturn.”
In the two years after purchasing Innovene, INEOS spent almost €143 million more on restructuring than it did in the years between 2008 and its fleeting return to profitability in 2011.
However, the business did not start generating profits again until 2015. By then, one of the most notorious disputes in the contemporary history of industrial relations in Britain had given way to INEOS.
INEOS assumed control of Grangemouth, a crucial oil refinery complex that contributes significantly to Scotland’s economy, accounting for roughly 8% of the country’s manufacturing base and 4% of the country’s GDP, as part of the Innovene agreement with BP.
The fable of the apple and the dinner money was shared by unionized workers at Grangemouth with their INEOS-experienced counterparts upon INEOS’s arrival in 2005.
“The parable goes like this,” wrote Mark Lyon, a convener for trade union Unite at Grangemouth, in the Battle for Grangemouth: A Worker’s Story, an account of the industrial disputes during INEOS’ first eight years of managing the site.
“If you give the school bully your apple, they want your dinner money. If you give them that, they want your bus fare home. If you give them that, it’s your designer trainers. They will not stop until they have taken possession of your grandmother’s stair lift. We thought our colleagues must be trying to wind us up.”
The relationship between BP’s employees and management was largely cordial, despite many issues. Production at the refinery had never been stopped by strikes in its 86 years of operation, but three years after INEOS was acquired, employees were staging picket lines.
INEOS made it apparent that it intended to close the final salary pension system, which paid out pensions determined by an employee’s wage upon retirement rather than their contributions, in early talks between union officials and company management.
INEOS declared in 2008 that it would no longer allow new participants in the program, citing its unfeasibility. Unite contended that the firm was eliminating the scheme only for political reasons, even though it was completely funded by surplus.
Approximately 97% of Unite employees at the refinery cast ballots in support of the two-day strike that occurred in April. As a result, the UK’s North Sea oil production was cut off to nearly half. At an estimated cost of £120 million, INEOS removed the pension modifications from the table when negotiations reopened.
Although the union won, it was merely the beginning of a bloody conflict that pitted the business against its employees and lasted more than five years.
One former Grangemouth worker sums up INEOS’ attitude towards its employees on-site at the time: “If we could run it without anybody being there we would, but because you’re there we’ll have to pay you, I suppose, and have certain safety arrangements. ‘Contempt’ would be the word.”
Ratcliffe’s move in May to go on the attack and send an email to every employee expressing dissatisfaction at messy conditions at Old Trafford and Carrington would resonate with people connected to the Grangemouth conflicts.
Ratcliffe wrote an email detailing “strike repercussions” during the 2008 pension scheme dispute. These implications essentially included staff giving up the bike-to-work program as part of the price they would have to pay for their resistance.
Ratcliffe’s note threatened to escalate things and was delivered without previous consultation during a pause in hostilities to try and find a solution. However, negotiations between union representatives and management took place and the suggested adjustments were not implemented.
“He wouldn’t send out constructive stuff,” says one person familiar with the situation. “He’d only send out stuff that was absolutely bonkers and would upset everybody.”
There could be a high stakes game of all or nothing in the negotiations with INEOS. In discussions with management, a number of United’s distant workers were essentially given the option of moving or accepting voluntary redundancy, and Grangemouth employees were given similar ultimatums.
“You get management sitting across a table saying, ‘I’ve not got any more to give you’, then when you say something, they maybe put half a per cent on,” says one person with experience of the situation. “But I think they were drop-dead serious on it. Give them that or nothing else.”
The most notorious instance occurred in the midst of a disagreement in 2013, which was brought on by union head Stevie Deans’ suspension due to claims that he was using company time to perform Labour Party business. Ratcliffe was publicly doubting Grangemouth’s long-term financial sustainability at the same time.
At the height of the conflict, INEOS declared its intention to close the petrochemicals plant in Grangemouth, eliminating 800 jobs and endangering thousands more throughout the site, after workers rejected the company’s survival plan that would have reduced the pension scheme they had fought for in 2008 and much more.
