The entrepreneurs you talk to, do they like the idea of Nigel Farage? Do they see a kindred spirit? Where do they go if they've fallen out of love with Labor? And the conservatives they see as being on the way out.
So Jim Ratcliffe has poured a whole load of money into his passions over the years.
So he's met Starmer. We know he knows Starmer. He's met Badenoch. He said, so now he's meeting the leader of reform, Nigel Farage.
When he meets you before Christmas, the first thing he's going to do is say, 'Can I have some money?' If he asks you, you'll say, 'No.' I'm Dominic O'Connell. I'm a business columnist at the Times and business presenter on Times Radio.
And I'm Hannah Previtt, associate business editor of the Sunday Times.
This is the first episode of our new podcast, The Business. Isn't that exciting?
It is so exciting. It's brilliant to be here in the studio that was made just for us. Isn't it glorious?
Amazing. Red and black colors. Love it.
And what are we going to be doing here, Dom?
The whole idea of this podcast is to bring people inside the kind of conversations that you and I have all the time, isn't it? Big bits of stories. They always involve people, big money, ego, ambition, politics, often technology. And you and I have had lots of conversations with these kinds of people where you find out what's really happening behind the scenes. And this podcast, the idea is to bring everybody who's listening into those conversations so they can hear what's really going on.
Like you, I'm fascinated by the personalities behind the scenes, how they operate, what makes them tick, and where you're interested in big business. So the footsie global industries my focus has always been much more on kind of entrepreneurship tech startups those businesses that are really shaping the world tomorrow and also it's the personalities at the top of these companies the founders the chief executives the investors but of course their individual lives their individual decisions have a huge effect on thousands of others you know all the people who are working for them who buy their products so these are conversations that are vital not just to them and to the future of companies, but to thousands, millions of people all around the world.
Absolutely. So, and what we're doing in this podcast is each choosing some guests, some people that we find fascinating and looking behind the scenes at what they're doing. So, I've lined up the founder of a tech unicorn to speak to next week. It's a really fascinating story of a British entrepreneur with a very kind of 21st century story to tell. And you, Dominic, what have you been up to? Well, I'm not so boring as to stay here in the studio. I've been down to Monaco to find our first guest, Sir Jim Ratcliffe, who is the founder and chief executive of Ineos, one of the world's biggest chemicals company. I think it's third biggest chemicals companies in the world, but he's better known, of course, as the co-owner and driving force behind the football team, Manchester United.
You're so fancy flying out to Monaco in our first week. Dominic, did you take your helicopter? No, I didn't get the helicopter between Nice and Monaco. I had to take an Uber, which is a bit of a step down me, but I've managed to kind of grind it out.
I bet Jim Ratcliffe hasn't taken an Uber in quite some time. But there's a really nice contrast there, isn't there, between kind of new industries like what we'll be talking about next week and I guess perhaps those older industries. Yeah, because Ratcliffe, I think, is kind of the entrepreneurial face of those old he's in chemicals, which is a very old industry. It's been one of the mainstays of European industry for more than a century really and Britain was in the past with ICI and other companies an absolute powerhouse of the chemicals industry. Not so much now. And also, and we're going to talk to him about this in a bit, as part owner of Manchester United, loads of people are going to want to know what he thinks about the business of football and their current rather poor run of results. And that means that Sir Jim Ratcliffe, he's not all about oil refineries, pipelines, chemical plants, is he?
No. But those things do give me a thrill.
Maybe that's where we beg to differ. Our business today is probably Britain's most important post-war industrialist, Sir Jim Ratcliffe. And his journey and what he has to say says a lot about the British economy and also about the European economy and to add to all that he's a bit of a character as well so that helps.
Yeah, he's definitely really interesting. As much as I've gleaned from him, I can see he's a prominent Brexiter or at least he was as you say, a part owner of Manchester United, a great British businessman. It has to be said, whatever your views of how he's managed the club since taking over. But now a resident in Monaco.
Yeah, he lives in Monaco. When I first met him, this was in 2008. And he had never talked to the press. He was pretty much invisible. He was known as one of Britain's richest people, one of the most successful entrepreneurs, but he had no public profile at all. Even after the banking crisis, demand for chemicals just fell off a cliff. The lenders to the company tried to take control of it, tried to take it off Ratcliffe. There was a huge fight, a showdown in Glazers Hall, one of the delivery guild halls in the city, and Ratcliffe won, although we did have to pay about $800 million in extra fees and higher interest rates to the banks. And after that, they decided they might want to talk to someone. And so I did the first interview in a refinery and a chemicals plant in Antwerp. He was super interesting and he gave us loads of stories about how during the crisis I'd asked Peter Mandelson for a VAT holiday. The government had said no. And he coined this and this was when the government was giving out billions to the banks and he coined this famous phrase you know business business life can't only be about banks and after that he got annoyed with the UK went off to Switzerland came back for a while was tax resident back in the UK for a while and then left for the sunny climes of the Riviera.
