Today, Xerox announced the purchase of Affiliated Computer Services (ACS) in a move that Xerox investors clearly found troubling causing the price to drop by 14%. This move should trouble postal stakeholders as well as it sends a strong message regarding what "the document company" thinks about the future of printed documents.
Xerox's business currently is focused on three business segments: 1) equipment for producing / scanning documents in an office; 2) equipment for producing documents in production settings; and 3) document management outsourcing. With the merger, Xerox's reliance on the future of paper documents drops from 100% to 67%. (See Xerox's presentation on the merger.) Steve Gerbel, founder and president of Chicago Capital Management called the merger a "transformative fix." Xerox's presentation to analysts, clearly expects that its future growth will come from the merged company's non-document based business and over time "the document company" will not be as dependent on paper documents.
Why does this matter to the Post? Now, the leading firm designing machines, processes, and software to handle paper documents will now help their customers move the document based, mail-delivered processes to electronic, Internet-delivered processes. Xerox's decision to seek a way to continue to serve existing customers as they abandon documents to the Internet suggests that senior management no longer sees growth prospects in print. The thinking behind Xerox's merger decision should provides postal stakeholders worldwide a wake-up call about the long term prospects of hard-copy delivery.
While some of the 14% decline in Xerox stock, reflects the dilution of current shareholder's holdings, I would argue that the size of the decline also reflects a major revaluation of the value of Xerox's document based business. If the financial market now thinks Xerox's document based business is worth less today than it was yesterday, then the financial market could soon realize that it needs to rethink the valuation of the printers, paper manufacturers, mailing equipment suppliers, and the document-delivery portion of the publicly traded Posts as well.
Monday, September 28, 2009
Thursday, September 24, 2009
The End of the Monopoly
The postal monopoly has ceased to exist. This is a bold statement given that no law has changed. However, the economic downturn has forced every sender of mail looks at their alternatives and many have found competitive alternatives from electronic and physical delivery options that are faster and more cost effective than the mail.
The shift in demand means that mail is now primarily a means to distribute advertising. Nearly all advertising has alternative modes of delivery and mail is used only if it provides a higher financial return than other advertising modes. But now two postal competitors, newspapers and United Parcel Service have found ways to chip away at the delivery monopoly that illustrates how little power the legal monopoly actually has.
The delivery of saturation advertising has always faced competition from local newspapers. While newspapers may find that their circulation, display and classified advertising advertising is declining, they have one bright spot in free standing inserts. Spending for free standing inserts grew by 4.6% in the first half of this year. At the same time spending on postage for delivery of saturation mail advertising (Enhanced Carrier Route) declined by 10%. Valassis and its competitors will prepare an advertiser's copy for delivery by mail or free standing insert depending on which mode the advertiser finds most cost effective. The shift in market share from mail to free standing inserts suggests that the Postal Service is losing market share and iits delivery prices are not competitive to newspaper delivery of the same copy. Further losses in this market may come as newspapers expand their delivery of "mini-papers" composed of 4 pages of newsprint surrounding coupons and other free standing inserts, most likely at prices below what it would cost Valassis to pay the Postal Service to deliver.
The competition from newspaper focuses on part of the hard-copy advertising market that has always fallen outside of the monopoly. The newspapers will try to skirt the monopoly slightly by targeting the "mini-paper" to homes that do not receive a newspaper. In this way they deliver two different items to specific addresses without having to put an address on any piece. Subscribers get the newspaper. Non-subscribers get the mini-paper.
Another assault on the monopoly on addressed advertising is coming from United Parcel Service which has just found another way around that restriction. Yesterday, United Parcel Service announced Direct to Door, a new product that delivers small boxes of advertising, at a price below the cost of direct mail. UPS offers the low price because it only delivers to addresses where it also delivers a parcel.
UPS's new product is attracting some of the Postal Service's best customers and more importantly customers that mail to some of the highest income and highest mail volume zip codes in the country. UPS's initial customers include Men's Warehouse, Finish Line, Williams Sonoma' s Pottery Barn and West Elm divisions, Sephora, and Zappos, an on-line shoe company owned by Amazon. As these customers use the higher prices regular standard mail products to reach their potential customers, UPS is competing against regular standard mail rates and not the lower enhanced carrier route rates.
