2011 No. 5 - October 21, 2011

Postal Service Makes Financial Presentation

This past week the Postal Service presented the NPMHU bargaining team with its official, on-the-record Financial Presentation. This did not include a proposed wage or benefit package for the 2011 National Agreement, but rather focused on the Postal Service’s current financial situation.

Given at USPS Headquarters in Washington, DC, the presentation outlined what the Postal Service believes are the root causes of its financial instability, the actions it has taken thus far, and the actions that it believes are still necessary to deal with the formidable challenges that lie ahead.

As we are all too accustomed to hearing, the most significant factor driving the Postal Service’s financial problem continues to be declines in first-class mail volume. During Fiscal Year 2011, which just ended on September 30, 2011, the decline was approximately 7%. The Postal Service claims that this decline in first-class mail volume is occurring at a faster rate than anticipated, and this is further exacerbating an already grim financial outlook. This phenomenon, the Postal Service claims, is driven by the poor state of the global economy and a slower than expected pace of economic recovery in the United States.

The Postal Service also noted that, while standard mail and package volumes are increasing, the extra revenue brought in by this mail is not enough to balance the large decline in first-class mail volume. The Postal Service claims it takes three pieces of standard mail to contribute as much as one piece of first-class mail to the Postal Service’s bottom line. The Postal Service also cited consumers’ growing reliance on technology and electronic communication platforms as a major contribution to this decline, and it believes that this reliance on technology will increase in the future, resulting in further declines in revenue.

The efforts of Mail Handlers and their role in recently achieved increases in productivity and efficiency were commended, and the Postal Service pointed to efforts it already has implemented to improve its financial condition. Organizational redesign, the freezing of salaries for USPS executives, and postponed or delayed financial payments to vendors and to the federal government were a few of the highlighted efforts. However, the Postal Service believes that such efforts must be accompanied by further action in order for it to achieve a level of satisfactory financial health.

Additionally, the USPS acknowledged recent proposals by the Obama Administration to ease its financial burden. These proposals may never be approved by Congress, however, and management therefore is convinced that it must be proactive in its approach if it is to achieve long-term economic viability. In other words, the USPS believes that relying on Congress and/or the White House for assistance will only mean that the Postal Service will continue to limp and hobble along a path of uncertainty. With that in mind, management is seeking substantial cuts in its labor costs in order to deal with its current financial state.

In its search for continued relief, the Postal Service put forth a number of ideas which would have profound impacts on mail handlers. Some of the strategies currently under consideration are:

• Consolidating or closing up to 252 mail processing facilities

• Moving to five-day delivery

• Amending the National Agreements to increase productivity by reducing “inefficient” work rules

• Creating USPS-only health and retirement benefit plans

The NPMHU understands the Postal Service’s financial predicament, and is supportive of the agency’s goal of achieving financial solvency. A financially stable Postal Service certainly is in the best interest of the mail handler craft. The question remains, however, whether the proposals put forth by USPS management, either collectively or individually, represent the best course of action for the future of the Postal Service and for all mail handlers.