Tough Times at the Post Office

You think you have it rough at the Post Office? Click on the picture below.

ENOUGH!

Postmaster General Pat Donahoe proposes to layoff 120,000 employees, in addition to the 100,000 who will leave through normal retirements, by 2015.

A few short months after ratification of the APWU contract, the PMG suggests the time has come to eliminate the long-held tradition of a no layoff guarantee for six year employees.

The Vice President of Networks floats the idea of closing 300 of the 508 mail processing centers across the country in the next 16 months.

Joe Corbett, the chief financial officer, announces that the deficit for the fiscal year won’t be $8.2 billion after all, it has been revised –up, of course – to $9 billion, thus speeding up the estimated insolvency doomsday to June or July 2012 instead of August.

Then the Postmaster General goes before the entire workforce and confirms most of the preceding.

All in a single week.

Apparently there’s no shame in leading an organization as it painfully swirls down the drain; otherwise, these postal ‘executives’ would have quietly slipped out the back door some years ago. And while we assumed the news couldn’t possibly get any worse, Deputy Postmaster General Ron Stroman announced that the cash flow stops in August 2012, even if the retiree healthcare payment is sidestepped this September.

All of which begs the question, “Aside from pure ego, exactly what makes these people think they have any capacity for running a business”?

They’ve managed to offend every constituency, from the employee unions, management associations, small-town customers, large and small mailers, and members of Congress. They’ve taken a 230 year old organization begun by Ben Franklin, and are running it into the ground at breakneck speed. In the real world, those who can’t cut it are themselves cut, but the Postal world is far from the real world.

They love to blame everyone but themselves: the Unions, Congress, the Recession, fuel prices, the Postal Accountability and Enhancement Act, small offices that don’t pay their own way, six day delivery, even bad parcel scanning. Anything but their poor decisions, a record of squandering financial resources, excessive dependence on questionable technology, and a culture of mistreatment of employees that would put Machiavelli to shame.

Few managers in the Postal Service have a college education, yet they seem to have a sense of entitlement which is reinforced by the postal culture and the infamously adversarial relationship with the unions. And perhaps most unfortunately, they are almost never held accountable for their actions, in fact in many circumstances they are protected by law.

So the poor decisions continue, the workforce becomes frantic at the prospect of losing 300 plants along with their livelihoods, and many will lose their dignity and self-worth, because we’ve got a top heavy management structure which should have been ‘realigned’ years ago.

And while the blame is spread around to everyone but postal management, the most significant aspect of how this all happened is mostly forgotten:

The Postal Accountability and Efficiency Act was intended to provide the USPS with much needed flexibility in running the Postal Service, in exchange for a few compromises, including the annual payment for retiree health care. At the time, the legislation was supported by PMG Jack Potter, and employees were asked to write their congressional representatives to encourage a vote for the PAEA.

In PMG Jack Potter’s statement to the Congressional Subcommittee on Federal Workforce, Postal Service, on Feb. 28, 2008, he reported that “I am pleased to report to you today on the Postal Service’s first year of operation under the Postal Act of 2006. The new law creates welcome pricing flexibilities that can and will benefit the Nation by keeping now a welcome, efficient and effective method to link every household and every business in America…We are entering a period of profound change. Through the new postal law, you have provided us with a new ability to navigate that change.”

“Our entire team is ready to make the new law work for us and for our nation. We are acting quickly to use its new approaches to produce the revenue that can close the remaining $1 billion of our budget gap.”

“The law requires the Postal Service to operate in a more businesslike way than had been possible under the restrictive provisions of the old law. We recognize that pricing innovation – even within the limits of a well-defined rate cap – is a key business driver. With that in mind, we are taking full advantage of our new pricing flexibility to grow business.”

“We have just scratched the surface of the advantages the new law offers through its new approach to price setting."

“The market in which we operate continues to grow more competitive. This means that the Postal Service must become more flexible if it is to remain competitive and successfully meet its obligations to the nation. The Postal Act of 2006 provides us with new tools that are intended to help us do this. This includes new approaches to pricing, intended to foster revenue growth.”

Postal management likes to place much of the blame on Congress, as if there was no postal input or support during the legislative process. The record shows that inept management at the highest level vigorously encouraged what is now believed to be contributing to the destruction of the organization.

But there are plenty of other scapegoats:

The Unions. Postal management supposedly negotiated “in good faith” on the APWU contract, then followed with pronouncements of management’s pleasure over the successful outcome. Within a few months of the APWU membership’s ratification of the contract, PMG Donahoe began a disreputable campaign to go back on his word and remove negotiated agreements on layoff limitations for employees with six years of service.