UPS and advertisers are targeting recipients that buy over the Internet and more importantly likely buy higher priced products over the Internet. In this way, UPS goes after the key advantage that the Postal Service had over all other advertising media, the ability to target specific customers. UPS's effort along with targeted e-mail, Internet search and display advertising erode the value of the addressed advertising monopoly to the point where the value may be quite minimal.
So what services are left within an effective monopoly?
Most transaction mail no long is without competition. Few new bank, insurance, credit card, gym club, cell phone, or brokerage accounts have mail as the default option for paying or receiving bills and statements. Only health care bills, statements, and payments remain as nearly exclusive users of the mail and electronic records could eventually allow the health care industry to follow financial services and telecommunications into a paperless environment.
Mail delivered periodicals compete every day with in-store and Internet delivery of content. A subscriber has to actively want the hard copy now to receive the periodical. Many business and industry publications have illuminated hard-copy editions completely. For a periodical to continue using the mail, the mail must compete with alternative modes and increasingly have a customer willing to pay more to receive hard copy.
Non-profit mailers showed these past two years that even if their low-priced mail may not be price sensitive, it is highly sensitive to the economy. With tight budgets driven by lower levels of contributions, non-profits are looking at mail as a cost center and newsletters, solicitations, and other documents that used to be sent by mail are now sent electronically. For these organizations, mail at even non-profit rates do not provide sufficient value to justify the production and postage expense especially when e-mail, search engine advertising, social media can deliver the same newsletter or generate the same net-revenue. The mail that they still send must compete with the value that alternative media provide.
This leaves two parts of the mail stream where the Postal Service provides service with minimal concerns about competition: 1) correspondence, and in particular announcements, greeting cards, invitations, and holiday cards; and 2) transactions for those not connected to the web. This is a very small part of the Postal Service's $60 billion in revenue. Having a monopoly to protect these customers seems hardly worthwhile.
The shift in demand means that mail is now primarily a means to distribute advertising. Nearly all advertising has alternative modes of delivery and mail is used only if it provides a higher financial return than other advertising modes. But now two postal competitors, newspapers and United Parcel Service have found ways to chip away at the delivery monopoly that illustrates how little power the legal monopoly actually has.
The delivery of saturation advertising has always faced competition from local newspapers. While newspapers may find that their circulation, display and classified advertising advertising is declining, they have one bright spot in free standing inserts. Spending for free standing inserts grew by 4.6% in the first half of this year. At the same time spending on postage for delivery of saturation mail advertising (Enhanced Carrier Route) declined by 10%. Valassis and its competitors will prepare an advertiser's copy for delivery by mail or free standing insert depending on which mode the advertiser finds most cost effective. The shift in market share from mail to free standing inserts suggests that the Postal Service is losing market share and iits delivery prices are not competitive to newspaper delivery of the same copy. Further losses in this market may come as newspapers expand their delivery of "mini-papers" composed of 4 pages of newsprint surrounding coupons and other free standing inserts, most likely at prices below what it would cost Valassis to pay the Postal Service to deliver.
The competition from newspaper focuses on part of the hard-copy advertising market that has always fallen outside of the monopoly. The newspapers will try to skirt the monopoly slightly by targeting the "mini-paper" to homes that do not receive a newspaper. In this way they deliver two different items to specific addresses without having to put an address on any piece. Subscribers get the newspaper. Non-subscribers get the mini-paper.
Another assault on the monopoly on addressed advertising is coming from United Parcel Service which has just found another way around that restriction. Yesterday, United Parcel Service announced Direct to Door, a new product that delivers small boxes of advertising, at a price below the cost of direct mail. UPS offers the low price because it only delivers to addresses where it also delivers a parcel.
UPS's new product is attracting some of the Postal Service's best customers and more importantly customers that mail to some of the highest income and highest mail volume zip codes in the country. UPS's initial customers include Men's Warehouse, Finish Line, Williams Sonoma' s Pottery Barn and West Elm divisions, Sephora, and Zappos, an on-line shoe company owned by Amazon. As these customers use the higher prices regular standard mail products to reach their potential customers, UPS is competing against regular standard mail rates and not the lower enhanced carrier route rates.