Yeah. And it's fair to say he's pretty outspoken about the government of the day whoever that might be at the time. It's not quite a rags to riches tale is it? I believe that he grew up on a council estate near Manchester, went to grammar school in Yorkshire, became a chemical engineer and got into the chemicals industry that way and then took the leap and co-founded his first company and I believe he put his house up as part of the financing deal. He was about 40 at the time with a young family. So a huge risk and that is a theme amongst lots of entrepreneurs I speak to kind of taking that financial risk themselves.
It's a common story, isn't it? And I'm sure you've struck it loads of times where they need a source of financing to back their big idea and one asset that they have is their house. So that does happen a lot, doesn't it?
Yeah. And often the only asset they have is their house, of course. And I'm seeing this more and more actually at the moment. The banks are asking entrepreneurs to put their houses up when they take out new financing arrangements to steer their business through what's quite a difficult time. Ratcliffe's other big insight, I mean, he took that jump and then he was on his way. And what he's done, he's built up Ineos from buying up what are pretty much unloved assets, orphan assets from the big oil and gas companies, in particular BP. BP is all about oil and gas or wasn't in those days all about oil and gas and the chemicals bit was always a bit unloved. And his great insight, which I think people still don't quite understand about him, is that he worked out that these companies shouldn't really be on the stock market. They're much better funded just from debt, just from borrowing. So he issues these bonds, seven or eight year bonds, whatever they happen to be. The people who issue that money don't really care about what the company's doing as long as they get their money back. Whereas, if you're on the stock market, one quarter's bad results can lead your share price to tumble. So he had that great insight, picked up these companies, funded them with debt, and made billions.
Mhm. And he didn't do it alone either, did he?
No. So he owns 60% of Ineos, people often say he's 60% of the shares and 90% of the company which I think is a bit unfair. His co-shareholders with 20% each Andy Curry who's kind of a bit of a genius at the operations of chemicals and John Ree who's the finance man.
It's like the three musketeers.
And so to give a sense of scale Ineos is huge isn't it? So over 20,000 employees and more than 100 production facilities across more than 20 countries, including of course the Grangemouth Chemicals plant. And I know we're going to talk a little bit about what that actually means, but they produce a lot of the raw materials that go into the food we eat, the clothes we wear, pharmaceuticals. So tell us more about how it works, how the ingredients that they make then go into making the things that we see all around us.
Yeah. So they take oil by and large and also gas and they refine oil and gas and turn it into all the building blocks you need for making plastics basically and other kinds of industrial products as well but the main stuff is polypropylene, all these fairly basic building blocks, all the plastics itself they do, they're right across the thing, all the chemicals you need for industrial processes as well they make all those. I remember John Ree telling me that Just Stop Oil were protesting outside the offices in London which are just across the road from Harrods. And he John is a fairly unassuming looking guy from the northeast and he walked past one of the protesters wearing the Just Stop Oil orange high-vis vest and he sort of reached out and said oh you know we make the polypropylene that makes this vest and then wandered off into the offices which I think is a quite interesting story because people who talk about our reliance on oil and gas and fossil fuels don't often realize the chemicals angle of it as well. It's not just burning it in your car or an aircraft. It's in everything you use day to day. It's the entire fabric really of western life.
Mhm. And that goes to the point, doesn't it, that Ineos is a great kind of bellwether, if you like, for the rest of the economy. And as the budget approaches, we're at this really critical moment, I think, both here in the UK and also in Europe, Ineos itself is very much currently in the news, isn't it? So we heard earlier this week that it's sitting on about 11 billion euros worth of debt, which has resulted in a recruitment freeze, job losses, and a pause on dividend payments, although I don't think it's going to hit him in the pocket too hard.
Total hardship for Jamaica.
So I'm interested to know why such a big company and such an important company seems to be hitting on such difficult times.
Well, that's certainly the case in Europe. And why don't we go down to fly down to Monaco and find out now.
So Jim, thanks very much for having a chat to us on the business podcast. You're our very first guest, you'll be pleased to know, which is a good thing.
We're here in Monaco. I can see Philip Green's yacht over your shoulder. It's sunny. The sea is blue, 23 degrees. Why did you want to live here?
