Boeing Employees CU To Cut Jobs; Oakland Not Happy About Layoffs, But Members Come First

TUKWILA, Wash. -Aerospace firm Boeing has endured a number of layoffs in recent years that has caused Boeing Employees CU to step up with special programs to help out-of-work members. This time the credit union is experiencing the job cuts. The $4.7 billion Boeing Employees Credit Union plans to cut 70 positions from its staff, trimming its workforce to 800 employees. Employee layoffs in credit union land is a rarity to say the least. Boeing Employees CU President/CEO Gary Oakland said deciding to lay off employees wasn’t easy, but in the end it was necessary to continue to deliver value to its 380,000 members. “It’s very difficult but at the same time it’s all about the member. We weren’t delivering the value to the member that we think is appropriate. We just took a look and realized that we were spending more money than we needed to, and that was coming straight out of the members’ pockets,” said Oakland. According to Callahan & Associates’ data, prior to the cuts BECU had about one employee per every $5 million in assets. It’s hard to do a peer analysis on the sixth largest CU in the nation because there aren’t many in its asset class, but looking at the top 10 CUs BECU ranks 7th in terms of number of employees to assets. Interestingly, Alliant CU in Illinois is the most efficient among the largest CUs with some $19 million in assets per employee (See chart). Oakland said the CU’s return on assets is relatively normal at .75%. “That’s high for us. We like to operate at a lower capital level than most other institutions about our size. If we’re at the capital we want to be, ROA must match our growth not add to our reserves,” said Oakland. The CU’s capital is currently 8.40%. It likes to operate in the 8.25% to 8.75% range. The job cuts are coming from a variety of departments and will affect both management and non-management alike. Oakland said the CU started to analyze how it was operating and thought it could use a different model to be more efficient. “It’s going to require a little bit more oversight on part of some of the director level people. They’ll take a closer hand in things,” said Oakland. He said the cuts have nothing to do with layoffs at Boeing. “We’ve always been very separate from the company. In the last few years that’s been even more so,” said Oakland. He noted that the CU now has a statewide FOM and only somewhere between 20 to 30% of its members are current Boeing employees. If you include retirees, it’s in the 50% range. “Our membership growth over the last few years has been the highest it’s been. That certainly wasn’t coming from new hires (at Boeing),” said Oakland. Oakland says these layoffs also indicate that the CU is going to focus on its current mix of products and services. “Twenty years ago we were known as a low cost, plain vanilla credit union. We have developed a full range of products and services and now we’re taking a look and saying we’ve gone maybe a little bit over in the spending portion of that. We’re going to cut back and really concentrate on improving the products and services we have,” he said. The CU offers a full product menu, and has expanded into innovative areas such as business lending and trust services. It was also the pioneer for Prime Alliance, one of the most successful mortgage CUSOs in the industry. Affected employees received 30 days notice and are eligible for one week’s salary for every year worked up to 26 years. Their benefits will be covered through the end of July. [email protected]