UPS and advertisers are targeting recipients that buy over the Internet and more importantly likely buy higher priced products over the Internet. In this way, UPS goes after the key advantage that the Postal Service had over all other advertising media, the ability to target specific customers. UPS's effort along with targeted e-mail, Internet search and display advertising erode the value of the addressed advertising monopoly to the point where the value may be quite minimal.
So what services are left within an effective monopoly?
Most transaction mail no long is without competition. Few new bank, insurance, credit card, gym club, cell phone, or brokerage accounts have mail as the default option for paying or receiving bills and statements. Only health care bills, statements, and payments remain as nearly exclusive users of the mail and electronic records could eventually allow the health care industry to follow financial services and telecommunications into a paperless environment.
Mail delivered periodicals compete every day with in-store and Internet delivery of content. A subscriber has to actively want the hard copy now to receive the periodical. Many business and industry publications have illuminated hard-copy editions completely. For a periodical to continue using the mail, the mail must compete with alternative modes and increasingly have a customer willing to pay more to receive hard copy.
Non-profit mailers showed these past two years that even if their low-priced mail may not be price sensitive, it is highly sensitive to the economy. With tight budgets driven by lower levels of contributions, non-profits are looking at mail as a cost center and newsletters, solicitations, and other documents that used to be sent by mail are now sent electronically. For these organizations, mail at even non-profit rates do not provide sufficient value to justify the production and postage expense especially when e-mail, search engine advertising, social media can deliver the same newsletter or generate the same net-revenue. The mail that they still send must compete with the value that alternative media provide.
This leaves two parts of the mail stream where the Postal Service provides service with minimal concerns about competition: 1) correspondence, and in particular announcements, greeting cards, invitations, and holiday cards; and 2) transactions for those not connected to the web. This is a very small part of the Postal Service's $60 billion in revenue. Having a monopoly to protect these customers seems hardly worthwhile.
Thursday, September 17, 2009
A Light at the end of the Tunnel
There is now growing evidence that we have passed the bottom in two of the Postal Service's key businesses, delivering advertising and parcels.
Advertising
The evidence on advertising comes from recent forecasts on advertising spending and management comments of Postal Service Competitors. Here are some highlights. TNS Media Intelligence Reports released its measure of advertising spending for through the first six months of 2009. In that report it shows that all media spending was down by 14.3% not much better than the 15.9% decline in Standard Mail revenue. Mail appears to be doing substantially better than radio, local television, newspapers, magazines, and about even with outdoor advertising. The problem that mail and many its hardest hit competitors faced in the last year was that its best customers were those that cut advertising the most, automotive, financial, retailers, other than department, appliance and home furnishing stores, and builders, building materials, home furnishing stores, and real estate. Real estate advertising spending was down 50% or more than 3.5 times the rate of decline of advertising in general.
Now that GM and Chrysler are out of bankruptcy, there advertising is rebounding and the Postal Service may see additional business from these and other auto makers as they try to serve some of the pent-up demand. Real growth depends on improved business in the housing and financial markets that really depend on both improved credit markets and how fast customers can save. However, these industries are no longer seeing declines in business so their advertising by mail and other modes have most likely hit bottom as well. So it is reasonable to expect that postal revenue handling advertising will no longer decline at double-digit levels.
Real growth in advertising will really depend on the consumer and specifically the consumer's return to the housing market. Few expect that will occur until late next year.
Parcels
Two of three publicly traded parcel carriers, FedEx and Dynamex, reported quarterly earnings today. Both companies indicated that they believe that their business has seen the end of the recession driven decline in business. However, neither sees significant growth in the near term.
Both companies survived the decline in business by significant efforts to control costs. For example, Dynamex cut 1/3 of its regional management and eliminated one of its two administrative centers. These significant cuts allows both companies to minimize losses and are now starting show the impact with greater than expected profits and higher stock prices.
