One Beltway Center
5904 Richmond Highway
Alexandria, VA 22303-1864
July 20, 2009
Charles Mapa, President
I've had some inquiries regarding a meeting the management association presidents and the union presidents attended with Postmaster General Jack Potter at Postal Headquarters last week. Yes, we did indeed meet. However, Mr. Potter asked us to treat the meeting as confidential until he had a chance to share its contents with the Area Vice Presidents. I have honored my promise to keep the meeting contents confidential and even messaged Postal HQ a few times to see if it was OK to share the info. I did not receive any direct response, but I've seen some information posted on websites and I've gotten a message that an AVP shared the info with District personnel. Apparently, the cat is out of the bag, so I will share some of what went on.
Mr. Potter gave us the current situation of the Postal Service (nothing really new there; we are still losing about $20 million a day). At the current rate of revenue loss, the Postal Service would not be able to meet its financial obligations by the end of the FY. One of the big obligations, as you know, is our payment of more than $5 billion into the fund for our future retirees' health benefits. How much impact does this obligation have on the bottom line of the Postal Service? The Postal Service is the only government entity required to make such a payment into a fund for its future retiree health benefits. The League has made the point several times that last year, in spite of the dismal economy, the Postal Service would have turned a profit of more than $2 billion. Let me repeat that. In a year when the nation's largest financial institutions, and our largest automobile manufacturers needed billions and billions of dollars of bailout money from the federal government, in a year where a great number of Americans lost their homes to foreclosure, and in a year when so many national franchise businesses went out of business, the Postal Service would have been profitable had it not been for this obligation. It's tough to be a cash cow.
HR 22, for which the League, especially Bill Krejci, our Legislative co-chair, has worked tirelessly to get co-sponsors in Congress, would give us about $2.3 billion in relief on the payment into the fund. That would still leave the Postal Service almost $4 billion short.
While HR 22, with its preponderance of co-sponsors might seem like a done deal, it is not. We still need someone in Congress to 'champion' the cause and push it through Congress. Additionally, the relief it will provide is for 3 years rather than the 8 that we originally asked for. There are already a number of roadblocks in the Senate, and there is no companion bill there yet. The passage of HR 22 in the House soon is very important and daily meetings between the Postal Service, employee groups and various congressmen are taking place and will continue until the bill's passage.
Mr. Potter then reviewed the elements of the Postal Service's Survival Strategy. They look simple enough; cut costs, grow the business, and protect liquidity. He laid the strategies out for the next few years. We are on target to cut more than $6 billion in expenses during the current fiscal year, 2009. A great part of these savings will come from a reduction of 100 million workhours. Strategies for FY 2010 include Network Distribution Centers, increased usage of Flat Sequencing, continued reduction in delivery routes, the consolidation of stations and branches, and further administrative reductions. The Postal Service hopes to implement 5-day delivery by FY 2011. If all of these strategies are implemented, the Postal Service projects a move back into black ink in FY 2012. This projection assumes the passage of HR 22 through Congress, and the implementation of 5-day delivery. Of course, a positive turn in the economy will help the trend.
Mr. Potter added that the Postal Service will also be looking to use increased product freedom. He remarked that some foreign postal services paid for their universal service obligations with non-postal revenues such as banking and cell phone sales. (About a year ago, you might recall, our own Bill Krejci put together a proposal on postal banking. Maybe someone was listening!)
Without relief from HR 22 and the implementation of 5-day delivery, Mr. Potter told us that the Postal Service's losses would climb into double-digit billions. That can't happen.
Over a month ago, the Postal Service solicited input from the unions and management associations regarding 5-day delivery. I had testified in Congress earlier this year and was asked about 5-day delivery. I cautioned Congress to consider the effects on service, operations and our Postal Brand. I asked your National Board to respond to me regarding 5-day delivery from the point of view of, if we absolutely had to go to it, how could we do it while continuing to provide effective service. I had asked Postmasters over the last few months as I visited branch conventions if going to 5 days would be a possibility operationally. Almost to a Postmaster, I was told yes, we could do it with volumes down so drastically.
Our proposals to the Postal Service addressed all three of our concerns. If we kept post offices open on Saturdays, we would be there to provide service. All box section mail would be distributed. For those businesses and other people who had to have their mail on Saturday, we would make post offices boxes available for delivery or we could provide caller service. We would not deliver to rural or city routes and we would deliver Express Mail as normal, and we could certainly come up with an intelligent way to deal with Priority Mail. We would continue to present a retail presence in our post offices as needed. We also suggested the creation of a utility employee, one who, with the blessings of the unions, would perform just about any craft function.
We don't know how far the 5-day delivery initiative will go, but rather than present a knee-jerk response of "no" to the Postal Service, the League decided to look at how it might be done, especially if we are talking about the survival of the Postal Service. The Postal Service's 5-day delivery study is in line with our own proposals adding that there would be no collection of rural, contract or city route mail and remittance mail would be made available through post office boxes and caller service. This move to 5-day delivery could only be done with the approval of Congress. A number of federal agencies with oversight over the Postal Service have been conducting studies on the viability of the plan and the Postal Service has been meeting with business mailers and conducting public surveys. It is possible that a Gallup poll will be conducted soon. The League will keep you up-to-date with the progress on this important issue.
National League of Postmasters