AUBURN HILLS, Mich. — Credit unions that serve the automotive industry are bracing for what they fear will be the toughest GM cutbacks in recent memory-which could not only strap just autoworkers, but local communities as well.
General Motors recently announced plans to cut 23,000 U.S. jobs by 2011, drop its Pontiac brand, and slash 40% of its dealer network.
Dianne Addington, CEO of the $1.2-billion Genisys CU here, told Credit Union Journal that "this is very different from anything we have ever been exposed to. Our members have never seen a situation like this. During my entire career at the credit union, which is over 30 years, we have had our ups and downs with GM - but not like this. With all the job cuts that are going on right now, some of our (older) members may never go back to work."
Over the years, automotive credit unions have prepared for the rise-and-fall nature of the auto industry by diversifying their fields of membership (CU Journal, Dec. 15, 2008).
"This will impact overall delinquencies," Addington predicted of the GM restructuring. "We are largely community-based, with about 10% of our membership with GM. But for every manufacturing job lost you lose two upstream and 10 downstream. It's the party stores, the small retail stores, the independent restaurants...A lot of businesses are going to go away."
Typical of many automotive CUs, Genisys has been reaching out to its GM members over the last several years, asking them to contact the credit union if they are facing financial difficulty, providing workout loans and other assistance.
At Chief Pontiac FCU in Pontiac, Mich., where just under 40% of its membership are GM employees and about half of those work for the Pontiac brand, Claudia York is most concerned about how this large cutback will affect GM retiree benefits.
"So many of our GM members have retired, taking the buyout," she explained. "A lot of people have come in and consolidated their debt to make their lives easier and adjust to retirement."
But with the potential for cutbacks in benefits by GM, York said those who are living on a fixed income are holding their breath to see what the carmaker's moves will mean to them.
York said CPFCU stands ready to extend loan terms or rewrite them, and "do whatever we can to help members through this rough patch. Our members, and the credit union, will weather this storm."
In Warren, Ohio, the $18-million Cavalier FCU recently merged with Associated School Employees CU, partially in anticipation of cuts by GM, explained Robyn Darocha, former Cavalier CEO and now COO of the Youngstown, Ohio-based ASECU. Before the merger, the credit union's membership was 50% GM; now it's down to about 25%.
Darocha noted that one of the two nearby Lordstown GM plants manufactures the Pontiac G5, but that assembly line will be retooled this summer to produce the Chevy Cruze. "With the addition of the new product line, hopefully not a lot of people will lose their jobs," Darocha said.
Like other credit union leaders whose CUs serve GM, the greater concern may soon be how the cutbacks impact the local economy, especially if GM's restructuring does not go well.
"From the waitresses to the store owners, we all depend on GM here," Darocha said.
