Surprise Merger Forces Western FCU Back To Drawing Board On New HQ
Western FCU's new headquarters building was a dream project-exactly what the credit union wanted and needed. It was even due to be completed ahead of schedule-until a merger with TRW Systems FCU threw more than just a monkey wrench into the works.
Suddenly, work on the dream project came to a halt while the two credit unions worked out the details of how their merger would affect the need and use of the new facility. The merger was precipitated by the sale of TRW Systems FCU's sponsor company to Northrup Grumman, a deal the credit union had no knowledge of at the time it was planning its building project.
"Our original goal was to move into the new headquarters in late July or early August (2003)," said Floyd Mullins, WFCU's manager of administration. "We were going to move all administrative staff to this facility. But because of the merger with TRW, we had to completely rethink the project."
Instead of opening the facility in late July or early August, staff began moving to the site in the fall, with the branch operations opening Jan. 4.
"We were at least halfway through the job," explained Tom Lombardo, national sales manager for HBE Financial Facilities, the design/build firm WFCU was working with on the facility. "We had more than just a head start, we had a great deal of work done. This was a major deal."
The five-month delay of a project that had been ahead of schedule may sound like a lot, but considering the extensive design changes to the building in the wake of the merger, Mullins credited the relatively quick-turnaround to having brought in the design/build as soon as possible.
"We had almost all the furniture ordered. Fortunately, we were able to stop the framing of the fourth floor," he noted. "We brought HBE into the (merger) picture almost from the beginning because we knew we needed their expertise. In our original design, we incorporated the executives into the fourth floor. Instead, we realized we could begin blending the two management teams immediately if we went ahead and used TRW's headquarters instead. We knew almost immediately that we needed to revise our plans."
"The first thing we did was to cancel as many things as we could so we wouldn't have to take delivery of stuff that wasn't going to work anyway," Lombardo said. "When something like this happens, the key is that you must put a halt to the process as quickly as possible."
One of the factors that made an already difficult process more tricky was that this wasn't a merger where a larger credit union was simply absorbing a smaller one, Lombardo noted-it was a merger of two large credit unions. "The architect needs to sit down with management-the combined management-and get an understanding of how the building is going to operate and how the culture is going to change, because the design is affected by that. After the merger, we had to change the layout, there was a whole realignment of different departments. The size of offices changed, the interaction among departments changed. We had to get involved in the detail down to each work station."
For example, part of TRW's culture included having a very high-end lunchroom as an employee benefit.
"All the amenities of home or even fine dining," Lombardo noted. Part of the redesign, therefore, included upgrading to a commercial-grade kitchen.
"One credit union had offices for supervisors as well as managers, the other only had offices for managers, so we had to redesign how we were handling that, as well," Mullins commented. "HBE was able to design nicer workstations for supervisors and put in conference rooms so supervisors could have confidential surroundings for one-on-one meetings with employees."
Another culture change: increased security. "The security requirements at TRW were more stringent with computerized video cameras instead of just VCR-type functions and bandit barriers," Mullins offered. "We're standardizing that across the board, too."
The delay of the 80,000-square-foot project wasn't the only issue-there were serious cost concerns as well.
"Speed is of the essence so you can get things canceled, but you also have to keep on eye on other cost factors," Lombardo noted. "Take your subcontractors. It's not unusual for them to take advantage of situation like this because they already know they've been selected, and it's not like you're going to rebid out the contract."
"We tried to take cost into consideration on every level, but we knew this was going to be expensive," Mullins related. "And it was significant. The building cost us about 35% to 40% more as a result of the changes we had to make because of the merger."
No Choice But To Form Team
While this definitely wasn't the way the WFCU would have chosen for things to happen, the merged credit union is looking on the bright side.
"It made it quite a challenge, but it did give us a period of time to grow together and become a team," Mullins suggested.
"It's hard enough when these two credit unions were faced with the challenge of meshing their two cultures without also having to figure out how the two credit unions were going to operate out of this one building and how that was going to change the whole nature of the building," Lombardo added. "Most credit unions don't have to face both of those challenges at the same time. There was a high anxiety level around here about how this was going to go once we got the call from the credit union about the merger. And while it's easier to erase lines on paper, this was easier than we thought it was going to be. It could have been a major disaster, but I think both credit unions-now one credit union-were pleased with the way we were able to respond to the situation."