The FedEx conference call also provides some hope for the Postal Service's business of delivering parcels that FedEx collects from package shippers. FedEx ships drops at least 2.5 million parcels every Monday with the Postal Service and this business was FedEx's fastest growing domestic business.
FedEx targets the business to parcels under 7 pounds destined to households. Heavier parcels are handled by its own FedEx Home service. The growth has come from three sources, 1) DHL business that FedEx captured, 2) moving customer's light weight parcels into this service and away from FedEx Home, and 3) taking volume away from the Postal Service, with the biggest customer mentioned by FedEx as shifting their business from the Postal Service being Amazon.com.com.
FedEx's expected increase in rates of 3.9% in January (5.9% increase in rates and a 2% decline in fuel surcharge) also suggests that the Postal Service will be able to raise its parcel rates by more than inflation and still offer a strong value proposition. In order to keep its un-regulated rates competitive and profitable, mailers should expect that the Postal Service could raise its under 7 pound parcels by at least 4% and still keep rates in line with competitors. The price cap requirement that parcel rates remain nearly flat on average and FedEx price increases will likely result in higher rate increases on lighter weight parcels and lower rate increases on heavier parcels. This will likely put Postal rates more in line with a weight related curve that the private sector uses. The FedEx increases may also force the Postal Service to raise short-distance rates and lower long-distance rates to put its rate schedule more in line with the schedules used by its competitors,
Advertising
The evidence on advertising comes from recent forecasts on advertising spending and management comments of Postal Service Competitors. Here are some highlights. TNS Media Intelligence Reports released its measure of advertising spending for through the first six months of 2009. In that report it shows that all media spending was down by 14.3% not much better than the 15.9% decline in Standard Mail revenue. Mail appears to be doing substantially better than radio, local television, newspapers, magazines, and about even with outdoor advertising. The problem that mail and many its hardest hit competitors faced in the last year was that its best customers were those that cut advertising the most, automotive, financial, retailers, other than department, appliance and home furnishing stores, and builders, building materials, home furnishing stores, and real estate. Real estate advertising spending was down 50% or more than 3.5 times the rate of decline of advertising in general.
Now that GM and Chrysler are out of bankruptcy, there advertising is rebounding and the Postal Service may see additional business from these and other auto makers as they try to serve some of the pent-up demand. Real growth depends on improved business in the housing and financial markets that really depend on both improved credit markets and how fast customers can save. However, these industries are no longer seeing declines in business so their advertising by mail and other modes have most likely hit bottom as well. So it is reasonable to expect that postal revenue handling advertising will no longer decline at double-digit levels.
Real growth in advertising will really depend on the consumer and specifically the consumer's return to the housing market. Few expect that will occur until late next year.
Parcels
Two of three publicly traded parcel carriers, FedEx and Dynamex, reported quarterly earnings today. Both companies indicated that they believe that their business has seen the end of the recession driven decline in business. However, neither sees significant growth in the near term.
Both companies survived the decline in business by significant efforts to control costs. For example, Dynamex cut 1/3 of its regional management and eliminated one of its two administrative centers. These significant cuts allows both companies to minimize losses and are now starting show the impact with greater than expected profits and higher stock prices.
The FedEx conference call also provides some hope for the Postal Service's business of delivering parcels that FedEx collects from package shippers. FedEx ships drops at least 2.5 million parcels every Monday with the Postal Service and this business was FedEx's fastest growing domestic business.
FedEx targets the business to parcels under 7 pounds destined to households. Heavier parcels are handled by its own FedEx Home service. The growth has come from three sources, 1) DHL business that FedEx captured, 2) moving customer's light weight parcels into this service and away from FedEx Home, and 3) taking volume away from the Postal Service, with the biggest customer mentioned by FedEx as shifting their business from the Postal Service being Amazon.com.com.
