Monday, February 28, 2011

How Deep Could USPS Regional Management Cuts Be?

In a previous post, I noted that the Postal Service plans to announce a cut around non-union 7,500 employees on March 25.   In all likelihood, a cut of that magnitude would involve a cut in the number of district and area offices along the line of the reductions suggested by the USPS - Office of Inspector General.

It is possible that the USPS - OIG may have underestimated the number of cuts in district and area offices that the Postal Service could cut and still manage the business effectively. Larger cuts would come if the Postal Service was as aggressive as United Parcel Service was in 2010 in cutting levels of management.

In 2010, United Parcel Service closed 26 of its 46 district headquarters offices and two of its five region headquarters offices.    For the Postal Service, similar cuts would eliminate 42 district offices and between two and four area offices beyond the one already eliminated this year,.

As far as job cuts, the reduction in management allowed United Parcel Service to reduce its workforce by2.7% to about 330,600 employees.  This is a cut of over 9,100 employees.  Most of the job cuts were management and non-union employees, as volume growth limited efforts to reduce the number of delivery drivers, package sorters, and over-the-road truck drivers.   A 2.7% cut in Postal Service employees would cut twice as many employees as are expected on March 25.

Who Represents the Administration on Postal Policy?

The Office of Management and Budget media office has provided the following response to my question regarding why OMB Director Jacob Lew is not testifying at the Postal Hearing this Wednesday.

"As a matter of policy, the OMB Director doesn't testify before subcommittees on issues not directly related to OMB’s appropriations." 

If this is standard policy for OMB then the Subcommittee may have posted the hearing schedule prior to knowing the protocol.  

The problem that the Committee faced in trying to pick a witness to present the Obama administration proposal for the Postal Service that is included in the 2012 budget is who represents the administration's position.  For most departments it is clear.   The Secretary or Administrator of the department of the department or agency gets the call to explain the proposed budgetary changes.   For the Postal Service, this is not so clear.  

It is not the place of either the Postmaster General or the Chairman of the Postal Regulatory Commission to present government policy for the postal market.  The adversarial relationship between the regulator and the regulated entity prevents either from doing more than present the perspective of their own organization on the proposal made in the Obama 2012 budget.   For example, it is clear that if the Postal Service could have submitted a budget proposal of its own choosing it would have removed the requirement that it maintain 6-day delivery.   What changes the Postal Regulatory Commission would have made is less certain.   There are also a fairly long list of postal policy issues that the Postal Regulatory Commission and the Postal Service would differ that affect postal finances and how they affect the budget which creates the appearance that there is no such thing as "government postal policy" in the United States.

Let's hope that the Committee can quickly find out who will represent the Obama administration on postal policy.   Until that happens, the 2012 budget proposal for the Postal Service risks becoming little more than a policy orphan.

OMB Not Testifying at

Congressman Dennis Ross has just tweeted that OMB is not testifying at the Postal Service hearing this Wednesday. 

" RepDennisRoss
OMB refusing to testify at our Oversight Hearing this Wed. on the looming financial crisis in the postal service. "

The tweet makes reference to the Daily Caller article which uses the term "bailout" in its headline.
The article does not interview anyone who called the Obama budget proposal  for the postal service a "bailout".  

The loss of OMB as a witness as it eliminates the possibility of putting the Obama administration on the record on postal policy.   The reference to the Daily Caller article raises concerns that the focus of the committee may be on the "bailout" and not the future of the future of the Postal market.


Friday, February 25, 2011

Choosing a Road for the Postal Service in the Digital Age

The U.S. Postal Service Officer of Inspector has posted an important white paper entitled, Postal Service Role in the Digital Age, Part I: Facts and Trends. The paper lays out the full range of new mobile and web-based hardware, software, and cloud based technologies that have changed how individuals, businesses and governments communicate.   All of these technologies pose threats to traditional uses off mail and other older means of communications. They also pose threats to older versions of digital and web based technologies.  The paper also illustrates the holes that exist that prevent the full use of web-based and mobile technologies from being more widely used.

The problem that the Postal Service, every firm that faces challenges in their traditional markets from new digital and mobile communications methods reminds me of the last stanza of Robert Frost's Poem, The Road Not Taken.

And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.

The poem suggests that: once a path is taken it determines all future choices; there are no do-overs and options and opportunities in the future all depend on the choice made now.   

In how the Postal Service adapts to digital and mobile competition and in deciding what unmet needs that it could fill, those framing a future for the Postal Service must choose between two roads.

The Well Traveled Road

One road is the one that it is now on as framed by the Postal Accountability and Enhancement Act.   That road limits the Postal Service to the services that existed prior to enactment of the Act.   This road is well known and comfortable.   However, while this road is clear it is narrow and generally focuses on dealing with the conflict between protecting existing stakeholders including employees, mailers, and traditional ways of buying and providing mail services and slowly winding down the traditional physical delivery network as demand declines.

The problem with the well traveled road is not the impact on postal employees or for that matter the impact on the firms within the printing supply chain that produces most of what the Postal Service delivers.  The problem with the well traveled road is it does not reflect a contemporary understanding as to the challenges that businesses, non-profits and governments have in communicating with consumers and businesses and government at all levels.

By not fully incorporating the contemporary understanding of communications, the well traveled road puts the U.S. government at financial risk for both providing service guarantees to areas with the lowest level of demand and the costs associated with winding down the enterprise that cannot be rung out of cuts in employee counts, salaries and benefits and rate increases on customers.    More importantly, the well traveled road does not allow the Postal Service to fully take advantage of the needs of its customers and potential customers to communicate with consumers, businesses and governments that will be unmet in tomorrow's digital and physical delivery markets whether in digital or physical form.

The Less Traveled Road

The less traveled road requires the clearing of brush and other obstacles in order to begin travel.  The USPS-OIG paper is the first step in that process but cannot be the last.    The paper focus's on the changes in communication from the perspective of  the choices that recipients make in terms of communications.    In doing so it identifies a number of problems relating to the lack of industry standards and gaps in the digital marketplace that could provide part of the path for the Postal Service.

However, it clears only part of the brush on the less traveled road which keeps the direction of that path unclear.   What it misses is the challenge facing senders of communications in adapting their communications strategy to reflect their needs.   These include but are not limited to how senders have to deal with:
  1. recipients want multiple options and platforms for receiving communications from them or sending replies; 
  2. restrictions that recipients want to and/or can place on sender access to their use of a particular mode (e.g., do-not-call lists, do-not-mail lists, opt-in requirement for much of e-mail and social media advertising)
  3. differences in how new communications options act as a adequate, equal or superior substitute for each of the set of more traditional communications differ (e.g. Hulu , ESPN3 and CBS Sports online streaming of the NCAA tournament act have a significant impact on TIVO, as well as broadcast, cable, and satellite television for the delivery of advertising but have little impact on personal communications or transaction related communications);
  4. the impact of various communications options depend on the purpose of the communications as the effectiveness of each option differs;
  5. the financial challenges caused by recipient's preferred choice may not be the most cost effective option for handling the message;
  6. the difficulty of shifting consumer choice toward the sender's preferred method as both negative and positive incentives to shift recipients have significant limits with those limits being greatest in business to business communications;
  7. the process of transitioning a population of recipient to a new method when the sender can compel the switch as has been the case of payment of Social Security and other cash benefits to individuals;  
Either the USPS-OIG or some other entity needs to take a number of additional steps to clear the brush from the less traveled road so that travel on that road can commence .   The first step is to look carefully at the needs of senders and how they are adapting those needs to full range of  in-person, voice, event, broadcast, print, digital and mobile communications options.   This step will identify what senders view as the problems caused by the lack of industry standards and current and future gaps in the digital marketplace.   This step will likely change the perspective of the USPS-OIG as to what the digital divide is and how the extent that it effects commerce, the activities and fund raising of non-profits and the provision of government services.

