Between a Rock ‘a Mailbox’ and a Hard Place

Situation/Background:
We have heard it was only a matter of time that change would be coming to the United States Postal Service (USPS).  This past Wednesday a controversial announcement was made that may affect Saturday delivery.  It is very clear that something needs to happen to ensure the stability of this federal agency.  Right now it is competing in a constantly evolving, technological savvy economy.  A battle it is not prepared to fight with its current infrastructure.  Today, many people pay their bills and read the news online, correspond with acquaintances through e-mail and social media and even read magazines on their tablets.  It appears the only thing keeping this industry alive is the shipment of packages and those who are “technology challenged.”USPS_mail

Strategy:
In an effort to reduce costs, the USPS has announced that August 1, 2013 they will be cancelling all mail service on Saturdays with the exception of packages, mail-order medicine and express mail. (CBSNews)

Implementation /Communication
In a press release the USPS agency ‘illegally’ announced this next step; it is illegal because Congress has the ultimate say in the decision and hasn’t been approached regarding the topic.  Technically, the Postal Service needs approval from Congress if it wants to cut service, but the Postmaster General says he “is moving ahead no matter what and he just hopes Congress won’t stand in the way”. (CBS News)  Given the circumstances and a look at the numbers, one can see understand why Postmaster General Patrick Donahoe came to this decision.

A recent MSNBC article, “For USPS, ending Saturday delivery is just the beginning” took an in depth look at the numbers:

  • The agency lost $5.1 billion in 2011 and $15.9 billion in 2012 triple the amount from the previous year.
  • Administering benefits costs have increased 448% since 1972.
  • Snail mail is down 5% from the previous year.
  • USPS has more than half a million full-time workers.
  • Worker-related costs–wages and benefits–eat up about 80% of the agency’s operating expenses.
  • In 2006, Congress legislated that the USPS pay 75 years’ worth of future-retiree health benefits over the following ten years.  Part of an overhaul of how Postal Service operates. No other government agency is held to this standard and if this was the case the article states the payments would be spread over forty years.
  • Also, in 2006 Congress prevented the agency from raising prices on standard and first-class stamps. However, FedEx and UPS raised their rates 5.9% and 4.9% respectively last year.
  • Donahoe proposed cutting 120,000 more jobs if Congress will let him.

It is very clear Donahoe, the Postal Commission and the USPS agency is stuck between a Rock ‘a Mailbox’ and a Hard Place.  Donahoe said, “The choice is either change some of the service or raise prices and people don’t want prices raised. We’ll make the changes in service.” (CBS News)

The CBS News article, “USPS Saturday delivery decision criticized” further states this move is expected to save an estimated $2 billion a year (annually).  However this is little to stop the “financial bleeding of an operation that lost $16 billion last year alone”.  Donahoe shared, “We don’t take any tax money. Our revenues pay for what we do. We need to act responsibly with good common sense and that’s what we’re doing.”

Donahue further defends his decision, “They say that you never really understand and appreciate how things work until you try to change them. I think this is true. Change is not easy. It’s comfortable to keep things the way they are. It’s comfortable not to make tough decisions. But our future is not in today’s comfort zone.” (MSNBC)

USPS_no mailEvaluation:
This is a hugely political topic with many stakeholders; postal service workers, unions, lawmakers, businesses and the general public all weighing in on the decision.  Another topic brewing in the background is the fight to keep Donahoe in charge, “The National Association of Letter Carriers (NALC), the largest postal workers’ union in the country, unanimously entered a vote of no confidence in their postmaster general last July.”  To initiate any serious downsizing, Donahoe would have to negotiate around precious “no-layoff” clauses in union contracts.  Seeking to cut jobs and reduce work hours won’t make those negotiations any easier.”  (MSNBC)

Personally, I do not see service being cancelled this coming August.  Either another decision will made beforehand or the topic will still be in lingo.  As we know the law making process is a long one.  With many stakeholders and angles to manage this is going to be a very long and tedious process.  However one this is true; the writing is on the wall for the USPS.  Something drastic needs to be done to ensure the future of this government agency.

File Under:  You’ve got “E”mail

Sources:

http://about.usps.com/news/national-releases/2013/pr13_019.htm

http://www.cbsnews.com/8301-505266_162-57568120/usps-saturday-delivery-decision-criticized/

http://tv.msnbc.com/2013/02/07/for-usps-ending-saturday-delivery-is-just-the-beginning/

Images Source: Jeannine O’Neil

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s