That's a good question. Why would you want to come to a place that's sunny and friendly? Yeah, it was part of it, quality of life. Lots of people at my sort of age retire to a place that's warmer and more comfortable and a bit more relaxing, but I obviously haven't retired. But to be honest, the reason we came out here, which was a few years ago now, was when there was the spectre of Jeremy Corbyn wrestling to raise a man.
Because you had been outside, you had been to Switzerland, but you'd gone back to the UK, hadn't?
Yeah, we went back to the UK for 16 to 19 for about 3 years. And then we had that concern about Jeremy Corbyn coming back in and that clearly wouldn't have been a good outcome for us. So we decided we need to find a solution to that.
How is the business doing? Because this morning you've announced some closures of some units in Germany.
Yeah. It's not a great time to be in the chemicals business in Europe. No, no, no. Europe is a very tough place for chemicals. I mean the world at the moment is a difficult place because if you think about the three main regions we operate in, that would be China, Europe and America. China, which is peculiar to our industry to an extent, has vastly overbuilt not only for China but for the world in many cases. So that's put a lot of pressure in our marketplace. Europe is simply a mess because of high energy costs and carbon taxes which are sort of unsustainable and a very slow response to tariff protection in Europe. And then America is not in a bad place but it's a bit unsettled at the moment because of Trump and his tariff negotiations. But Europe is by far the worst, most difficult place for chemicals, and quite a lot of Ineos is based in Europe.
Well, let's come back to Europe and for the company what does it mean? You're not hiring people. You put a hiring freeze on. You're not paying dividends.
Correct. Correct. And correct. Yeah.
So you're in a cash conservation mode.
Yeah. We just have to hunker down during this sort of difficult period.
Is the state of chemicals or perhaps the state of Ineos like 2008 again? Oh, no. No. Not at all. No.
Yeah. No. Absolutely not. No. Because for two reasons. One, we don't have any covenants in our banking facilities because covenants trip you up. So we don't have covenants. But secondly, we sit on a lot of cash. So the two principal legs of Ineos are Ineos Group and what we call Quattro Ineos, Quattro because it's got four businesses in it. And both of them sit on two billion of cash each.
So there's always a cash reserve.
What's the future of the chemicals industry in Europe then?
Grim, I would say no other word for it really. I don't think there'll be much chemicals left in 10 years time unless something radical happens because ultimately one of the primary costs in chemicals is energy. And we're not 10 or 20 or 30% disadvantaged against the United States or the Middle East, but we're four or 500%. It's four or five times the price, and we're talking about gas and electricity, and we can't cope with that. And on top of that you've got carbon tax. So what they're trying to do with a carbon tax is improve our carbon footprint. What in reality they're doing is we don't have any cash left to invest. So ultimately all these units, as you can see, there's a whole slew of facilities in Europe closing down, and what happens is it gets replaced by Chinese imports. But China is a coal-based economy. So you're bringing imports in to replace low-carbon products in Europe. But what good is that doing to the planet if you're just replacing low carbon with high carbon product and you're closing down? Bear in mind with chemicals, it ends up in just about every product you can imagine. Every single product you see in the hospital or your iPhone or your car, washing machine, whatever, and all the consumables like shampoos and detergents. It has huge economic importance because it's the fourth largest business in Europe, chemicals. It's about three-quarters of a trillion. But it's also hugely strategic. You don't want to be completely reliant on imported materials for all of your products, particularly where the world is today. We've surely learned our lesson from Russia and gas. The reason gas is where it is today is because we fell out with Russia and they cut off the gas supply. Chemicals is strategic as well as economic.
So the picture you're painting is quite a bleak one actually, isn't it? Because if you think about Germany, all that industrial heartland, a lot of it is the chemicals industry.
France is pretty big. The UK still has some chemical stuff left, not a great deal, but all that's a lot of employment which could go in the next 10 years. A million direct jobs and probably you multiply that by 10 if you look at all the indirects related in terms of services, so it's probably 10 million jobs in Europe and three-quarters of a trillion in value. The automotive industry, to put it in perspective, is 1.2 trillion. Chemicals is 700 billion. Three-quarters of a trillion.
So they're huge. Those are the two of the four biggest industries in Europe, automotive and chemicals, and they're both in a horrible place, but largely because of government and the decisions government's making.
What about the UK? Because we're a UK podcast, UK paper. So the Grangemouth Refinery, which you own with the Chinese company Petroineos, that's now shut.
