Tuesday, September 30, 2008

Hard Times

The Postal Service is now beginning to tell its stakeholders the extent of the hard times that it faces. In a notice to members, APWU President Burrus provides some financial details that were not presented at the Board of Governors meeting. The information he provides along with my comments in italics is as follows:
  • The Postal Service experienced a 12 percent reduction in mail volume during some unspecified time period. [Most likely this figure represents an early estimate of volume for the 4th quarter. If true it means that mail volume has truly dropped precipitously as in the 3rd quarter volume was only down by 5.5% over last year. ]

  • The Postal Service's expected loss in 2008 will be around $2.3 billion. [This is about $1 billion less than the estimate that I generated in my last post but still a substantial number. The difference reflects the fact that I was not able to identify all of the one time charges and accounting credits that will occur]

  • There are no prospects that increases in mail volume or for productivity improvements will be sufficient to offset losses. Increasing postage rates, beyond what is permitted under the rate cap, is not an option either as large price increases would hasten the substitution of electronic alternatives for mail. [With these comments, President Burrus is preparing APWU membership of the prospect for significant changes in postal operations beyond productivity improvements within a single facility.]

  • Postal Service employees may experience layoffs in the next fiscal year. [The layoffs would come from the 16,000 employees have less than 6 years of service. The layoffs would further reduce Postal Service head count beyond what the hiring freeze and the early retirement program will generate.]

  • The Postal Service will have losses in 2009 of around $2 billion. [The projection of a $2 billion loss is most likely , the Postal Service's best projection for FY 2009 even with the hiring freeze, the early retirement program and the layoffs that President Burrus is hinting at.]

  • To cover losses, the Postal Service will have to borrow around $5 billion. [If the business cycle recovers in FY 2010, the Postal Service will need to still hold down costs then to pay back the debt.]
President Burrus closes his note linking the Postal Service's financial challenges with the upcoming election and the impact that the election could have on the prospect for postal privatization. While I am less convinced than President Burres that postal privatization is in the offing, I do agree with him that the next administration will likely examine "the future role of government in providing postal services."


Thia - Omaha said...

I don't know how the rest of the country is handling this economic downturn but, in Omaha, NE the Post Office is diverting mail that should be processed by USPS to a contractor facility on Giles Road. This facility is so secretive that even the drivers are not allowed to see what the inside of the operation is like. I read that the GAO rejected the USPS' request to outsource mail yet that is exactly what they are doing here. Of course our revenue is down; someone other that USPS employees are processing our mail!

Anonymous said...

Alert your congressman/woman. This shouldn't be happening.