This step will also provide a better understanding as to how the Postal Service can generate the revenue that it needs to survive whether it stays on the well traveled road that only involves delivery of printed communications or embarks on the less traveled road and incorporates digital solutions that meet the needs of senders that complements the Postal Service's physical delivery services and brand equity.  It is this information that will determine whether senders that are expected to send 150 billion pieces of printed communications 10 years hence find that they will have the a cost-effective delivery service neccessary to get the impact that they will need.  
The Road Not Taken
By Robert Frost

TWO roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth; 

Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same, 

And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.

Wednesday, February 23, 2011

Upcoming Cuts in Non-bargaining Unit Jobs

At the February 9th meeting of the Board of Governors, Postmaster General Pat Donahoe announced that the Postal Service will be cutting some 7,500 administrative and line management jobs.   This represents around 11% of employees currently in non-bargaining unit jobs.  

Negotiating with the APWU is a Smart Business Decision

The Postal Service has made a smart business decision by continuing to negotiate with the APWU, three months after the contract with the union expired.   The decision to negotiate changes in a labor contract that will reflect the new competitive reality, rather than go to arbitration reflects the fact the Postal Service needs the buy-in of its employees on the changes that will be necessary to turn the Postal Service's finances around.

The Postal Service's negotiations with the APWU will likely extend until after the Postal Service announces on March 25th the 7,500 cuts in the administrative and line management jobs mentioned at the last Board of Governors meeting by Postmaster General Pat Donahoe. At that point the Postal Service will likely announce a significant reduction in the number of districts in a move that could follow a USPS - Office of Inspector General report's recommendations to cut between 14 and 32 districts and up to three more areas.   These cuts, if they are in this range, will communicate clearly to production employees the seriousness of the situation and that sacrifices will be shared by management as well. 

The value of the Postal Service's approach is illustrated by a counter example, Wisconsin Governor Walker's approach to getting contracts changes with public employees in Wisconsin.   By attempting to impose not only changes in benefits but also eliminating collective bargaining, he has created a volatile adversarial relationship between public employees and the state of Wisconsin that did not exist previously.    While he may get what he wants, he will make the state of Wisconsin, its counties, municipalities, and school districts much less attractive employers when the financial crisis passes.

The approach that the Postal Service is using is an example of the best strategies that the private sector uses to deal with managing the process of adjusting labor agreements.   Steven Pearlstein states in his column in today's Washington Post why looking toward the private sector would favor the Postal Service's approach over Governor Walker's.

Back when I was working at Inc. magazine in the mid-1980s, we loved nothing better when approaching a public-sector issue than to ask how the private sector would handle it. Faced with the situation in Wisconsin, we would have called up Tom Peters or Peter Drucker and posed the example of a new chief executive brought in by the shareholders (i.e., the voters) to rescue a company suffering from operating losses (budget deficit) and declining sales (jobs). Invariably, they would have recommended sitting down with employees, explaining the short-and long-term economic challenges and working with them to improve productivity and product quality in a way that benefits both shareholders and employees.

Now compare that with how Wisconsin's new chief executive handled the situation: Impose an across-the-board pay cut and tell employees neither they nor their representative will ever again have a say in how things will be run or get a pay raise in excess of inflation. A great way to start things off with the staff, don't you think?   

Surviving the current financial crisis requires that the Postal Service follows the best management thinking around.  Knowing that Pat Donahoe is following the thinking of people like Tom Peters and Peter Drucker should give Congress, customers and employees some reassurance that the Postal Service will weather the storm.

Update 12:04 pm

The March 25th date for the 7,500 job cuts was confirmed by the Postal Service

Note of thanks:
The early readers caught numerous spelling and typographical errors.   I thank them for their indulgence in wading through the uncorrected post.  Again, I apologize to Pat Donahoe for having as much trouble spelling his name as others have spelling Muammar Qaddafi / Moammar Gaddafi's name

Tuesday, February 22, 2011

Cash-Starved Postal Service May Buy Time With Obama Quick Fix

By Angela Greiling Keane

The following article provides a clear discussion as to why the provisions in President Obama's budget relating to the Postal Service matter to the business comunity and web-based comerce.   It was published on Bloomberg Government and was only available to subcribers.   It is published here with the gracious permission of the author.

Feb. 22 (Bloomberg) -- The U.S. Postal Service, which predicts it will run out of cash by the end of its fiscal year, may buy time to restructure under a plan laid out in President Barack Obama’s budget last week.

Obama proposed deferring $4 billion of a $5.5 billion congressionally mandated payment required in 2011 to cover health-benefit costs for future postal retirees, and refunding some surplus pension payments made by the service.

It was the first time Obama mentioned the Postal Service in a budget message in his three years of presidential budgeting.  Trade groups representing companies such as EBay Inc. that rely on mail and shipping services urged the administration to address the Postal Service’s uncertain future. 

“It’s beginning to sink in that this is not going to be a problem that’s going to go away in advance of the election” in 2012, said Gene Del Polito, president of the Association for Postal Commerce, an Alexandria, Virginia-based group that represents postal customers. “This is a start of coming to a ealization that it’s an issue that needs to be addressed.”

The Postal Service, which has a congressional mandate to be self-supporting, has said it will reach its $3 billion annual and $15 billion total borrowing limits at the Sept. 30 end of its fiscal year and run out of cash if it has to make the $5.5 billion retiree health care payment. The agency, unlike many businesses, must fund future retirees’ projected health-benefit costs out of current revenues.

An agency executive said he was pleased by the president’s plan. “There is momentum, and we’re certainly encouraged by the whole thing,” Postal Service Chief Financial Officer Joseph Corbett said in an interview.

Widening Losses

Obama weighed in with a fix for this year as the agency considers shuttering more facilities, cutting more employees and reducing the number of days mail is delivered across the U.S.  First-class mail volume continues to decline and overall mail volume fell 20 percent from 2006 to 2010 due to widening
use of e-mail and a weak economy. The agency lost $329 million in the three months ended Dec. 31, 11 percent more than the $297 million lost a year earlier.

Jerry Cerasale, senior vice president of government affairs for the New York-based Direct Marketing Association, called the White House’s budget proposal “a great first step.”

“The president’s budget helps for 2011,” he said in an interview. “But it doesn’t do a lot beyond 2011.”

The U.S. Government Accountability Office this week said it’s keeping the Postal Service on its “high-risk” list of government programs.  The Postal Service “cannot fund its current level of service and operations from its revenues and urgently needs to restructure to reflect changes in mail volume, revenue and use of the mail,” the GAO wrote in its report released Feb. 16.

Broader Fix Sought

The Postal Service would need congressional permission to cut Saturday delivery or to close post offices for financial reasons. Lawmakers have blocked those changes previously after Postal Service executives proposed them. “We hope that with the administration having this in focus and the oversight committees who deal with postal matters also having it in focus and some potential new bills coming into the Congress in the near term we’ll really bring this to a head and make some fundamental changes,” Corbett said.

