Monday, August 16, 2010

Privatizing the Post

In the United States, the policy debate is over how the Postal Service will survive past the end of the fiscal year.   In Great Britain and Canada the debate is now respectfully when and if the Post should be privatized.

Royal Mail clearly is on a path toward privatization.

In July, Sky News reported the government hired advisers on a potential Royal Mail sale.

More recently, Royal Mail hired Moya Green, former CEO of Canada Post who the Times (London) steered the "organization to a trebling of its net profit to C$281 million (£183 million), despite a 5.1 per cent drop in revenue.Ms. Greene also served as "Assistant Deputy Minister of Policy in the Department of Transportation, Canada from 1991 to 1996 and was responsible for broad reform of the over-burdened transportation system; the privatization of CN; the deregulation of the Canadian airline industry; and the commercialization of the Canadian port system." (Biography from Business Week) With this hire, Royal Mail has hired both an executive who has experience cutting costs in a postal enterprise in a period of declining revenue as well as one who understands the privatization process from the government's (owner's) side of the sale.

Hellmail has reported that Richard Hooper, who is engaged in his second evaluation of the future of Royal Mail, "argues that the recent hiring of former Canada Post CEO Moya Greene and the swap from Allan Leighton to Donald Brydon as Chairman will have increased the value of Royal Mail."

The departure of Moya Greene has raised the privatization issue in regards to Canada Post as it is clear that the key difference between her position at Canada Post and the one at Royal Mail is the challenge of taking a government enterprise through the privatization process.   The issue of privatization of Canada Post was first raised by the Organization for Economic Co-operation and Development (OECD) last spring and received a tepid response from the Harper government at the time.    The departure of Moya Green has generated a number of articles and letters to the editor on the subject which include those by Michael Warren, former CEO Canada Post, Denis Lemelin, National President, Canadian Union of Postal Workers (CUPW), and Kevin Gaudet, federal director of the Canadian Taxpayers Federation.

The expected privatization of Royal Mail and the discussion of privatization of Canada Post illustrate that the decision to privatize is a decision of the government and not the postal operator.   While the operator may have the data necessary required to determine whether privatization is possible, and its management may have opinions on the advisability of privatization for the long term viability of the enterprise, the decision is that of the owner of the enterprise, the government involved.

Any examination of privatization of the United States Postal Service would have to be approved by Congress and most likely have the support of the Administration with the lead most likely taken by the Department of Treasury with the support of Departments of Transportation and Commerce and the Federal Trade Commission and the Federal Communications Communication.  Even if privatization is not on the table, it may be time for Congress to begin demanding that administration recognize its position as owner of the Postal Service and designate a point person for examining potential business models and a regulatory framework that would ensure the Postal Service's survival as a self sufficient enterprise in 2020 and beyond.


Anonymous said...

In the end, this is a public service. Much like military, it's done for the common good. If the government can't provide the most basic of services, then it has failed & you as a public have failed. There have to be common bonds for your countrymen to rally around. In this case, your flag is delivered via the Post.

Anonymous said...

Certainly a review of the current management structure is appropriate. It is obvious current management of the USPS under Potter et al has failed miserably. A more government wholly owned and operated with greater customer services is in order. The public awaits a true service oriented public agency, not the failed quasi - independent one run by the pro business board of governors which postal management is part and parcel to.