The oil industry isn't the only one with a boom-and-bust cycle: just ask some of the high-profile technology companies — and the credit unions that serve them.
Layoffs have become a routine part of life in Silicon Valley and other part of the Pacific Northwest that are home to such high-flying tech-based companies as Intel, Microsoft and Yahoo, among others.
Earlier this year, Intel Corp., based in Portland Ore., announced it would be laying off some 12,000 people — about 11% of its workforce. More recently, internet search giant, Yahoo! Inc. reported plans to reduce its global staff by about 15%, or about 1,500 jobs.
A number of tech-focused credit unions that include Yahoo! and/or Intel among their select employee groups (SEG) could feel the indirect impact of these downsizing measures.
One such credit union is First Tech Federal Credit Union, a $8.7-billion institution based in Mountain View, Calif., which counts both Intel and Yahoo! among its SEGs.
While First Tech FCU would not comment specifically about the layoffs at either Yahoo! or Intel, Jack Weldon, the credit union's VP of marketing, stated that when a member faces a "life transition," such as a layoff, First Tech CU offers programs "that help provide temporary financial relief and support as they re-examine their next steps." Such programs, Weldon noted, include loan payments assistance, onsite workshops that discuss topics such as budgeting or managing credit, and personalized financial counseling.
Weldon added that First Tech FCU's financial advisors, Addison Avenue Investment Services, will "review a member's personal situation, take the time to understand their individual needs and objectives, and help implement their personalized strategy."
Tech CU, a $2.1-billion institution based in San Jose, Calif., also includes Yahoo! as an SEG.
Liann Walborsky AVP-communications at Tech CU, said that the credit union works together with its members at "all stages of their financial life," including job loss.
She stated that some ways that Tech CU could help laid off members include: setting up a line of credit to tap into equity in the member's home; refinancing a mortgage to a lower the rate in order to help with monthly payments; consolidating high-interest debts into one manageable loan; suggesting community resources who can aid in planning, networking and emotional support; and making an appointment with a Tech CU employee who has obtained their Certified Credit Union Financial Counselors (CCUFC) designation.
But Walborsky cautions that while some big-name tech firms are indeed laying off workers, many other smaller and less known tech-related entities are actually hiring new people - hence, the overall employment picture in Silicon Valley is actually quite bright.
Indeed, according to a report from Joint Venture Silicon Valley, an economic advocacy group based in San Jose, 134,000 new Bay Area jobs were created between mid-2014 and mid-2015, with average annual earnings having risen to $122,000. Meanwhile, the regional unemployment rate has decreased steadily over the past six years, reaching as low as 3.6% in November 2015 (versus a 5.7% jobless rate for California as a whole at that time).
"This growth just keeps accelerating," said Russell Hancock, CEO of Joint Venture, in a statement." We're now adding jobs at a rate we haven't seen in 15 years, and that's powering everything else."
Walborsky of Tech CU said that even if the local tech industry did start to decline, the credit union's member company base is "somewhat diversified" and well- positioned to handle such a shock, "While we do support the tech eco-system, we also partner with several schools/colleges, non-profits, transit agencies, stores, chambers of commerce, CPAs and law firms in the region," she specified.
Tech CU also offers some incentives for tech workers (and others) to join the credit union. "We offer up to $150 for employees when they open up a new checking account with direct deposit and Bill Pay — our online bill pay system," Walborsky said. "They are also eligible for a discount off of our auto loan rate of 0.50% — if they use our free auto buying service, Tech Car Shopper — and we waive lender fees on our mortgages and refinances."
Another local financial institution, Star One Credit Union, an $8.1-billion entity based in Sunnyvale, Calif., also includes Yahoo! as an SEG. But Joe Fagenstrom, VP of marketing at Star One CU, echoes Walborsky's assertion that even if Yahoo and Intel and other tech giants are firing workers, the local tech industry as a whole is enjoying buoyant growth.
"The tech industry in Silicon Valley is seeing rapid growth, record employment, and is having difficulty in finding and retaining experienced trained employees," he said. "
Fagenstrom further notes that Yahoo's troubled situation is not uncommon as companies expand and contract.
As for members who lose their job, Fagenstrom said that they don't single out particular companies for special programs.
"We offer assistance to members on a case-by-case basis based on many factors," he said. "Some of our SEGs have had layoffs over the years and we work with our members based on their individual circumstances"
Moreover, Fagenstrom asserts that overall unemployment in the Bay Area is at an all-time low, meaning that housing prices and rents continue to soar. (For example, in April of this year, the median price for a single-family home in Santa Clara County reached $1 million for the first time ever).
Also, both Walborsky and Fagenstrom noted that, as Silicon Valley is a highly competitive market for banking/financial services, it was not easy getting SEGs from the tech industry or from any other fields.
Walborsky said, however, that Tech CU is a "rather unique" credit union since it was founded by the first semiconductor company in the region (Fairchild Semiconductor). "Our roots are firmly entwined with some of Silicon Valley's pioneering entrepreneurs," she added.
Given the competitive backdrop in the region, Fagenstrom said that getting "noticed" by area consumers is always a challenge. However, Star One has been providing financial services to area residents and employees of local companies for more than 60 years in Silicon Valley. "We have a very loyal membership and are constantly implementing ways to service their changing needs," he concluded.
Bill Conerly, an Oregon-based economist and business consultant who frequently works with credit unions, cautioned that while Intel is the largest private employer in the Portland region, the local economy is highly diversified and features a number of other major corporations, including Nike, Columbia Sportswear, Mercedes trucks (formerly Freightliner), Precision Castparts, and Standard Insurance.
"The fastest growing part of the economy is software, and the changes that triggered the Intel layoffs (i.e., the shift to cloud and mobile computing) are part of the local software growth," he told Credit Union Journal. "So we add jobs in one area, lose in another."
Conerly further points out that Portland has gone through this cycle before. "The area did recover from past Intel layoff rounds," he said. "It's been a cyclical company pretty much from its beginning. How quickly we recover depends on what else is happening. If we get hit by a recession right after this round of layoffs, we'll struggle to recover. If we have a couple of years of growth in other sectors, then all is smooth sailing."