The Association of Postal Commerce is working with the Direct Marketing Association, which has representatives from EBay and Google Inc. on its board, and other postal customer groups whose members send 85 percent of U.S. bulk mail. They and postal labor groups this year asked Obama to change the payment schedule for retiree health benefits, one of the things the president proposed in the budget.

EBay Reliance

EBay sellers are, collectively, the Postal Service’s single largest package customer, accounting for about a quarter of their package shipments, 13 percent of media mail and 9 percent of Priority and Express mail, EBay spokeswoman Alina Piacentino said. Postal Service revenue related to EBay commerce is about $1.7 billion as of last year, she said, or about 2.5 percent of the service’s fiscal 2010 revenue.
“EBay sellers rely on efficient, affordable shipping services to serve their customers and grow their businesses,” Brian Bieron, senior director of federal affairs for EBay, based in San Jose, California, said in an e-mail. “Federal initiatives that enable the U.S. Postal Service to focus more of its resources on providing affordable shipping services to small business retailers are a win-win for consumers and job creation.”

Jake Parrillo, a spokesman for Mountain View, California-based Google, referred comment to the Direct Marketing Association.

Pension Refunds

“As customers of the Postal Service, we recognize our delivery partner will ultimately have the obligation to pay for the benefits established by law and in collective bargaining,” the mail customer groups, which also included the Alliance of Nonprofit Mailers, Magazine Publishers of America and the
National Newspaper Association, wrote in a Feb. 7 letter to Obama.  (Bloomberg LP, the parent of Bloomberg News, publishes Bloomberg Businessweek and Bloomberg Markets magazines. Bloomberg Businessweek’s president is on the board of the Magazine Publishers Association.)

Cerasale said the Direct Marketing Association will push for more federal relief. Customers would like the U.S. to refund overpayments the Postal Service made to a federal retirement fund used for employees hired before 1987, he said. In his budget, Obama proposed refunding $6.9 billion over 30 years in overpayments to the current federal retiree pension fund.

Until the Postal Service’s future is more certain, business customers may shy away from using it, exacerbating the downward spiral, Del Polito said. “Businesses do not like uncertainty and if you tell them there’s this world of uncertainty about using the Postal Service, people stop using the mail,” he said.

--Editors: Bernard Kohn, Joe Winski

To contact the editor responsible for this story:

Bernard Kohn at +1-202-654-7361 or

Why isTunisia, Egypt, Bahrain, and Especially Libya Bad for the Postal Service?

The answer is oil.   Since the fiscal year began crude oil has incresaed $16 per barrel.  This is a 20% increase in price since the fiscal year began.  News reports suggest that gasoline prices could hit $5 a gallon this summer if the turmoil in Libya and other Middle East ountries  continues.   The increase in oil prices raise the cost of fuel used to transport and deliver the mail and heat and run the processing plants and retail locations.

Private sector competitors will handle incleasing oil prices by raising fuel surcharges, while at the same time working feverishly to minimize transportation and other fuel dependent costs.   The Postal Service will handle the increase by generating larger losses, even after it completes efforts to reduce excess capacity in its processing and transportation network.    Figuring out which approach makes more business sense is another issue for Congress to contemplate

Monday, February 21, 2011

How Congress Makes the U.S. Less Competitive

The New York Times reports today that that the Patent Office is opening up its first satellite office.  This opening is designed to help to deal with the backlog of 700,000 patents awaiting their first action by an examiner and the 500,000 patents that are in process.

Once patent applications are in the system, they sit — for years. The patent office’s pipeline is so clogged it takes two years for an inventor to get an initial ruling, and an additional year or more before a patent is finally issued.

The delays and inefficiencies are more than a nuisance for inventors. Patentable ideas are the basis for many start-up companies and small businesses. Venture capitalists often require start-ups to have a patent before offering financing. That means that patent delays cost jobs, slow the economy and threaten the ability of American companies to compete with foreign businesses.  

The Patent Office like the Postal Service is self supporting.  Application and maintenance fees generate "$2.1 billion in income" in 2010.   This has made the Patent Office an inviting target for Congress, which "over the last 20 years has diverted a total of $800 million to other uses, rather than letting the office invest the money in its operations." [emphasis added] 

While there are changes in Obama's budget to add resources to the Patent Office, previous Congressional actions suggests that Congress wants the revenue from the Patent Office more than the economic benefits generated by the patents the office issues.

"In two consecutive sessions, Congress has defeated a bill that would allow the patent office to keep all of the fees it collects."

The problems faced by the Patent Office in its dealings with Congress are quite similar to those faced by the Postal Service but on a smaller scale.   The impact on the economy is also similar as Congress's actions regarding the Patent Office and the Postal Service have had the effect of retarding the economic growth by making doing business in the United States more difficult and more expensive than it need be. 

Unfortionately for the Patent Office and the Postal Service fixing the problems do not have solutions that fit easily into political arguments that use words that poll favorably or fit within the 140 characters available in Twitter.   The willingness of members of Congress to adjust their language to fit real solutions to the budgeting and policymaking issues of the Patent Office and the Postal Service will determine if the country reverses the anti-growth policies that now exist.

Competing In Competitive Markets

TNT Post is the privately owned provider of universal mail service in the Netherland.  As such it operates under a corporate structure similar to investor-owned public utilities in the U.S.   From a competitive standpoint, TNT Post is similar to the land-line operations of Verizon, ATT, Quest, and numerous smaller firms that are dominant in their traditional market but face competition from telephone services offered by cable companies, wireless services, including sister wireless divisions, and voice over internet services like Skype and Vonage.  

Just like land line companies, TNT Post expects demand to decline.  Its just released annual report provides the following information on volume change in 2010 and in upcoming years.  As a consequence of the combined market trends [i.e., competition and electronic diversion], the addressed postal volume decline in 2010 was 9%. For 2011, Mail estimates the decline of its addressed postal volumes to be around 8% to 10%. In the years thereafter, Mail estimates its annual volume decline to be 6% on average. 

TNT does have options to grow its business that the United States Postal Service does not because it is in in the private sector and does not have legal restrictions from offering "non-postal" services.  The following figure illustrates TNT's strategy and a number of these options.  
Choosing to allow the U. S. Postal Service to expand its range of services is a significant policy question that requires Congressional action.  

The argument for allowing the Postal Service offering similar services come from the economic theory of the firm that describes the limits in both efficiency and service quality of contacting out parts of a manufacturing process or service to multiple firms.   The theory of the firm explains why with limited exceptions most movements of physical objects from rail cars to less-than-truckload freight to express letters are marketed and transported by a single firm and these firms have aggressively expanded into logistics and trade-finance services that customers often require in addition to the transportation.  It also explains why most posts operating in the G-20 offer services similar to what TNT Post, while at the same time many now or will soon compete with firms offering upstream (i.e. collection, sortation and transporation) and end-to end mail delievery services.

The argument against allowing the Postal Service, operating as a public entitiy, offering similar services are twofold.  First, allowing the Postal Servcie to offer these service would put it in direct competition with private sector and government provision of services are perceived to be required only if the private sector fails to provide the service.   Second, by allowing the Postal Service to compete with private sector firms, its delivery service would give it an unfair advantage over firms currently competing in the market.