Yeah. Correct. What's the future for that chemicals plant which takes all the gas from the North Sea? If you step back a minute, there are three large chemical facilities in the UK which have a cracker at the heart of them. So they're big petrochemical facilities. You've got one in Wilton in the northeast, one in Grangemouth on the river, and one in a place called Mossmorran just north of Grangemouth. Two of those three are going to close. Wilton's already closed. Mossmorran is sure to close in the next couple of years, which just leaves Grangemouth. But Grangemouth is a good unit and it's the umbilical cord to the North Sea because the majority of the North Sea is interconnected and passes all of its oil through the Forties pipeline system which arrives in Grangemouth. Then they separate because when it arrives in this pipe, it's a big pipe about a meter in diameter, it's like Coca-Cola. It's a mixture of oil and gas. So they boil it all off and the gases move across the chemical facility and the chemical facility turns those gases into chemical products in a cracker, and then the oil gets shipped off or consumed in other refineries in the UK. The oil you can move around, the gas is much more difficult to move around. So you're dependent on that chemical facility. But it's in quite a tough place, Grangemouth, because
No, it hasn't made any money for two or three years. It ought to make money, but the burden in Grangemouth for energy and carbon tax is 130 million pounds per year. So over 10 years that's 1.3 billion. That's all the money required to invest in the future and make it greener, more energy efficient, lower carbon footprint. But all that cash gets sucked out of the business and goes into government coffers.
Why don't you just close it then?
Well, if you close Grangemouth, you close down 60% of the North Sea. So Ineos has invested 500 million pounds of cash into Grangemouth in the last 3 years. So it's stressed.
Yeah. You're not going to be investing anymore in the North Sea obviously, because at one stage when you set up Ineos Energy that was part of the plan, was it to buy some of these North Sea oil fields that were being sold by the likes of BP and Shell.
There's a pretty significant exodus out of the North Sea because of the government policy on shutting down, I mean effectively shutting down the North Sea. Taxes now 80% and they're not giving any new licenses out. So that's a policy of closure of the North Sea really, which is a great shame because it's a fabulous asset for the UK. There's still lots of oil and gas left in the North Sea, but everyone's running away. If it were me, I would liberate the North Sea. I would do what America does and just simply apply corporation tax to people who are operating in the North Sea. It's very simple. Everybody understands it. That's what they do in America. In America, if you produce oil and gas and you're profitable, you pay 35% corporation tax on it. It's nice and simple. You don't pay 80%. Otherwise, nobody would invest in the Gulf of Mexico.
Have other conservatives asked you about energy policy at all?
I'm meeting with Nigel Farage before Christmas. His meeting, and I've met with Kemi Badenoch. She's talked about it. So we have had a hearing.
Do you think your chat led to her saying I'm going to open up the sea?
I don't know who she's spoken to. She's spoken to me, but she may have spoken to other people as well. But you don't need to be a rocket scientist to figure it out really in my view. Energy is clearly highly correlated with economic growth. You can see that over the centuries. The UK started growing when we discovered coal, China discovers coal, America discovers oil and gas. You can see a kick up in the economy every time you get competitive.
What do you make of Farage?
Do you think he's the answer to the UK's woes?
Well, if I look dispassionately at the UK, then I see the UK as high tax, high immigration, high crime, unfortunately. Now, if I look at why Trump won so convincingly in America, he won on tax and immigration really, or the economy and immigration. And unfortunately the current government for whatever reason isn't delivering on tax, immigration or crime. It's free crime in the UK. Nothing anyway. So if Farage is able to do that, he'll support him.
I think most people would support him. If he could solve the economy, taxes, there are two sides to taxes and the economy in the UK. One, you need growth, and you have to think about what creates growth in the UK. And secondly, the solution to having an imbalance where we're spending more money than the government is earning is not to keep putting taxes up. And it's a weird statistic, we were talking about it earlier, but the top 1% of earners in the UK pays 30% of the income tax. And in America, the top 1% of earners pay 40% of the income tax. The top 1% of earners pays more tax than the lower 90% of earners. So you need to look after the 1%. That's where the growth is going to come from in the UK because they're the people who invest in the UK, and we've just kicked them all out with high taxes and the non-dom registration. And you've had a direct experience of that because of what you see in Monaco.
Yeah, exactly. You can just see Monaco is flooded with applications from the UK, as is Dubai, as is Italy, as is Portugal, almost everywhere. I was brought up in a very nice but very poor household in the north of England, so I wasn't born into money. I lived in a council estate in Manchester for the first 10 years of my life. But the one thing that you notice as you accumulate wealth is you become more mobile. So people who are wealthy are mobile and they can make decisions about where they wish to stay. Now London was an absolutely wonderful place to live, but taxes need to be reasonable and you need to feel safe.
Just go back to Nigel Farage. It occurs
To me that when he meets you before Christmas the first thing he's going to do or maybe the second thing he's going to do is say can I have some money?
Yeah. Yeah. Well, I've never
Do you do political donations?
