When DaimlerChrysler announced layoffs of 25,000 employees last month, AM Community Credit Union in Kenosha, Wis., knew what to do. Unfortunately, noted CEO Don Gillespie, the $85-million credit union has been down this road before.
"We dealt with Chrysler closing two plants in 1988, which displaced 5,000 to 6,000 employees."
This time around, he said, the blow locally will not be as large. "We're looking at 300 to 400 out of work."
As part of a restructuring plan to bring the automaker out of the red, company officials announced they would cut about 20% of its North American workforce over a three-year period.
That includes approximately 19,000 of its 95,000 manufacturing jobs and about 6,800 of its 25,000 white-collar jobs. Part of the plan includes indefinitely "idling" several auto plants and scaling back production to two shifts from three shifts at additional factories.
AM Community CU is one of 24 credit unions throughout the Midwest that serve DaimlerChrysler employees. While some credit union officials said they are taking the "wait-and-see" approach to the situation, officials at several others said they have already written letters offering financial advice and assuring members that their credit union will not abandon them.
Gillespie, whose CU serves about 24,000 members-2,500 from the local Chrysler plant-said his CU received permission from the company to put a letter in the employee separation packet that invites them to talk to a CU specialist before they make any rash financial decisions.
"When this happened last time, the local community pretty much blackballed auto workers," he said, referring to other retailers and noting that AM Community CU has no intentions of doing that. Instead, he said, it will discuss options, such as consolidating debts and downsizing vehicles, if necessary.
Gillespie, whose CU serves both salaried and hourly employees, said he knows of at least 70 employees notified so far that their positions are being eliminated.
AM Community CU has also been invited by DaimlerChrysler and United Auto Worker officials to participate in a seminar for displaced workers. "Our approach is going to be to treat everybody as an individual," Gillespie said.
Active Approach With Counseling
Jim Carson, president of ABD FCU in Warren, Mich., said his CU is also taking an active approach by offering counseling to any member who suspects they are on the list to lose their jobs.
"We are sending out letters to let them know we will be there as soon as they need us," he said. "We feel our obligation is to help alleviate some of the pressures."
ABD, with $51-million in assets, serves about 13,000 members-mostly DaimlerChrysler employees in assembly, engine and support plants. Carson, who also serves as DaimlerChrysler Credit Union Council president, said he has been led to believe the effect on his CU won't be significant, because most of the employees being laid off will be those with less than a year on the job. And, other members working at a plant targeted for closure are expected to be transferred to jobs elsewhere in the company, he said.
Delinquencies & Bankruptcies
At Motor Parts FCU in Auburn Hills, Mich., President Don Major said his credit union is anticipating significant fallout as a result of members who accept buyout packages from DaimlerChrysler. "We're going to be looking at unemployment challenges that include increased delinquencies and possible bankruptcies," he said.
As part of DaimlerChrysler's plan to cut back jobs, the company intends to offer voluntary early- retirement packages. But if too few employees opt for the packages, officials reportedly said they will order layoffs to reach their target.
To help them prepare, MP FCU, which serves mostly salaried employees of DaimlerChrysler, is running advertisements in local newspapers letting its members know the CU has experts who can offer solid financial advice on how to handle any lump-sum payments.
Major said just prior to DaimlerChrysler's announcement of layoffs, his credit union with $109- million in assets hired an onsite financial planner. "We will offer assistance on how to invest that money," he said. "And it'll be a good opportunity to offer CDs."
Another CU taking a proactive stance is Huron River Area CU in Ann Arbor, Mich. President Gerald Gillikin said even before his DaimlerChrysler members-mostly salaried employees-accept any buyout offer, HRACU wants them to seek financial advice on how it might affect them.
"This is going to be the biggest decision that they're going to have to make in their lifetime," Gillikin said. "Utilizing representatives from our financial CUSO, we are offering services that include helping them evaluate the offer by the company. And, if they decide to accept it, we can help them invest it."
Gillikin said the CU identified potential layoff targets through its payroll deduction list and sent direct mail pieces. So far, 10 have signed up for counseling. Huron River Area CU with $145-million in assets has about 45,000 members from 1,000 SEGs.
Deborah DeVous, manager of Dayton Area Cooperative CU in Dayton, Ohio, said her approach is to remain positive. Even though the DaimlerChrysler plant served by DACCU is up for sale, she said, "We do not believe it will affect us in a negative manner anytime soon."
She said company officials have promised to honor the contract to utilize the plant, which makes air conditioning units, through 2007. In a demonstration of confidence, her CU recently installed an ATM in the plant building.
DeVous said layoffs did start at the plant last December, but, like other plants, those affected had less than a year of seniority and little or no connection with the credit union.
She reported that of the 6,000 members served by Dayton Area Cooperative CU, about 1,500 are employed by DaimlerChrysler.
And, at least one credit union contacted by The Credit Union Journal stated that his members who are DaimlerChrysler employees are not in line for layoffs. "This facility is what we call a parts distribution center," said David Pecsi, president of the $25-millionAmerican CU in Milwaukee, Wis. "It's one of the few profitable divisions."
Board To Determine Plan Of Action
With only 4% of its entire membership of about 5,600 employed by the plant, he said he doesn't expect to see significant layoffs. In fact, he said, he knew of "only three salaried employees" being offered early retirement packages. Of course, Pecsi added, that his CU would certainly be available to help them.
At C.J. FCU in Detroit, officials are still unclear about the effect on members who work at plants where the third shift is being eliminated. "We expect some employees will be bumped, others will move to other shifts," said Joyce Cook, manager of the $7-million financial institution. She said the board was expected to meet later this month to determine a plan of action.