Even if the Postal Service is privatized, there is an argument against allowing it to compete with the private sector.  This argument focuses on the competitive advantage of a private sector firm offering the delivery service has in the market over other competitors.   In many ways these arguments are similar to those favoring net-neutrality as well as concerns of competitors to NBC that were raised prior to the merger of NBC and Comcast.

In weighing these arguments, as well as arguments on the full range of postal policy issues, Congress needs to focus on the economic impact of the policy choice. 
  • To the extent that mail is used to consummate transactions including the sending of bills and payments, what option allows those transactions to go smoothly at the lowest cost to the buyer and seller?
  • To the extent that mail is used to advertise products and services, what option gives advertisers the most efficient advertising media possible which allows them to grow their business and create jobs?
  • To the extent that the Postal Service is a critical part of a low-cost transportation network that allows e-commerce companies to grow, which option best ensures that the sender of parcels or receiver of returns will have cost-efficient delivery network that they need that will allow their businesses to grow and create jobs?

Saturday, February 19, 2011

Tweets from Congressman Dennis Ross and Possible Implications for Postal Unions

In the last few days, Representative Dennis Ross has made a number of tweets regarding the conflict between the Governor and the teachers unions in Wisconsin.   While none of the tweets mention postal issues, they may provide a hint to stakeholders and policymakers  regarding the tone on labor issues that the House will take when discussing changes required to return the Postal Service to solvency.   

RepDennisRoss Dennis Ross
Hypocrisy & big labor are synonymous. RT @Reaganista: RT @JebBush: Must see video. Stay strong @GovWalker. #wiunion

RepDennisRoss Dennis Ross
Working on that. RT @michellemalkin: Unions get waivers from Obamacare. Why can't workers get waivers from forced unionism? #wiunion

RepDennisRoss Dennis Ross
@crbones private sector unions were needed in the 20s and 30s. They are even helpful in some ways today. Public sector unions must go.

RepDennisRoss Dennis Ross
I wonder how many of the 10% unemployed in America would like a job as a teacher in Wisconsin? Time for an air traffic controller solution.

Representative Ross's tweets suggest that postal labor may find that the best they may expect from postal reform legislation could be the changes in the criteria arbitrators must use that are contained in bills proposed by Senators Tom Carper and Susan Collins.

Thursday, February 17, 2011

Tweets from Congressman Dennis Ross on the Postal Service

On February 17, 2011, Congressman Dennis Ross tweeted, " we will have a website where the man or woman on the street can tell us how to improve service and cut costs."

This is the first indication of what Congressman Ross wants to do as Government Reform Committee's Subcommittee on Federal Workers, the Postal Service and Labor Policy

Congress Dennis Ross Spoke on Postal Issues

On February 12,Congressman Dennis Ross tweeted "Speaking to the Letter Carriers installation dinner tonight in Lakeland. Going to speak the truth as I see it about the postal service."

Does anyone who follow this blog know what he said?  If you do, post a comment and/or e-mail me.

Tracking the "Bailout" Talk

Recently, the Daily Caller story that went to great lengths to call President Obama's 2012 budget proposal a bailout of the Postal Service.   The previous post, The Bailout Talk Has Begun.  Or Has It?" showed that the interviewees were actually stating that they believed just the opposit

However it was not the only website that chose to use that language.  Here are all that could be found with a quick Google search.  (new items will be added over time.)

During the Debate on Adjustments in the FY 2010 Continuing Resolution

Washington Post,  July 29, 2009: "Bailout in the Mail"

Politico, September 24, 2009: "A $4 Billion Bailout for the Postal Service?"

During the Debate of the FY 2011 Continuing Resolution

Washington Times, September 20, 2010, "ISSA: Time for Another Government Bailout"

During the Debate on the FY 2012 Budget

American Thinker, February 10, 2011: "Another bailout on the way - Postal Service next in line"

Daily Caller, February 17, 2011: "USPS Gets Short-term Relief from Obama’s 2012 budget, But Some Call it a Bailout"

Republic Watchdog, February 17, 2011: "Obama's $4 Billion Taxpayer Bailout of the Postal Service"

Jr. Deputy Accountant, February 17, 2011, "The Postal Service Gets A(nother) Handout from Washington"

Fox Nation, February 17, 2011,  "Obama's $4 Billion Taxpayer Bailout of the Postal Service"

The Snooper Report, February 17, 20111 "Obama's $4 Billion Taxpayer Bailout of the Postal Service"

The 2012 comments are starting to look viral, doesn't it?

The "Bailout" Talk Has Begun. Or Has It?

The Daily Caller today has an incendiary headline on President Obama's budget proposal regarding the Postal Service.  "USPS Gets Short-term Relief from Obama’s 2012 budget, But Some Call it a Bailout"  The headline suggests that that there are individuals who are familiar with postal policy who are willing to call what the President proposed a bailout.  However, the quotes of two conservative critics contained in the article suggest that finding anyone to use the word bailout took a great deal of effort.

Tad DeHaven, a budget analyst at the Cato had strong criticism but he did not call it a bailout.

“Surprise, surprise,” he said, “like on entitlements and everything else, they’re proposing to kick the can down the road with regard to the Postal Service’s long-term financial situation.”

DeHaven suggested that the long term solution was to privatize the Postal Service, but that even if that didn’t happen, the solutions being suggested were inadequate.

Members of Congress, he said, were unwilling to take the necessary steps because they get complaints from constituents when local post offices close or when stamp prices go up. Instead, he said, they come up with “gimmicky fixes that are very myopic at a time when they could use this long term vision.”

“But such is the nature of a politician, they operate on election cycles,” he added.

Looking at the budget, he was unimpressed. “It just continues to perpetuate an anachronism, and it demonstrates to me a lack of bold vision.

Tad Dehaven's statement presents a serious proposal from a libertarian thinker.   The Postal Service should be privatized and the proposal doesn't go far enough to put it on that path.   Whether you agree with his statement or not, it would be hard to suggest that he called the budget a bailout.  In many ways the tone of his criticism is similar to the criticism of Senator Susan Collins, who has already proposed legislation that promotes more changes.

Mike Schuyler, senior economist at the Institute for Research on the Economics of Taxation who has frequently written conservative critiques of the Postal Service, supports the proposal

I do not regard what’s specifically in the budget as a bailout,” he told The Daily Caller.

“My reaction as an economist is 100 percent funding is a highly prudent thing,” he said, regarding the over funded FERS. But, he continued, “if you’ve got over 100 percent funding, and you need money, taking the money out of an over funded account probably makes sense. So I have no problem with that.”

Moreover, he said, “I do not think that allowing the Postal Service to reschedule its payment for the retiree health benefits fund is a bailout. If the Postal Service was told you never have to pay it: that would be a bailout.” 

Mr. Schuyler only called what was not proposed a bailout. 

The Daily Caller is clearly trying to create new fodder for talk radio and conservative commentators.   It is clear that the most knowledgeable people on the right are not willing to add to this talk.

Book Stores as Community Centers; Should Congress Intervene to Keep Them Open?

Today, Borders filed for bankruptcy and announce that it will be closing 192 of its 642 stores.   These closures are leaving major holes in the communities affected.   Austin, Texas will lose all of its Borders.    Michigan will lose four stores including the store in Borders home town of Ann Arbor.   Chicago will lose most of its stores.  

