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USPS Unveils 'Transformation Plan'
Burrus Update #8-02, April 5, 2002
Postmaster General John Potter presented his much-awaited "transformation plan" today at the National Press Club. I attended and heard first hand the postmaster's views on the Postal Service's future. A copy of the plan can be found on the USPS web site at www.usps.com.
My immediate reaction to the plan is that in a one-inch thick document made public during a two-hour presentation, not one word was said about the loss of billions of dollars in unwarranted discounts to giant presort mailers. The emergency circumstances of growing deficits that led to the transformation plan have been plastered over with promises of greater efficiencies and requests for regulatory relief.
Specifically, the plan proposes to:
As a part of this effort to become more efficient, the postmaster general proposes to modify the collective bargaining process to make it more management friendly and deny employees their collective bargaining rights. This is a nonstarter and the postal labor unions will vigorously oppose it.
The plan lays a foundation for changes in the Postal Service that may adversely affect APWU represented employees, but no specific initiatives have been proposed for immediate implementation.
The plan ignores the fundamental cause of the current financial crisis. The fact is that the Postal Service has incurred deficits of $300 million in FY 2000 and $1.7 billion in FY 2001, and anticipates a $1.5 billion deficit in FY 2002 and a deficit as high as $1 billion in FY 2003. The economic slump and the anthrax attack are principally responsible for the reductions in mail volume, but cost cutting or regulatory measures cannot overcome the billions of dollars foregone in excessive rate discounts.
Fifty percent of all first class mail is discounted, and the discounts are far above the costs that would be incurred if postal employees performed the work. These discounts are subsidies to the giant mailers, pure and simple. As mail processing has become increasingly productive, the discounts have actually increased and the new rate case will continue the 9.5 cents discount for bar coded mail, leading to billions of dollars in lost revenue.
Two mail processors process approximately 30,000 letters per hour. At the discount rate of 9.5 cents per letter, the total discount applied would be $2,850 per hour. Applying a generous calculation of the salary and benefits of the two mail processors, supervision, maintenance and other support costs, the USPS cost for processing 30,000 letters would be approximately $150 per hour. The value of the discount ($2,850) that exceeds the postal cost ($150) represents a subsidy that leads to serious deficits. Adding insult to injury, this discounted mail must still be processed after entering the postal mail stream, incurring still more cost for the Postal Service.
The transformation plan ignores the drag that these subsidies have on postal revenues and guarantees that the proposed changes will not lead to financial stability. The Postal Service has used its monopoly authority to arbitrarily set discounts that guarantee profits for the major mailers and direct mail firms and guarantee losses by the Postal Service. Postal management views the Postal Service not as a government agency responsible for providing universal service at universal rates to the American public, but as an appendage to the mailing industry that is dictating terms favorable to their bottom line. Postal management has become an appendage to the mailing industry ¨ the giant mailers and presorters.
I am informed that no major new initiatives are underway from the headquarters level. In fact, I have received written assurance from the postmaster general that, "there are no national plans for implementing/consolidations of processing centers in the near future." The areas and districts are expected to continue efforts to reduce costs and streamline operations. The union at the national and regional level will monitor the implementation of any changes and require the strict enforcement of our collective bargaining agreement.
William Burrus
President