FedEx's expected increase in rates of 3.9% in January (5.9% increase in rates and a 2% decline in fuel surcharge) also suggests that the Postal Service will be able to raise its parcel rates by more than inflation and still offer a strong value proposition. In order to keep its un-regulated rates competitive and profitable, mailers should expect that the Postal Service could raise its under 7 pound parcels by at least 4% and still keep rates in line with competitors. The price cap requirement that parcel rates remain nearly flat on average and FedEx price increases will likely result in higher rate increases on lighter weight parcels and lower rate increases on heavier parcels. This will likely put Postal rates more in line with a weight related curve that the private sector uses. The FedEx increases may also force the Postal Service to raise short-distance rates and lower long-distance rates to put its rate schedule more in line with the schedules used by its competitors,
Tuesday, September 8, 2009
Moving to Cleveland
Recent news stories have highlighted some of the absurd results that current labor contract provisions and civil service rules create as the Postal Service deals with workforce management today.
Combined the articles raise two important issues as it relates to workforce planning.
Layoffs within the Postal Service must occur with the guidelines of civil service. This allows employees to bump employees with lower seniority, including seniority related to preferred classes of employees. The employees that are laid off are eligible for severance pay and unemployment benefits that could total far more than the early retirement incentives that the Postal Service is now offering. Finally, the civil service layoff of RIF process is time consuming and fraught with procedural land mines that can delay the reduction in staff or add costs to the process.
The early-retirement incentives that the Postal Service is now offering is a lower cost and more quickly implemented solution but not without its own challenges. The Cleveland example illustrates that the Postal Service will have challenges in some locations where potential retirements could create staffing challenges. The Postal Service has already noted the $450 million in cost for employee incentives. Additional costs will come from training new and existing employees and possible paid transfers to facilities that will be short staff after the retirements.
The Postal Service is not alone in using early retirement incentives as a preferred option for reducing the workforce, especially when the reduction has to be substantial. Similar incentives were offered to employees of GM, Chrysler and FedEx.
Why doesn't the Postal Service have more part-time jobs? One of the key highlights of the Federal Times article is a description of what is happening in Key West, FL. "Standby time, for now, is largely confined to mail processing facilities — though it is beginning to spread to retail post offices. The three post offices in Key West, Fla., employ 27 people. But under a schedule recently drafted by postal supervisors, 15 of them would spend at least part of their week on standby time." Here the issue is the labor agreement that limits the number of part-time clerk jobs. As noted in a previous post, the APWU contract limits part-time employees in a district to 2.5% of employees. While Key West may conduct some mail processing, most of the activity will involve window service with significant peak periods of customer demand. Most retail employers would use part-timers with regular schedules to deal with peak demand issues but the APWU contract does not allow for hiring a significant number of part-time retail clerks. Even the provisions for part-time/flexible did not work as the mail business needs part-time employees on regular schedules.
Layoff procedures and part-time jobs will likely be key issues negotiated in the next agreement with the APWU. Pressure from current employees give APWU leadership little incentive to back away from provisions in existing agreements on these subjects. Acceptance of changes by union leadership only if they are either imposed as part of an arbitrated contract agreement or if Congress demands that the parties negotiate changes as one of the conditions for relaxing retirement payment schedules and raising loan limits. The first possibility leaves leadership with clean hands. The second one will give them the opportunity of negotiating a seat at the table in deciding the future of the Postal Service and postal service jobs.
- The East Hampton Star reported the experience of two postal employees that were transferred from Manhattan to the far reaches of Long Island. The story was picked up by the New York Times and New York Post, which made it a national story. The commute that these employees face is not uncommon for businesses that have union agreements that guarantee jobs during a period of declining demand. Employees with guaranteed jobs at the Penn Central could be transferred from Delaware to Ohio if the jobs close to home disappeared. Similarly airline employees regularly are transferred from base to base when shrinking demand bumps an employee from a base closer to home.
- The Federal Times provided a detailed account of the practice placing employees in "standby rooms" until they can be assigned. The story notes that 11,000 can be placed in this position at any time or about 4.5% of the clerks and mailhandlers the Postal Service employees. The article illustrates the absurdity of union rules that prevent the Postal Service from using this standby time to train employees to be more productive at what they now do, or for other jobs that may become available in the future.
- The Akron Beacon Journal illustrated the challenge that the early retirement incentives will have for workforce planning in northern Ohio. Cleveland has 1,100 employees eligible for retirement incentives out of 1,700 working in the Cleveland processing plant. That's right. Sixty-five percent of the workers in Cleveland are eligible to retire. Another 550 are eligible in Akron and Canton. Similar figures likely exist throughout the Northeast and Midwest creating the possibility that the Postal Service could find itself in October needing employees in this region to fill vacancies created by early retirements.