The communities affected by Borders bankruptcy lose not only a place to buy books but more importantly a community gathering place whether in the isles of books, CD's and videos, and graphic novels or in the cafe.   These stores were places that acted as a late night place for students to study, mothers to meet with pre-schoolers for "play dates," the self employed to conduct business and couples on dates to go before or after a movie where they can flirt while they are browsing in the racks.   These stores also became community literary centers bringing members of the affected community together to listen to author talks and readings of children's books.  

The bankruptcy of Borders reflects the shift in how we buy books and recorded audio and video.  Books and much more likely to be bought on line and music is now mosly bought via downloads.  Now even hard-bound and soft-bound books are selling less frequently than books downloaded to e-readers and tablet computers.   Even video is switching from physical DVD's to streaming videos even though the quality of the product is inferior. 

The digital switch leaves those who are unable to embrace the new technology behind.  Those that continue to need physical books, as well as music and video recordings fall behind a "digital divide."  

The closing of 192 Borders stores will generate no calls from Congress for an investigation.  There will be no reqirement that Borders hold public hearings before it can close the stores affected.   No regulator will review Border's decision process in order to determine whether the decision to close each of the 192 stores is cost justified.   Shouldn't it?   Won't the effect on the communities be greater than the closing of a Post Office retail location that most patrons visit maybe twice a month that generate outrage from local communities, local politicians, the employees affected and Congress and require extensive regulatory review?  Maybe its time for Congress to require that book stores remain open and/or prove to a government regulator that the closure would save a company suffering losses money.

Tuesday, February 15, 2011

Wither e-mail advertising

So far today I have received 29 e-mail advertisements.   All of the ads are from vendors that I have used in the past so none of them are "spam"  The only way I know that I received 29 is that I have put all my ads into a separate folder called "vendor ads" in Outlook.  Included in those 29 were 4 identical ads from Office Depot and 2 identical ads from Booking Buddy.   

Today is typical.  Yesterday the number of ads was 33 and that included duplicates from four different vendors and one vendor sending two different e-mails to me within seconds of each other.  

Ever since I began putting the ads in a folder, I no longer see them every day.   I look at them at most once every couple of days when I need a break or know I have to buy something and need to see if anyone is selling what I need.  They clearly will not receive the immediate impact that the sender expected.

It is no wonder that the value of e-mail advertising is declining due to the clutter it creates.  it must be worse for those that use web based mail services and have to go though all of their ads one by one.   I am so overwhelmed by the number of ads, and messages from groups that I am a member of on LinkedIn that I am afraid to have my iPhone get my e-mail in addition to my laptop.

Maybe there is a future for physical mail after all.

What is the Economic Cost of Closing a Post Office?

The Center for the Study of the Postal Market has just posted in the Postal Journal the first study looking at this question.  The study was conducted by a team of six graduate students as part of a Cost Benefit class at the LaFollette School of Public Affairs at the University of Wisconsin-Madison.    The study examined a hypothetical situation, the impact of closing one Post Office in Marquette County Wisconsin.   This county is representative of some of the most rural counties in the United States with a population of less than 15,000 spread out over 455 sqare miles.

Last year the USPS - Office of Inspector General released a model that the students employed and determined that the Postal Service could justify on a business basis keeping only two of the seven Post Offices that now exist in the county.   The student's study looked at only closing one of the seven which was a more solvable problem within the time constraints of a course project

With the Postal Service about to close around 2,000 Post Offices and soon thereafter implementing a new retail strategy, this analysis should be of interest of anyone following changes in how the Postal Service offers retail services.   As a first attempt to look at this question, the analysis clearly has flaws, and as editor of the Postal Journal, I urge the readers of this blog to read the study and send me critiques and suggestions for further research that I can publish in the Postal Journal

For more details see the story in the Postal Journal.

Cost-Benefit Analysis Provides First Attempt to Measure Economic Impact of Closing a Rural Post Office

What do House Republicans Think About Budget Changes Relating to the Postal Service?

Now that the President's 2012 budget is out, both Senator Tom Carper and Senator Susan Collins have already commented on the proposal to provide some modifications to the Postal Service's retirement obligations.   To date, members of the house who are leading the subcommittee responsible for marking up legislation that would enact the changes that the President proposed have made any public statement about their views on the proposed statements.

As both Representatives Dennis Ross (R-FL) and Justin Amash (R-MI) are freshmen,  they have no history with Postal issues and are more than likely coming to the issue with not much more background in the postal market than the average consumer.  Given their lack of experience with the issue, it is not surprising that they did not immediately respond to the budget as the Senators Carper and Collins did.

What we have to go on is their public statements so here is a review of quotes from articles and press releases that may provide some guidance.

Congressman Dennis Ross

Ed O'Keefe of the Washington Post interviewed Congressman Ross after he was appointed chairman of the Government Reform Committee's subcommittee on federal workers, the Postal Service and labor policy.  In that interview he honestly expressed that the issues before the subcommittee were new to him although he had proposed similar changes in the federal payroll during his campaign.

Ross noted that he proposed trimming the federal payroll through pay freezes or attrition during his campaign. His new role, he said, presents "an exciting opportunity to open up and look inside the workings of our federal workforce" and learn more on a topic about which he admits he knows little.

Later the article gave an impression as to how he plans to run the subcommittee

Ross's subcommittee will focus first on those proposals by gathering facts and not pushing "a hidden agenda," he said. "We want to ask a lot of questions, we want to get a lot of experts testifying before us, and we want to find out what it's going to take" to deliver benefits to active and retired federal employees in a cost-effective manner, Ross said.

Congressman Justin Amash

Congressman Amash has a bit more of a public record that is available from his press releases. In a j following his appointment as Vice Chairman of Government Reform Committee's subcommittee on federal workers, the Postal Service and labor policy, he presented an initial position on postal issues:

"USPS has raised its rates in the last several years and now is threatening steep service cuts. I look forward to examining closely whether some of USPS's functions could be done more efficiently through competition and the private sector."

In a press release announcing his appointment to the Congress's Joint Economic Committee, Representative Amash stated, 

"I look forward to studying how the government’s expansion has inhibited our economic growth and how we can be champions of job creators.”

Finally, in a press release following the publication of the President's budget, Congressman Amash provides the following quote:

“Instead of fresh ideas and a bipartisan way forward, the proposed budget feeds Washington’s addiction to more taxes, more spending, and more debt.  The White House’s own projections show a ‘new normal’ of debt that we have not seen since we were fighting World War II."

“Americans expect more from their representatives, as well they should.  With four years in a row of trillion dollar deficits, the public demands that we be more than caretakers of a bloated federal bureaucracy.  They deserve more than token cuts.  They deserve a responsible government.

“I look forward to working with House leadership and my colleagues on both sides of the aisle to remove the debt burden from our children and future generations.”  

In sum,  these statements suggest that the Republicans leading the Government Reform Committee's subcommittee on federal workers, the Postal Service and labor policy are faced with looking at a signifiant change in postal law with a limited understanding of:
  • the postal market, 
  • the roll that the Postal Service plays in the economy and 
  • the challenges of turning around an enterprise as large as the Postal Service in a manner that does not disrupt the success of businesses, governments, and non-profit entities, including the campaigns they will likely run in another year that depend on the existence of a nationwide postal network. 
In all likelihood, both Congressman Ross and Amash will soon realize that gaining that understanding will take more effort than either of them envisioned when they were first appointed. 

Monday, February 14, 2011

When is $600,000 more than $6,200,000?

When the $600,000 involves sex and "waste, fraud, and abuse" of Postal Service funds.

