Hitting The Brakes

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Credit unions across the nation are making plans to help their members-and themselves-in the wake of Ford Motor Co.'s announcement last week that it would cut some 34,000 jobs by 2008.

While some CU leaders are discussing steps to expand their charters, others expect to develop programs to provide members with financial assistance. Still more said they need more information about how their field will be effected before they can determine a plan of action.

For credit unions serving the auto industry, the announcement demonstrates how what were once stable memberships working cradle-to-grave jobs can change, as Ford's planned cutbacks follow earlier announcements by General Motors that it would also retrench.

"Obviously, we are very upset for our members," said Arthur Kremer, CEO of Sharefax CU in Batavia, Ohio, just hours after the announcement. His credit union serves one of 14 Ford plants targeted for closure. "We have two and a half years to work with them and their changes in jobs. I'm sure we will come up with something specific to help them make the transition smooth."

Approximately 1,745 jobs will be lost when the Batavia transmission plant closes.

Kremer was among several CU leaders who expressed sadness for their members and surrounding communities that will be adversely effected by plant closings and job loss in the next several years.

"We're still analyzing the information and waiting to hear the full scope of impact," said Denise LaHay, VP of Marketing at First Community Credit Union in St. Louis. FCCU, with more than $1 billion in assets, serves employees of the St. Louis Assembly plant, among those targeted for closure.

"We have heard through the news that Ford may be continuing payment and offering education for employees who have to make a transition," she said. "We want to know what there will be in the way of packages so we can respond to their needs."

LaHay said FCCU, the second largest credit union in Missouri, expects the closure will have a ripple effect on the entire community and wants to be prepared to help all of those who need it.

Affecting Everyone

Kremer said the same goes for his members and their community.

"It's not going to be as major an impact on Sharefax as it will be on the community," Kremer said, explaining that the credit union expanded its charter after a similar situation in 1983.

The $185-million Sharefax serves 21,200 members and was founded by Ford employees and continues to receive their support, he said. Seven of the board's nine directors have ties to Ford's plants in Batavia and nearby Sharonville. The Sharonville facility, currently undergoing expansion, is not expected to close, Kremer said.

Presently, there are 39 credit unions that serve Ford or Ford-related SEGS and many more that serve Ford employees are part of their community charters, said Shirley Meyer, president of The Council of Ford Credit Unions.

"Credit unions are going to be impacted, " said Meyer, also CEO of Woodlawn Autoworkers FCU, Blasdell, N.Y. "But, the plants are not closing tomorrow. (CU leaders) have a few years to prepare themselves for how they are going to serve these people."

She said The Council of Ford Credit Unions plans to have group meetings to share information from credit unions that have survived similar large-scale layoffs in the past and prospered.

"I think they are going to have to look at community charters and SEG markets," she said.

In an hour-long press conference at the Ford Design Center in Detroit on Monday, Jan. 23, Ford Chairman Bill Ford Jr. said the jobs cuts were a "painful last resort" but necessary to return profitability to the company's North American operations by 2008. He and other top executives unveiled a plan titled "Way Forward" that will include reducing the number of vehicles produced annually in North America, closing 14 manufacturing facilities (seven of them assembly plants) by 2008, cutting 25,000 to 30,000 blue-collar jobs by 2012, and cutting 4,000 salaried positions and six to seven top corporate officers by the end of March.

The reasons are twofold: the company's market share has dropped steadily for a decade due, in part, to falling sales of sport utility vehicles, officials said, and it continues to have higher labor costs than other auto producers.

"The automotive market in North America is rapidly becoming as crowded and fragmented as other global markets," Ford said in a statement. "To meet this challenge, we are acting with speed to strengthen the Ford, Lincoln and Mercury brands, deliver the innovation customers demand and create a business structure for us to compete, and win, in this era of global competition."

For credit union leaders, the developments have led them to recall times past when credit unions that served automakers had what seemed like secure futures.

"Obviously, it's not that way anymore," Kremer said, adding that while Sharefax has maintained loyalty its Ford connection, it expanded so it could thrive and serve more people. While the credit union is SEG-based with four branch locations, its state charter allows it to serve entire counties, as well. Approximately 3% of SCU's members work at the Batavia plant, but Kremer said his CU's concern is for the entire community.

"They have about 1,700 employees at Batavia," he said. "I'm sure we'll be out there a lot."

Keeping Close Tabs

John Hoblack, executive general manager of Automotive Federal CU in Ypsilanti, Mich., said his CU has been "closely monitoring" the auto industry as two of its major SEGS-Ford's Wixom Assembly Plant and its supplier, Michigan-based Visteon-have both announced restructuring plans. Ford's Way Forward plan came on the heels of Visteon's announcement earlier this month that it planned to close three plants and put another six up for sale. It is the second major restructuring in two years for Visteon, the former parts division of Ford, which transferred another 23 North American facilities back to Ford last year in an effort to avoid bankruptcy. Visteon, headquartered in Van Buren Township, Mich., has six locations throughout the state.

Hoblack said about 85% of AFCU's members are either employed by Ford or Visteon. Of those, about 5% work at Ford's Wixom Assembly Plant-among the doomed facilities.

"Obviously everybody is very concerned," Hoblack said, noting that the board has a contingency plan under way to convert to a community-chartered, state credit union from its present federal associational charter. In the meantime, he said, the CU will continue to serve its members and create special financial planning for those affected, if necessary.

Count On Your Credit Union

Hal Allen, CEO of Hapeville Auto Employees CU in Hapeville, Ga., said its credit union would do the same its members employed by Ford's Atlanta Assembly Plant, also on the list of targeted closures.

"While we are saddened to learn that the Atlanta assembly plant is slated to be closed by 2008, HAECU stands prepared to continue to provide quality service to our members both now and in the future.

HAECU has $20 million in assets and 3,800 members, 1,200 of whom are employed at the Atlanta plant.

"While many HAECU members stand to be affected by Ford Motor Company's plans...they can continue to count on their credit union to assist them in managing their finances," he said in a released statement.

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