By Ray Birch
BURBANK, Calif. — Disney’s announcement it will be laying off nearly 30,000 workers reveals just how deeply the COVID-19 recession is affecting the country, according to the credit union that serves those workers and which has been working to provide relief.
The news comes as even larger numbers of employees are being furloughed in the airline industry, while layoffs have also been announced by petroleum companies, hotels and other large employers.
“Before the pandemic, if you looked at how Disney has performed across the broad spectrum of its companies, I would say no one would have thought this would be happening,” said Michael Terzian, VP and chief member services officer at Partners FCU. “I think very few people, even today, fully understand the impact of what this pandemic will do to Disney and the country. Its effects are deeper and wider than any of us ever thought.”
With Disney letting go 28,000 employees—two-thirds of whom are part-timers, the company said-- Partners FCU, which serves Disney employees nationwide, said it plans to provide ongoing support, adding the future of the CU is not in jeopardy as the result of the stresses being felt by its primary sponsor.
The credit union reported net income of $1.686 million at mid-year.
According to various reports, at least 6,390 nonunion Disney employees in Florida will be laid off starting in early December. The number of Florida layoffs could grow as the company negotiates terms with a coalition of unions that represent 43,000 employees at Walt Disney World.
“Over the last seven months Partners has been actively assisting its more than 180,000 members during these unprecedented times,” said Terzian.
Unfolding the MAP
Currently, Partners serves almost 45% the Walt Disney Co.’s domestic employee and “cast member” population—approximately 65,000 members—and operates across the country to serve these members with offices in California and Florida. Cast members are employees who perform and serve the public at Disney theme parks.
“As the pandemic unfolded, the credit union implemented its Member Assistance Program (MAP) designed to assist those facing financial hardships, including being furloughed or laid off,” said Terzian. “This Member Assistance Program has been refined over the years to address natural disasters, such as wildfires and hurricanes, that regularly impact our geographic footprint.”
Help For More Than 70,000
Terzian said Partners continues to offer its MAP and other financial relief options to members effected by the layoffs at Disney or other employers.
“So far, the credit union has helped over 72,000 members through a variety of emergency loans, fee waivers, payment deferrals, and other relief services,” said Terzian. “More than $360,000 in fees have been waived, almost 3,000 emergency loans that have 0% APR and no payments due for several months have been provided, and over 115,000 consumer and home loan payments have been deferred.”
Terzian said as the pandemic’s impact continues to unfold, Partners will evolve its MAP program to best serve its membership.
“Ensuring proper guidance, support, and help are available for all members has been, and will remain the primary focus for Partners for the foreseeable future,” he said.
What will make it somewhat easier to serve those in need, Terzian said, is not all of the layoffs will happen at once.
“We will deal with what is happening over the course of the year,” said Terzian.
Just One Part of Company
Terzian emphasized those affected most by the layoffs, the theme park cast members, represent only part of the Disney operations.
“While Disney sounds like a very focused SEG group, it’s actually a broad company,” emphasized Terzian. “In addition to the theme parks you have the resorts, you have ABC, ESPN, Hulu…And these businesses (outside those attached to the theme parks) are doing quite well.”
Terzian, added, too, cast members are often part-time, younger employees, and that they are not the ones holding jumbo mortgages.
“Maybe a credit card, a car loan…The liability to the credit union here is limited,” he said.
Terzian said Partners has already been “prudent” in its efforts to protect the credit union during the pandemic.
“We've increased our loan-loss reserves,” he said. “While this is going to have an impact on the credit union, I'd say we're comfortable with our risk mitigation standards as well as with our ability to meet a lot of diverse needs of this membership.”
Strong Growth to Date
Terzian said the $2-billion credit union—which has been growing assets by more than $100 million annually over the last four years with net worth above 11% at the close of 2019—said it would take an unexpected event like a pandemic to knock its sponsor off course, and the CU as well.
“If we did not have this black swan event, you and I would not be talking,” Terzian told CUToday.info. “Our credit union membership was growing at over 10% a year; this year it will probably be 1.5 to 2%. What a difference.”
The credit union has approximately 181,000 members.