The $600,000 is the amount of money that the USPS - Inspector General has indicated that the Postal Service could save over the next two years if it improved training on travel expenses were introduced.   Overspending on travel and abuse of corporate credit cards is nothing new in either the private sector or public sector.   Reports similar to the one issued by the Inspector General probably have been written since at least the times of the Roman Legion.  Given that Postal Service currently spends $97 million on travel expenses annually, the impact of the Inspector General's findings suggest that better training on travel rules would reduce travel expenses by 0.32%.     Discovering that travel rules are complied with 99.68% of the time would suggest that employees are not doing all that bad of a job complying with travel spending rules and appropriate use of corporate credit cards.
The $600,000 in savings identified has received lead stories in nearly every paper covering the Postal Service and comments from both Senator Susan Collins and Senator Tom Carper.   It has generated some truly salacious headlines:

Washington Post:
Report: Postal workers expensed private travel and 'adult entertainment'

The $6.2 million is the cost of the fines that OSHA has imposed on the Postal Service.  Stories of individual fines as well as the fact that OSHA is now seeking enterprise relief has received coverage only by local newspapers and publications that cover OSHA actions.    These fines have received scant attention by either the national, Federal Government or postal press.   These fines have not generated statements from any member of Congress who are looking at changes in postal legislation.

Even though spending $6.2 million in OSHA fines is ten times more waste than the abuse of travel rules, the attention that policymakers place on it suggests that they believe that  the $6.2 million in OSHA fines are less than the $600,000 that would be saved by the Postal Service if no employee abused travel rules and corporate credit cards.  

The real reason for the failure of policymakers in elementary school arithmetic is that the travel abuse issue has an obvious fix and the OSHA fine problem only suggests that there is a more serious underlying problem that needs investigation.   Doing that investigation is critical particularly as it would likely identify significant capital spending, training, and non-capital equipment and supply needs that fall outside the financial capabilities of the Postal Service with or without relief from all of its retirement benefit accounting issues.   Until this and other similar investigations are completed, a significant portion of Congress will believe that all that is needed is to remove "waste, fraud and abuse" making fixing the retirement benefit accounting issues much more difficult.

When Will the Fines End?

Occupational Health and Safety has reported that OSHA has identified announced one willful violation with a $70,000 proposed penalty against the Postal Service $70,000 for violations in its Royal Parkway in Nashville, Tennessee for allegedly allowing workers to use damaged, un-repaired dock levelers. This is the first OSHA finding of 2011 against the Postal Service.

Details of the investigation and the reason for OSHA's action, as reported by Occupational Health and Safety are as follows:

OSHA's Nashville Area Office began an inspection following a complaint that an employee was seriously hurt while lifting a damaged, steel-hinged plate that provides a bridge between the dock and a truck trailer. When the strap the employee was using to lift the plate slipped off the steel flap, the employee fall backward and struck the concrete floor, according to OSHA's account. "The Postal Service was made aware of the hazards related to its use of dock levelers that should have been removed from service," said William Cochran, director of the Nashville Area Office. "The hazard must be addressed and corrected, because this type of disregard for employees' safety and health will not be tolerated."

The investigation raises further questions about the condition of Postal Service facilities and equipment given the budgetary pressure to extend the life of all physical assets and operating equipment.   The specific problem raise some questions about the design of the dock in Nashville and whether the dock and equipment used to move rolling containers off and on vehicles could use an upgrade to reduce injuries and improve the efficiency of loading and unloading vehicles.

Prior to this investigation, the focus of OSHA has been on issues with electrical systems and maintenance of those systems.   After completing investigations at 30 facilities in 2010, OSHA fined the Postal Service $6.2 million for what it described as “willful and serious” electrical safety violations.  Electrical Construction & Maintenance (EC&M) magazine in its January 2011 cover story indicated that "even more citations expected in the coming months."  The article estimates that "the total in proposed fines could exceed $10 million."   

The EC&M article provides a useful summary of 29 of the investigations that generated fines in 2010. (EC&M's summary is presented at the bottom of this post for convenience to readers.) As a group, the cases illustrate how financial challenges have resulted in short cuts that may reduce immediate spending but result in even greater costs in the future. 

Fixing the problems that are generating OSHA finds require capital spending to fix and/or replace facilities; increased operating expenses to replace non-capitalized operating equipment and supplies, and increasing spending on safety training of employees that work with aging electricity dependent sortation and other equipment.   Given that the Postal Service will have trouble making payroll this year, finding the cash to cover these expenses is unlikely any time soon unless it delays other investments designed to cut costs, improve service or increase revenue.