Rural Post Offices. PMG Donahoe has made every attempt to demonize small post offices across the country, as if anyone ever expected the rural offices to pay their own way. Universal service demands that the urban centers subsidize the rural offices, a long held tradition. The Post Office loves to support universal service, as long as it doesn’t cost any money, when in fact many believe this to be the service’s constitutional responsibility.

The Internet. Perhaps the one area which is truly beyond postal management’s control is what has become known as “electronic diversion of the mail”, or email to non-bureaucrats. Some did see it coming, particularly in Europe, where the response has been far more effective than in the United States. But USPS management, always on the cutting edge of the latest innovation, completely missed this one.

Six day delivery. Perhaps the quickest way to save the most money in the shortest time would be to eliminate Saturday mail delivery. What hasn’t been considered is the effect this will have on further devaluing the mail as more customers are driven away to the alternative forms of hard copy and electronic communication. In times of declining business, reducing customer service is hardly the most logical approach to growing the enterprise.

And now, in a desperate attempt to add to the list of excuses, the USPS is grasping for “world class parcel scanning” on its optional tracking service, Delivery Confirmation. Sorry to say but the true world class scanning is done by those organizations that scan every parcel, namely FedEx and UPS.

The storm is fast approaching.

In the search for solutions, here's a good place to start:

Billions could be saved by eliminating more than the topmost layer of management. This is never considered.

Drastically revise the current methods for management selection. It is fraught with nepotism, favoritism, and advancement of people with little or no qualifications, experience or education.

Take a lesson from any real business and train managers with contemporary university level management education. Very few postal supervisiors and managers have acquired a college degree, and the results are obvious. Autocratic styles are alive and well, resulting demoralized employees. In the eyes of postal management, the employees aren’t our most valuable asset, they’re often the enemy.

Seriously review the factors which result in management’s sense of entitlement. The sources range from elaborate meetings at distant hotels, flying around the country to discuss the service’s poor financial condition, excessive catered meals, personnel policies for management that encourage abuse and cheating (such as four hour workdays and no monitoring of rampant time theft), even reserved parking spaces. All of these send the wrong message to the employees, that managers are somehow better than the employees and that it is not a team effort.

And this is only the beginning. The approaching storm will require Postal leadership to develop an ability to innovate, and that’s never been part of the USPS’s DNA. But in the meantime, management of the Postal Service can begin to salvage the organization by placing the blame where it really belongs, and take responsibility for bad decisions and poor planning that have gotten us where we are today. Only then will it have the credibility to regain the full support of the employees and postal customers.

USPS files huge $3.8 bil loss for '09

The US Postal Service has recorded a third straight year of devastating financial results, filing a loss of $3.8 billion for the 2009 fiscal year. This equals a loss of $5,984 per employee, but it could have been a lot worse. The Obama Administration's last minute $4 billion rescue of the service in late September saved the USPS from the indignity of recording a loss of $7.8 billion, or $12,283 per employee.

This loss adds to two previous years of disastrous losses, $5.7 bil in 2007, and $2.8 bil in 2008, for a total three year loss of $12.3 bil.

And across the board, the numbers tell the story of what appears to be a dismal future for the 217 year old organization: Operating revenue is down $6.8 bil from 2008 to $68.1 bil, total mail volume is down more than 25 bil pieces to 177.1 bil pieces, or 12.7 percent. Operating expenses have dropped by $5.9 bil to $71.8 bil.

Chief Financial Officer Joseph Corbett said, "We undertook comprehensive cost-cutting measures across all areas of the organization. Most notably, we reduced work hours by 115 million, or the equivalent of 65,000 full-time employees."

Postal Intelligence questions whether it really is in "all areas of the organization". Case in point: following the recent Reduction In Force, the National Association of Postal Supervisors (NAPS) stated in a news release that not a single member of its association was laid off during the RIF. Looks to us like the NAPS members haven't sacrificed as much as 'other areas of the organization'. Perhaps it's time for Postal HQ to finally get serious about making the cuts necessary to save the service: examine every job that doesn't touch the mail...eliminate all travel...close redundant offices...introduce time clocks for ALL positions to eliminate rampant time theft...require nothing less than a college degree for all management applicants...

...and go OUTSIDE the service to find another Carvin' Marvin Runyon to start cleaning up this mess.

Drinking the union Kool-Aid...mail volume to return?

