<p>EWING, New Jersey – The current economic recession in New Jersey is getting mixed reviews from the state's credit union leaders. Some administrators feel this is not a deep recession, with signs of optimism on the horizon, yet others are just beginning to deal with member lay-offs, both from the public and private sectors, that are expected to hit full force within the upcoming months and well into 2004. The climate for state employees is insecure. Newly installed Democratic Governor James E. McGreevey is attempting to balance a $2.9 billion budget shortfall for the current fiscal year that ends June 30 and an estimated $6 billion budget gap next year. The national recession is to blame, as well as September 11, but McGreevey also points to the previous Republican Administration and Republican dominated House and Senate which, he says, were on a spending spree during last year's lame duck session. Part of McGreevey's plan to balance the budget is to lay off more than 500 full-time non-unionized workers, while asking others to volunteer for unpaid furloughs of up to 90 days. All "non-essential" part-time employees also will be laid off. "We are certainly concerned about the upcoming layoffs, but we're not sure in which direction the state is heading towards," commented Andrew Jaeger, president of New Jersey Department of Transportation Credit Union (NJDOT) in Ewing.NJDOTCU, which will soon complete its merger with Parkway Financial on March 1 (CU Times, Jan. 23), is looking closely at the loans it is making. "We have seen a slight increase in delinquencies and charge offs, related to members losing their jobs," says Jaeger, "so we're looking into more contingencies built into loans." According to Russell Clark, president and CEO of Credit Union Affiliates of New Jersey, Hightstown, the real issue affecting affiliated CUs are the corporate credit unions and credit unions with select employer groups who are facing member lay-offs. For example, members of Linden Assemblers FCU and Metuchen Assemblers FCU will be hit hard as the Ford Plant in Metuchen plans to close its doors by 2004, eliminating 1,570 jobs and General Motors' announcement to end its second shift at is Linden plant by April 15 of this year. Approximately 1,100 workers will be let go by GM, but they will continue to receive a salary through September of 2003. There are fears that the plant will eventually close by 2004. The two facilities are within 15 minutes driving distance of each other and both are located on Route 1. The closing will have great impacts on residents of Union and Middlesex counties. Like the rest of the nation, the state's telecommunications industry has been hit hard. United Teletech FCU, Tinton Falls, has seen more than 2,000 out of its total 29,000 members lose their jobs at companies such as AT&T, Lucent Technologies and Lucent spin-offs such as Avaya, Inc. and Agere Systems. Lucent planned between 45,000 and 50,000 jobs cuts by the end of 2001, while AT&T, continues job reductions as it splits itself again into smaller, separate companies. In a Nov. 7, 2001 Credit Union Times article, Ann Rhem, loan manager at United Teletech said it was too soon to say how the layoffs were impacting members. "I think we will be seeing the full effects in a month or two," she was quoted as saying. "Now," she says, "people are feeling it. They are coming in and requesting help. The assistance that United Teletech is providing its members includes three months interest only payments on loans, the refinancing of car and personal loans in order to lower monthly payments, the reworking of car loans based on equity so that members could consolidate other consumer credit union loans and home equity refinancing. "We look to refinance anything we can," said Rhem. "We are looking at the member's whole financial picture to see where we can help him or her." The number of member delinquencies has increased, said Rhem, but the credit union staff at United Teletech is putting in the extra time and effort to contact and work with these members. Other concerns that Clark has regarding credit unions is that because of lower interest rates, institutions are narrowing their income spread. Because of this, bankruptcies are a problem. In addition, many credit unions are considering merging. "We see mergers increasingly coming down the pipe," he says. Another effect is an increase in management changes at credit unions. CUANJ is helping its members by providing free educational seminars on coping with the recession (see related story 34 "Filene's Hoel Says Recession is a Time to Thrive") and waving cost-of-living increases for CUANJ membership. "In the larger scheme of things, the lay-offs are not massive, credit unions are taking steps to help members, and there is an overall optimism that credit unions will ride this recession through," said Clark. -</p> <p>[email protected]</p>

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.