In order to save jobs at the plant, Unite gave in and accepted the survival plan “warts and all.” Subsequently, Deans left his role at INEOS prior to the resolution of his internal disciplinary proceeding.
“This move by INEOS was designed to cut right to the heart of human frailty,” wrote Lyon of the threatened closure. “The fact that the company was prepared to go to such lengths is still a source of sickening disbelief.”
As a result of the bitter dispute, the prime minister at the time, David Cameron, announced plans for an independent review of trade union laws, led by Bruce Carr KC.
Unite declined to collaborate on the review, characterizing it as a politically driven “Tory charade.” INEOS informed Carr that union actions that might be construed as bullying or intimidation ought to be illegal, citing demonstrations outside Ratcliffe and other senior INEOS management’ own properties.
“The common theme was as follows,” claimed INEOS’ submission. “The protestors would arrive waving banners and, in many cases, with a very large inflatable rat. They would play loud music and challenge passers-by to support the union by passing out leaflets.”
The Carr assessment found no evidence that the protests it evaluated “were anything but peaceful,” following the receipt of a submission from Hampshire Constabulary.
After over ten years, everyone The Athletic spoke with on both sides agree that INEOS and Unite’s relationship has improved as a result of both parties taking lessons from the past. The connection is characterized as “mature” and “in the proper spirit,” and talks with Ratcliffe and other business executives are reported to be cordial and produce positive results.
“People don’t want to go back to (the disputes) because it was so damaging,” According to a union spokesman, trade unions and oil and gas corporations are increasingly collaborating to safeguard jobs due to government pressure to meet environmental goals.
According to INEOS, almost 5,000 employment have been secured by investing £12 billion across its four main UK locations over the last 25 years. But the future of Grangemouth is nearly as uncertain as it was ten years ago.
Citing pressures from the global market, declining demand, the site’s age, and the shift to greener energy, Petroineos, the joint venture between INEOS and China’s state-backed PetroChina, announced in November of last year that it intended to eventually cease operations at the site’s oil refinery, possibly the following year.
Nearly 400 jobs are in jeopardy despite plans to turn the complex into a petroleum import terminal. Job security is a top issue, according to Prime Minister Keir Starmer, who is leading ongoing discussions between the government, unions, and the corporation.
Although the majority of Manchester United’s personnel is not unionized, the team maintains that they are adhering to the stringent procedures that oversee redundancy plans, including the designation of employee representatives.
United revealed a £76.9 million loss until the end of March in their third quarter financial year figures, which were released this month. Even greater pre-tax losses were incurred, amounting to £89.2 million as of the end of March.
INEOS cites this figure as one of the reasons cost-cutting measures are required. It is the starting point for calculations made in accordance with the Premier League’s profitability and sustainability requirements.
2019 saw United make its last year-end profit. Their losses in the four and a half years afterward have amounted to £331.1 million.
A portion of that can be attributed to COVID-19, which severely reduced the club’s financial reserves, which were £307 million before to the epidemic and are now only £67 million. It also stems from the way the Glazer family managed the team, allowing United to foot the cost after pilfering the club for £790 million in 2005.
In the third quarter of the previous season, United was paying interest on loans totaling more than £1 million a week. Stated differently, this week’s payments would be covered by the £420,000 original fee Girona paid for Donny van de Beek’s transfer this month, at least until Wednesday morning.
Ratcliffe’s declaration that he had not invested in United to make money was one of the most important lessons learned from his initial meeting with workers at Old Trafford in January. Few owners would examine United’s finances and conclude that nothing needs to be fixed.
Although Ratcliffe may argue that he did not plan to lose money either, the idea that football success would take precedence over all other considerations made employees feel more upbeat after their initial meeting with INEOS.
However, many of those same employees skipped the most recent meeting out of concern for their futures, even as United’s minority owner works toward that goal.
(Top photo: Getty Images; design: Eamonn Dalton)