While we at PostalIntelligence would never advocate privatization of the US Postal Service, we were intrigued by the American Postal Workers Union response to a recent New York Times editorial on the subject of privatization. The Times wrote an article outlining the USPS's financial difficulties, followed by a call to privatize the organization.

We would, of course, expect APWU President William Burrus to vigorously fight any effort to privatize, and then offer his solutions to help restore the USPS to solvency. Instead, he has offered a surprisingly weak response, claiming the current financial troubles are not the result of diversion of the mail to email. After all, he says, electronic diversion was well established prior to the volume declines, which began in 2006.

President Burrus needs to step out of the lounge at the APWU headquarters for a few minutes and see what's going on outside. Almost NOBODY uses the mail anymore for personal correspondence. Talk to people under 20 and they likely won't even know how to use the system for anything but eBay shipments. If you receive bank statements, voting proxies, mutual fund statements, phone bills and now even credit card bills, among the hundreds of other types of business correspondence, chances are they soon won't be arriving in your mailbox, but by email. Just last month Vanguard Mutual Funds offered customers $10 to eliminate all correspondence by US mail. No President Burrus, this didn't all happen in 2006, much of this diversion began as recently as 2009.

Burrus blames the mail slump almost entirely on the recession-driven decline in business mail. We expect President Burrus may be the only person on the planet who believes this, if in fact he really thinks this is true. But this comes as no surprise. Burrus needs to hold out the carrot of an eventual return of mail volume to his overworked and overstressed employees in the hopes they'll hang on for a few more years until it 'turns around'. Sorry President Burrus, we don't see many in your ranks drinking the Kool Aid. As much as we all wish it to be, you'll never again see the volumes of 2006... no matter how much you cross your fingers. This fact was verified by none other than the Deputy Postmaster General only a few weeks ago.

How about looking into solutions to some of our basic problems: a grossly overloaded management structure that would strangle any normal business; lack of innovation to find new products and services (look to European countries for this one); uneducated managers who lack even the most rudimentary 'people skills'; union rules that put bad employees on the window due to hopelessly outdated seniority rules; policies that prohibit 'burden sharing' within employee groups to reduce the need for future layoffs (all employees taking a reduced workweek); and prohibitions on voluntary leave without pay opportunities to save work hours. And this is only the beginning.

USPS loses another $677 million, volume down 20%

The US Postal Service reported a net loss of $677 million for the month of May 2009, creating a year-to-date deficit of $3.4 billion. The share per employee is $1,041 for the month of May alone. If this trend continues, the anticipated loss for 2009 will be $6 billion. Mail volume is down 19.9% overall (first class -16.4%, standard mail -23.9%, package services -17.8%). No class of mail has been spared from a reduction in volume compared to May 2008.

There is no end in sight for what has become a multi-year trend. Personnel cuts, mostly among craft employees, have reduced work hours, but the USPS's top heavy management structure continues to suffocate the organization with its monolithic bureaucracy. There is much talk, but very little action, on significantly reducing the ratio of supervisors to employees.

And there is a sense of panic on the workroom floors throughout the country as employees at all levels witness a steady, measurable and very visible decline in the mail's volume. The service is in the process of 'studying' the feasibility of closing as many as 3,243 stations and branches, which will result in massive protests from customers and Congressional representatives alike. The Postal Service's campaign to eliminate the sixth day of mail delivery is on track since the service launched its trial balloon several months ago to test the public's reaction to such a proposal. To the surprise of many, the public was generally disinterested in the loss of the sixth day, an apparent indication of the USPS's state of irrelevency to the American public. It appears that the Postal Service and its unions are slowly coming to grips with the service's inability to compete with electronic mail, and the time has come for headquarters to take serious action. Meanwhile, top 'management' continues its decades old tradition of endlessly studying the problem and coming up with largely ineffective solutions. And we suspect no one at the top will feel the pain.

This all comes at a difficult juncture in American life which many in the financial press are describing as Great Depression II. While the USPS in May hit nearly a record loss, the federal budget deficit soared to a monthly record of $189.7 billion. It wasn't many years ago that such a deficit for an entire year would have been considered lethal to the national economy. The annual tide of red ink is now close to $1 TRILLION ($991 billion) with four months left in the federal budget year. The Obama Administration is projecting the deficit will total a record $1.84 trillion when the fiscal year ends October 1. That would be more than four times the amount of last year's record deficit.

