U.S. Postal Service in crisis

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Employee Gwen Ancelet weighs envelopes at the Port Arthur Post Office on Friday. Morgan Jones

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March 8, 2010

Mary Meaux The Port Arthur News The Port Arthur News Mon Mar 08, 2010, 11:12 AM CST

PORT ARTHUR — The nations financial crisis has dug itself deep into the lives of many, sending people to the unemployment lines and changing the face of the housing market.

The latest victim to come to light is the U.S. Postal Service.

As early as May 2008 Postmaster General John Potter announced a second quarter net loss of $707 million, “driven by a continued decline in mail volume resulting from the current national economic climate.” Meanwhile, on-time delivery of First-class Mail continued to plunge at record levels in the second quarter of 2008.

That announcement was the precursor the most recent proposition to drop Saturday delivery of mail.

The proposed changes do not include closing local Post Offices on Saturdays though, just cutting delivery on that day.

Potter is scheduled to bring a cost savings proposition to Congress, including the five-day per week delivery option, Dion Montague, corporate communications for the U.S. Postal Service, said.

The decline in the volume of mail coupled with economic issues has created a shortfall USPS is not able to absorb, she said.

But the USPS’s proposition to cut corners doesn’t sit well with the American Postal Workers Union who call the drop to five-day per week delivery the beginning of the demise of the Postal Service.

“The assertion that the Postal Service must initiate major changes in its business plan to survive a grave crisis is false,” APWU President William Burrus said on the union Website. “It masks the central cause of USPS financial difficulties: the congressionally-imposed requirement to pre-pay retiree healthcare obligations.”

Burrus goes on to say the USPS has saved money through “productivity increases, a series of cost-cutting initiatives, and sacrifices by workers,”

More than 100,000 jobs have been eliminated through attrition over the last two-and-a-half years and workers are paying an increased share of health insurance premiums, he said.

The Postal Service outlined a 10-year plan to address declining revenue and declining mail volume and the cost savings are enormous. In the first year of cuts the Postal Service looks to save about $3.3 billion, Montague said, and by the 10th year, in 2020, that savings is up to $5.1 billion.

One plan is to restructure retiree health benefits payments to be consistent with what is used by the rest of the federal government and the majority of the private sector and address overpayments to the Postal Service Civil Service retirement System pension fund.

Montague explained the Postal Service pre-funds the retiree health benefits program and leaders would like to move to a pay-as-you-go system.

“We have already overpaid the fund by $75 billion,” she said.

This change could result in a savings of $50 billion over a 10 year span.

A third option is to establish a more flexible workforce that are better positioned to respond to changing demand patterns, as more than 300,000 employees become eligible to retire in the coming decade, according to the USPS.

The idea of a more flexible workforce will allow the Postal Service to put the right people in the right place, she said.

But employees are union based and there are restrictions on how to use the employees. Montague said the unions are always involved with any negotiations.

Montague said about 40 percent of FedEx and UPS workforce are flexible employees whoa re used where the need is the greatest.

The Postmaster General’s cost cutting plan also includes modernizing customer access by providing services at locations that are more convenient to customers, such as grocery stores, pharmacies, retail centers and office supply stores. This would be done through partnerships, self-service kiosks and a world-class Website.

A price increase will likely be proposed, effective in 2011 as well.

“The future depends on a suite of solutions that takes a balanced and responsible approach, one that cuts across every aspect of our industry but one that, in the end, does the greatest possible good for our stakeholders and the American Public, Potter said.

Mail volume is projected to fall from 177 billion in 2009 to 150 billion in 2020, representing a 37 percent decline in First-class Mail. Revenue contributed by First-class Mail will drop 51 percent today to about 35 percent in 2020, he added.

mmeaux@panews.com

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U.S. Postal Service in crisis

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