Insourcing and Your Credit Union
Recently there’s been news coverage highlighting a return of jobs to the U.S. Companies who are now insourcing range from small and medium businesses (or SMB’s) to large corporations.
This is not a coordinated feel-good movement by our nation’s business community. It’s simply a decision that benefits both the businesses and American workers. These corporations have found that the “China price” for workers is not what it was in the 90’s. They are finding higher energy, transportation and manufacturing costs. Another motivating factor is a measured increase in U.S. labor productivity. So how can U.S. credit unions benefit from this new trend?
When a large factory closes, it sets a negative multiplier effect into motion. Restaurants and other businesses which served the factory and its employees also close, which leads to the crippling or possible demise of a community.
Insourcing, on the other hand, creates a positive multiplier effect. Consider GE’s appliance park in Louisville, KY (GE, by the way, is spending $800M to bring their manufacturing to the U.S.). GE’s move was an economic boon for Louisville, creating new, local GE employees. Companies that supply GE with parts also relocated or opened branches in Louisville. All these businesses and their employees will need food, services and products.
That’s where Credit Unions come in.
While credit unions most likely cannot meet the banking needs of giant, global corporations, they most certainly can work with the SMB’s that roll in due to the multiplier effect if they have a Business Services program in place.
The SBA reported in 2012 that 99.9% of businesses in America have 500 or fewer employees. The majority of these businesses can be served by credit unions. I get a handful of calls each week from business owners or office managers who are tired of dealing with the boxed bank down the street, and are seeking a more meaningful relationship. A living, breathing relationship.
I received a call from a CEO last week inquiring about our services. After a brief conversation he asked, “Why aren’t more people moving to credit unions?” I have never been accused of being a salesperson-extraordinaire. This was simply a conversation about how we approach our members and how my organization does business. He then added that he was expecting to leave a voicemail and to never hear from me again as that had been his experience dealing with financial institutions for his 13 as a business owner.
Credit Unions must stay abreast of developments in their communities, build strong relationships with local businesses and local government. It’s better to be prepared for a new (rich) neighbor moving in than to be surprised and left scrambling to catch up with others.
The most direct method of benefiting from a large company’s transition to your community is to directly serve their employees. Remember SEGs? Select Employer Groups. Valerie MacLean, Corporate Partnership Manager, at Amplify Credit Union in Austin, TX runs Amplify’s Amplify@Work program .
“We found small to medium size businesses very receptive to giving Credit Unions a chance to serve their employees. They especially appreciate that we offer individual credit analysis and encourage employees to sign up for direct deposit,” said MacLean.
The program exceeded its first year goals by establishing new memberships and generating new loans at a level comparable to some of Amplify’s physical branches.
MacLean added, “Our objective was not merely to acquire employer partnerships, but to achieve a long term, disciplined channel strategy that builds deep penetration of the employee base and earns a high share of their household financial relationships.”
It’s best to keep your eyes on the horizon to discover and implement ways to better provide a sense of community to your members, both consumer and commercial. Serving local businesses and the employees who live and work nearby is a good place to start.