Following is a list of facilities and the record of their electrical safety violations:
  • Jan. 27, 2010 — Des Moines, Iowa: OSHA initiated an investigation in October and cited USPS for two alleged serious and one alleged repeat violation of federal workplace safety standards. Proposed fines total $46,200.
• April 29, 2010 — Providence, R.I.: OSHA cited USPS for alleged willful and serious violations of safety standards. Proposed fines, chiefly for electrical and lockout/tagout of energy startup hazards, total $558,000.
• April 30, 2010 — Denver: OSHA’s inspection found that employees were performing testing on live electrical equipment and doing so without adequate training, personal protective equipment (PPE), and safety-related work practices. OSHA issued three willful citations. In addition, one serious citation ($7,000 in fines) was issued for failure to post warning signs to alert employees of electrical hazards. “USPS was aware of the hazardous electrical conditions but did not correct them in a timely manner to prevent potential serious injuries,” says Greg Baxter, OSHA regional administrator in Denver. The violations total $210,000 in proposed fines.
• May 5, 2010 — Bedford Park, Ill.: OSHA’s inspection, which began in November 2009, found that USPS failed to provide required electrical safety training for its workers; to ensure they used safety-related work practices while working on electrical equipment; and to provide workers with appropriate PPE while working on energized equipment. OSHA cited USPS with three alleged willful violations, which total $210,000 in proposed fines.
• May 24, 2010 — Anaheim, Calif.: Proposed fines total $11,050.
• May 24, 2010 — Las Vegas: Proposed fines total $10,625.
• May 24, 2010 — Bell, Calif.: Proposed fines total $18,425.
• June 3, 2010 — Philadelphia: OSHA cited USPS for workplace safety violations related to electrical hazards found at two Philadelphia facilities. OSHA’s inspections found inadequately trained employees performing work without the proper PPE while being exposed to live parts. OSHA cited the network distribution center with four willful violations with a proposed penalty of $280,000. The processing and distribution center was cited for three willful violations with a penalty of $210,000 and one serious violation with a penalty of $7,000. “The Postal Service’s disregard for workplace safety standards has left workers at these facilities exposed to unnecessary dangers, including electric shock, electrocution, fires, and explosions,” says Al D’Imperio, director of OSHA’s Philadelphia Area Office. Combined proposed penalties total $497,000.
• June 7, 2010 — Baton Rouge, La.: Postal employees were found working on energized equipment without protective gear and were exposed to potential electrocution from live machinery. Proposed fines total $97,500.
• June 8, 2010 — Pittsburgh: OSHA initiated an inspection in October 2009 and discovered four willful violations carrying a penalty of $265,000; one repeat violation, with a penalty of $25,000; and two serious violations with a penalty of $9,500. The willful violations include inadequate training for employees exposed to electrical hazards, failure to provide electrical protective equipment to protect employees from arc flash hazards and electrical current, and failure to use appropriate safety signs, safety symbols, or accident prevention tags to warn employees about electrical hazards. The repeat violation is due to the facility’s failure to use approved covers for electrical junction boxes. The serious violations include the use of an unapproved junction box in a wet and damp location and a failure to provide voltage-rated tools. Proposed penalties total $299,500.
• June 16, 2010 — Portland, Ore.: OSHA’s inspection found workers were performing tests on live electrical equipment and doing so without adequate PPE, safety-related work practices and warning signs, as well as working on equipment that had not first been de-energized. As a result of these conditions, OSHA issued one willful citation with a proposed fine of $70,000. In addition, two serious citations with $7,500 in fines have been issued for failure to adequately lock out machines’ power sources to prevent unexpected startup during servicing and for inadequate insulation on electric cables. “The Postal Service disregarded basic electrical safety practices, which left workers at this facility exposed to unnecessary risk of serious injury,” says Richard S. Terrill, OSHA regional administrator in Seattle. Proposed fines total $77,500.
• June 23, 2010 — Belleville, Ill.: Proposed fines total $2,925.
• June 25, 2010 — Scarborough, Me.: An inspection, which began in December 2009, uncovered employees working with or near live electrical equipment without adequate training or qualifications, PPE, safety-related work practices, and warning signs. In addition, OSHA found that access to electrical panels was blocked in several instances by materials being stored adjacent to them. Proposed fines total $430,000.
• June 25, 2010 — St. Paul, Minn.: Inspectors found employees working on live machinery without proper equipment or training, exposing them to the risk of electric shock. Proposed fines total $210,000.
• July, 1, 2010 — Capitol Heights, Md.: OSHA initiated an inspection in January 2010 in response to a complaint alleging the hazards. Inspectors cited four willful violations and one serious violation. The willful violations include inadequate training for workers exposed to electrical hazards, failing to provide electrical protective equipment to protect workers from arc flash hazards and electrical current, and failing to use appropriate safety signs, safety symbols, or accident prevention tags to warn employees about electrical hazards. Proposed penalties total $272,000.
• July 9, 2010 — Simi Valley, Calif.: Proposed fines total $13,175.
• July 22, 2010 — White River Junction, Vt.: OSHA’s inspection, which began in January 2010, found untrained or unqualified employees routinely performing troubleshooting, servicing, voltage testing, and maintenance on or near live electrical equipment, such as mail sorting and canceling machines. The machines had not first been de-energized, the workers lacked PPE, and insulated tools were not provided to perform electrical lockout/tagout procedures. OSHA cited six alleged willful violations of safety standards. Proposed fines total $420,000, chiefly for exposing workers to electrical hazards.
• July 26, 2010 — Boston: OSHA’s inspection, which began Jan. 28, 2010, found that employees, including mechanics and technicians working with or near live electrical equipment or parts, such as bar code readers and elevator control panels, were not provided with adequate training, safe electrical work practices, required PPE, or insulated tools. These conditions exposed the workers to the hazards of electric shock, arc flashes, and arc blasts — and resulted in OSHA issuing five willful citations. OSHA also found that the Boston facility failed to have an authorized person conduct periodic inspections of its energy control procedures to prevent the unexpected startup of machinery during maintenance. This situation resulted in one serious citation ($7,000 fine). “These citations and sizable fines reflect both the gravity of the hazards identified during this inspection and USPS’ knowledge of and systemic failure to address these hazards,” says Assistant Secretary of Labor for OSHA David Michaels. “The dangers of electric shock, burns and explosions were real, present, and ongoing. USPS must take comprehensive and aggressive action to correct these conditions once and for all.” Total proposed fines reached $357,000.
• Sept. 2, 2010 — Binghamton, N.Y.: OSHA issued citations for several serious safety violations, including lack of sufficient access and working space in front of some circuit breaker panels to permit ready/safe operation and maintenance of the equipment, as well as employees performing troubleshooting on or near energized circuits who were not provided with proper protective equipment. Proposed fines total $8,000.
• Aug. 11, 2010 — Dayton, Ohio: OSHA’s inspection, which began in April 2010, found that USPS failed to provide adequate electrical safety training, ensure that workers followed safety-related work practices while working on electrical equipment, provide workers with appropriate PPE while working on energized electrical equipment, address machine lockout procedures and hazards, and provide proper lockout/tagout training. OSHA issued citations for three alleged willful and six alleged serious violations. Proposed fines total $225,000.
• Aug. 19, 2010 — Portsmouth, N.H.: OSHA inspectors issued five alleged willful violations of safety standards following an inspection that found untrained or inadequately trained employees performing troubleshooting and voltage testing on or near live electrical equipment and wiring that had not first been de-energized. The workers also lacked PPE and were not instructed on proper electrical lockout/tagout procedures. USPS faces a total of $350,000 in proposed fines, chiefly for exposing workers to electrical hazards.
• Sept. 19, 2010 — Sharonville, Ohio: OSHA issued the three citations after inspectors found that USPS failed to provide employees working on electrically energized equipment with adequate training and protective equipment, exposing them to the risk of electric shock. Proposed fines total $210,000.
• August 27, 2010 — Kansas City, Kan.: The inspection revealed seven alleged repeat and 21 alleged serious violations. “There is no excuse for the lack of attention to the work environment that resulted in a multitude of violations, including seven repeat violations,” says Charles Adkins, OSHA’s regional administrator in Kansas City, Mo. “It is imperative that employers take the necessary steps to eliminate hazards and provide a safe working environment for all of their employees to prevent accidents from occurring.” OSHA has proposed $191,000 in penalties against the facility.
• Oct. 12, 2010 — Columbus, Ohio: OSHA inspectors issued five citations, after they found USPS failed to properly train employees on safe electrical work practices and provide them with proper protective equipment when working on live machinery. USPS also failed to use proper procedures to prevent electrical parts from being inadvertently energized. Proposed fines total $210,000.
• Oct. 12, 2010 — Huntington, W.Va.: OSHA issued citations for failure to properly train employees assigned to work on electrical equipment and failure to provide workers with protective equipment. USPS also failed to use lockout procedures on machinery to prevent electrical parts from being inadvertently energized. USPS faces proposed fines totaling $212,500 for willfully exposing employees to electrical safety hazards.
• Nov. 17, 2010 — Bluefield, W.Va.: OSHA inspectors issued four citations after finding USPS failed to label electrical cabinets, properly train postal employees, use proper safety practices when exposing employees to live machinery, and provide adequate PPE. An additional serious violation was issued for allowing an unauthorized employee to perform inspections at the facility. Proposed fines total $287,000.
• Nov. 18, 2010 — Los Angeles: OSHA inspectors issued the USPS 18 citations after finding that USPS failed to properly train postal employees or provide them with adequate safety equipment, and live machinery was not properly de-energized, exposing employees to the risk of electric shock. Other violations included failure to maintain clean and orderly working conditions, maintain fixed metal ladders and guardrails, keep aisles and passageways clear, and properly mark circuit breakers. Proposed fines total $220,000.
• Dec. 29, 2010 — Shrewsbury, Mass.: OSHA inspectors found that the USPS failed to properly train postal employees or provide them with adequate safety equipment, and live machinery was not properly de-energized, exposing employees to the risk of electric shock. The facility also lacked proper voltage meters, and the USPS failed to perform periodic checks on energy control procedures. Proposed fines total $238,000.
• Dec. 29, 2010 — Duluth, Ga.: OSHA inspectors found no safeguards to prevent accidental startup of machinery, material was stored in front of electrical and circuit breaker panels, electrical boxes had unused openings, and there was exposed electrical wiring. Proposed fines total $80,000.

