47,000 Autoworkers To Get Big Payout

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The announcement by General Motors Corp. that 35,000 of its workers, along with another 12,600 at bankrupt Delphi Corp., have accepted buyouts or early retirements in exchange for packages ranging from $35,000 to $140,000 has credit unions serving those workers getting ready.

Debt counseling and financial planning services are being offered or will be offered to the workers.

Many, including Dort FCU in Flint, Mich., Vantage Financial CU in Brook Park, Ohio (see their ad, right), and Afena Independent Credit Union in Marion, Ind., have already created game plans and marketing materials to let members know they can count on their CU for all of their financial needs.

"We've been working on it ever since GM made their announcement," said Sheila Burkhart, president of the $40-million Afena Independent CU. "It's been a pretty big deal."

She said AICU has sent out mailings informing members their credit union has a certified financial counselor on staff and has partnered with another CU that also has a financial planner.

Sponsor Co. Providing Names

She said the nearby GM plant-Metal Fabricating Division in Marion-has provided a list of retiring employees, which has allowed AICU to target-market to its affected members. The materials they will receive depend on their financial relationship, Burkhart said. For example, those with outstanding debt might be referred to financial counselors, while those with solid savings relationships will receive information on the CU's financial planning products and services.

Burkhart said the CU, which is 89% loaned out, welcomes an influx of deposits and is developing marketing materials aimed at gaining more savings.

Approximately 400 workers at the plan served by AICU took the buyout pacakges, about 150 more than targeted, she said. Nationwide, the final tally far exceeded early estimates by GM, paving the way for a major restructuring.

For AICU, that also means that new employees-and potential new members-are on the horizon. "I know Metal Fabricating Division is gearing up to start training new employees, so we are putting together welcome packets for them," she said.

Meanwhile, in Brooke Park, Ohio, Steve Cooper, director of marketing and business development at Vantage Financial Credit Union, just outside Cleveland, said that while not too many of its members will be affected, it's a sufficient number for the credit union to step up marketing efforts.

"We have plastered our branches with posters and fliers offering help," Cooper said. "We want all of our members to know that we hope to stay with them right through retirement."

In addition to recently placing a print ad in a suburban weekly, the $60-million VFCU also offered a more personal touch via cookies and punch, all served inside a lobby decorated with signs congratulating affected members on their retirement.

Cooper said he also attended a recent retirement party at the nearby Parma GM Stamping Plant to hand out fliers and offer the CU's services. "We think one-on-one conversation with our members is the best way to reach them," Cooper said, noting that staff has also been trained to identify affected members and discuss possible options.

VFCU has about 9,500 members, a third of whom are automotive workers, Cooper said. The majority of those have ties to three area Ford plants.

"It's a challenging time for us and it's one of the key reasons we've transitioned to a community charter," Cooper said. "As the automotive industry shrinks and consolidates, and our members from that segment diminish, our challenge is to find ways to neutralize the attrition and grow under our community charter."

Martin Smith, president of the $310-million Dort FCU in Flint, Mich., said his board instructed staff to put together a preparedness plan as soon as it saw how things were going at Delphi, a former unit of GM and its biggest parts supplier.

Among the results, he said, is free debt counseling and financial planning services for its members.

"We realized that people that would be accepting buyouts would have an infusion of cash," Smith said.

In anticipation of that, DFCU established a relationship with Financial Network Inc., and can draw on other area financial advisors, if needed.

Dort has about 45,000 members, 2,000 of whom have GM or Delphi connections, Smith said.

Funds Flow In-And Out

While Smith said he expects there will be an influx of deposits, previous experience with a CU whose primary sponsor, Ameritech, also downsized, leads him to believe that portions will be dispersed as members settle other financial obligations and deposit funds toward their long-term financial plans.

"We are over 22% capitalized, so we don't anticipate any derogatory outcome," Smith said. "The plan of the board of directors and preceding management to accumulate this level of capital was basically for this rainy day."

Smith said many members have already informed CU staff that they would use some of their funds to pay down or restructure debt or invest in real estate. "The membership has given this a lot of thought," Smith said. "They know that their financial lives have taken a turn." (c) 2006 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com

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