As the economy continues to unwind, the US Postal Service seems to be watching from the sidelines as its organization rapidly implodes. Let's get serious, folks. Any employee can tell you that the waste, abuse, lack of accountability, demoralization of employees at all levels, sense of entitlement by a large segment of management (including four hour lunches, leave taken without charge, et al), continues unabated. And yes, no matter what the new policies are, money is still being wasted on expenditures that are unnecessary to the functioning of the organization.

Let's hope Mr. Potter and company wake up, and that it's not too late. Where is Carvin' Marvin Runyon when the venerable old US Postal Service so desperately needs him?

The Simpsons: USPS sells out to pop culture?

Desperate times call for desperate measures

For centuries, the US Postal Service has taken a dignified approach in its selection of designs for postage stamps. Even as the organization has occasionally veered off in strange directions with its choices (Salsa dancing, mahogany speedboats, clouds), it has still maintained a variety of historic figures, presidents, writers, artists, flags, national parks, and even Hollywood legends. But the times are tough and things are changing.



In March the Postal Service announced it would be suspending the third installment of 10 state flags until 2010, and eliminating artist Edward Hopper's stamp with his 1935 painting, The Long Leg (shown above). Like everyone, the Postal Service has fallen on hard times and needs to squeeze every nickel. So when the service announced an unscheduled addition to the year's line up, we realized it was time to take a closer look. Surprisingly, the cancelled stamps, perfect examples of traditional postal propriety, have been unceremoniously replaced by none other than Bart Simpson and his dysfunctional family!

With the USPS on track to post losses in the billions this year, the $8 billion question has become: Is the Post Office really so desperate that it would sell out to commercial interests, creating an advertisement for a current television show which many find objectionable, just to bolster the bottom line? Has the service forever traded high culture for pop culture in the selection process for stamp designs? And what role may the Citizens' Stamp Advisory Council have played in this decision? It seems unlikely that Council dignitaries such as Mrs. Walter Mondale and Mr. Karl Malden would have supported such an odd choice.

The USPS made a similar selection that served as an advertisement when it issued the Hershey Kiss stamp awhile back, as well as a multi-sheet Disney series, and Warner Brothers cartoons a few years ago. While we support the Postal Service's efforts to increase revenue in these desperate times, a bit of decorum would be in order. Those who are most inclined to follow the adventures of the Simpson family are likely people of an age who don't buy many stamps. If the stamp sells as few as we expect, it is our hope this experiment in pop culture edginess will steer the Post Office away from cartoon characters and back to honoring what is great about America.

And while you're at it, Mr. Potter, if you want to make some money, how about these ideas: a sheet of 50 National Parks; major American city skylines; American inventions; Presidential pets; Invention and development of the telephone; Natalie Wood; Spencer Tracy; Barbara Stanwyck; George Burns; Fred Astaire; Joan Crawford; Burt Lancaster; William Holden; and Vivien Leigh. And when the 10 year waiting period has ended: Paul Newman; Jack Lemmon; and Walter Matthau. Those ought to keep you going for awhile.

The Simpson stamps were released today, May 7, 2009. We urge our readers to commemorate the event by buying a pack of Forever Stamps.

February losses exceed $650 million

The US Postal Service announced a monthly loss for February of $658 million, leading to a year-to-date loss of nearly $1.8 billion. At this point last year, the USPS had posted a loss of only $258 million. Various estimates have projected a year end loss of somewhere between $5 and $8 billion.

This staggering loss comes on the heels of the announcement in late March of the USPS's plans to to cut up to 3,000 management jobs throughout the country, and elimination of four of the 80 customer service districts. The service maintains a huge management structure relative to its labor force, and is known for being the most top heavy organization in the country.

Postmaster General John Potter is attempting to save his organization through the reduction of thousands of redundant positions, closing of facilities, filing for additional rate increases, and cutting one day of delivery per week. The elimination of 3,000 management positions is expected to only save $100 million, and will therefore have almost no effect on the bottom line. A rate increase is scheduled for May, but often such increases further depress mail volume.

Many employees consider the action on management positions to be nothing more than a large scale rearrangement of office chairs, as significant new positions will be opened, often at higher pay grades. This has long been the tactic of the Postal Service, and nothing is expected to change. Further, the ratio of supervisors to employees remains considerably higher than what would be acceptable in private industry, as evidenced by surveys at numerous postal facilities.

Headquarters seems to believe it's serious about saving the organization, but until radical policies are implemented, such as former PMG Marvin Runyon's examination of every position that doesn't touch the mail, nothing will change.

Meanwhile, panic is in the air as management employees begin to consider the possibility of losing jobs, or being forced to relocate to other parts of the country, as the RIF approaches this summer.

Next stop: Associate Offices.