Sunday, February 13, 2011

What LSU's Actions tells Us About Retail Postal Services.

The Baton Rouge Advocate reported that LSU is replacing a Postal Service run retail station for students on campus with one run by Ricoh, USA.    The switch will occur in the fall of 2011.  The switch is required because the campus Post Office is one of those being closed by the Postal Service.

In addition to the student mail center that is located in the LSU Student Union,   LSU has its own university mail service for non-personal mail and parcel services.  The LSU mail service also provides printing services for university clients.

The Postal Service's Post Office at LSU is one of a number of campus based Post Offices that the Postal Service is interested in closing.    Campus based post offices are not found on all campuses as many colleges and universities have their own internal mail services that provide mailboxes for students and may operate contract stations for the Postal Service as well.  For example, Macalester College, St. Thomas University, and the College of St. Catherines all operate contract stations for their college community that are also open to the public and can be found by searching for Post Offices in zip codes 55105. These campuses also have mailboxes for students that are run as a separate operation as per Postal Service contract station rules.   In many instances, mail services for students and the universities also handle copying and printing needs of campus based customers.

The following excerpts from the story 

The move will cost students more and require students living on campus to purchase mailboxes, but also should solve long-term mailing services problems on campus, said Jason Tolliver, LSU director of auxiliary services. ... The end result should be better quality in a consolidated, one-stop shop for mailing, copying, binding and graphic design services on the bottom floor of the LSU Student Union, he said.

“It’s a challenge for us, because we’re changing the way we do business,” Tolliver said. “But the service has not been what it should be. You can stand over there 20 to 30 minutes waiting in lines because of understaffing.

Although Ricoh may not be a household name, Tolliver said, the company offered to invest more in LSU and provide additional services like luggage carts, wireless “hotspot” printers and online “doorbell” notifications to let people know when they have new mail.

Ricoh will pay LSU about $133,000 in annual rent, he said, and invest $350,000 in renovations for the space, in addition to more than $200,000 in new equipment and software.

The switch to Ricoh USA illustrates the impact of change and suggests that it may have been possible for the Postal Service to continue to operate campus based Post Offices if they were able to
  1. charge market rates for campus mailboxes; 
  2. integrate delivery information with e-mail and text messages to provide box holders with information about when new mail arrives; 
  3. legally provide on-site printing services that print documents that are then delivered to a post office box as a service to students on campus; 
  4. find the cash necessary to invest in equipment and information systems necessary to provide both print services and the links between delivery and e-mail and/or text messages; and 
  5. expand into other mail-related back office activities that it currently cannot provide under Postal Accountability and Enhancement Act restrictions that a private sector firms like Ricoh USA, the UPS Store, and Pitney Bowes can provide.

Opportunities for Policymakers to Learn Before They At

Tomorrow, the President's budget expected to recommend changes in law that will jump start a multi-year process of revamping postal law and the Postal Service's business model.    Just in time, the Center for Research in Regulated Industries of Rutgers University has announced three conferences that should help stakeholders and policymakers evaluate the options that will be on the table.   The titles of three conferences below are linked to web pages on the Postal Journal that provide more details and information on how to register.

April 1, 2011 Washington DC - Advanced Workshop on Postal Policy: What is a Viable Postal System?

The day long program presents ten views as to the future of the Postal Service.  These views come from the Postal Service, the GAO, the Postal Service-Office of Inspector General, customers, consultants to the industry and a representative of Canada Post.

May 18-20, 2011, Skytop, PA, USA - 30th Eastern Conference in Regulatory Economics
The three-day program presents thirteen sessions that include 39 presentations on a wide range of topics on operating, marketing, and regulatory issues affecting both the Postal Service and other industries subject to  economic regulation.   This conference presents a unique forum for those who are interested in postal policy to discuss current postal policy issues in an informal manner.  The conference also allows those whose primary interest is postal policy to learn about new theories in economic regulation that might provide ideas as to the appropriate regulatory model for whatever business model is created for the Postal Service in the next few years.

June 1-4, 2011, St. Helier, Jersey – 19th Conference on Postal Economics
The four day program presents the latest in economic, policy and legal research relating to issues affecting the postal market worldwide.


Monday, February 7, 2011

How Much Longer for Transaction Mail

The Postal Journal has just posted three recent studies looking at the changing ways that consumers and businesses receive and pay bills.    The articles as a group suggest that consumers are increasingly looking toward web and mobile methods of handling bills and web, mobile and in-person methods of paying bills.

The studies, listed in order of their publication and their relavent conclusions are as follows:

Consumers Shift to ePayment to Get Control Over Finances 

 With the release of the 2010 Billing Household Survey by Fiserv Corporation provides a significant update on how the availability of multiple web and mobile based payment and bill presentment delivery modes has changed consumer use of traditional and new modalities. The survey, conducted by The Marketing Workshop, showed that consumers that have online access are gravitating toward payment options that provide them more control and allow them to hold onto their money as long as possible. In particular, the number of online consumers that use checks declined to 54.5 million households, below the 65.0 million households that use either biller direct or financial institution bill pay services.

Federal Reserve Study Shows More Than Three-Quarters of Noncash Payments Are Now Electronic

The Federal Reserve’s 2010 study of noncash payments revealed that in 2009 more than three-quarters of all U.S. noncash payments were made electronically, a 9.3 percent annual increase since the Federal Reserve’s last study in 2007. This growth and other statistics in the study emphasize consumers’ increasing adoption of electronic alternatives for payments in the United States. The 2007 study revealed that in 2006 roughly two-thirds of the payments were made electronically.

e-Bills Will Surpass Paper Bills By 2016

This study conducted for NACHA, the national electronic payment association by Blueflame consulting showed that 26.6% of all bills are now sent electronically with the largest percentage among customers of educational institutions and wireless telecommunications companies.  The study also showed that on average firms surveyed had e-bill volumes grow by 32.3% on average over the past two years.   The study indicated that at this point consumers are more amenable to e-billing than businesses.

 Implications of These Studies

These studies confirm the Boston Consulting Group's (BCG's) conclusion that the primary purpose of mail in 2020 will be the delivery of advertising as the volume of bills and payments in the mail decline.   These three studies suggest that the Postal Service and others interested in the future of the Postal Market need to take a second look at the forecasts developed by BCG and presented publicly last spring in order to determine if the more recent data suggests a faster or slower decline in transaction mail than previously believed.

From a policy standpoint, these studies suggest that more information is needed about:
  • the proportion of the population that are only using mail continues to handle bills and payments continue to shrink and better information is needed about the characteristics of U.S. households that continue to use mail as their primary means of handling transactions; 
  • how the shift of the mix of mail senders affects demand for collection and delivery services and the accuracy of the Postal Service's understanding of the business needs of its advertising mailer and parcel shipper customers;
  • the appropriate role of the Federal government regarding the maintenance of an infrastructure to deliver advertising containing media (both direct mail and periodicals) when the volume of printed communications handling transactions or information becomes significantly smaller; and
  • the relevance of the Postal Service's money order product when unbanked individuals are increasingly using walk-up electronic payment services rather than mailing postal or private sector issued money orders.