Combined the articles raise two important issues as it relates to workforce planning.
- Why aren't lay-offs used to reduce the workforce?
- Why doesn't the Postal Service have more part-time jobs?
Layoffs within the Postal Service must occur with the guidelines of civil service. This allows employees to bump employees with lower seniority, including seniority related to preferred classes of employees. The employees that are laid off are eligible for severance pay and unemployment benefits that could total far more than the early retirement incentives that the Postal Service is now offering. Finally, the civil service layoff of RIF process is time consuming and fraught with procedural land mines that can delay the reduction in staff or add costs to the process.
The early-retirement incentives that the Postal Service is now offering is a lower cost and more quickly implemented solution but not without its own challenges. The Cleveland example illustrates that the Postal Service will have challenges in some locations where potential retirements could create staffing challenges. The Postal Service has already noted the $450 million in cost for employee incentives. Additional costs will come from training new and existing employees and possible paid transfers to facilities that will be short staff after the retirements.
The Postal Service is not alone in using early retirement incentives as a preferred option for reducing the workforce, especially when the reduction has to be substantial. Similar incentives were offered to employees of GM, Chrysler and FedEx.
Why doesn't the Postal Service have more part-time jobs? One of the key highlights of the Federal Times article is a description of what is happening in Key West, FL. "Standby time, for now, is largely confined to mail processing facilities — though it is beginning to spread to retail post offices. The three post offices in Key West, Fla., employ 27 people. But under a schedule recently drafted by postal supervisors, 15 of them would spend at least part of their week on standby time." Here the issue is the labor agreement that limits the number of part-time clerk jobs. As noted in a previous post, the APWU contract limits part-time employees in a district to 2.5% of employees. While Key West may conduct some mail processing, most of the activity will involve window service with significant peak periods of customer demand. Most retail employers would use part-timers with regular schedules to deal with peak demand issues but the APWU contract does not allow for hiring a significant number of part-time retail clerks. Even the provisions for part-time/flexible did not work as the mail business needs part-time employees on regular schedules.
Layoff procedures and part-time jobs will likely be key issues negotiated in the next agreement with the APWU. Pressure from current employees give APWU leadership little incentive to back away from provisions in existing agreements on these subjects. Acceptance of changes by union leadership only if they are either imposed as part of an arbitrated contract agreement or if Congress demands that the parties negotiate changes as one of the conditions for relaxing retirement payment schedules and raising loan limits. The first possibility leaves leadership with clean hands. The second one will give them the opportunity of negotiating a seat at the table in deciding the future of the Postal Service and postal service jobs.
Friday, September 4, 2009
The Problem with Congress
The primary debate that over the future of the Postal Service will be whether it is time to seriously consider privatization. Independent of the value of a mail delivery as a governmental or private sector service, the private sector option will not be viable as long as members of Congress from both parties see personal political value in interfering with Postal Service operations, prices, or service.
The value of interfering with postal management decisions come from the positive news stories in local newspapers and on TV. No member of Congress can pass up good press. Any interview or press statement supporting a local plant and its workers or retention of a local post office is good press. Good press relating to constituent service raises the Congressperson's visibility and positive ratings and may even endear him or her to voters of opposing political viewpoints.
The headlines relating to one postal plant illustrate the point.
Upton says postal facilities are here to stay
Congressman Fred Upton, R-St. Joseph, says a U.S. Postal Service processing plant in Oshtemo Township and downtown Kalamazoo's Arcadia post office will not be closed.
U.S. Rep. Fred Upton will tour the U.S. Postal Service processing plant in Oshtemo Township today in an effort to stop officials from studying the consolidation of the plant to Grand Rapids.
Congressman Fred Upton fights to keep Kalamazoo postal plant open
"Local postal facilities serve as a cornerstone to communities large and small, and provide hundreds of good-paying, stable jobs," said Upton, R-St. Joseph, in press release. "We owe it to our postmen and women who have faithfully served our community, many for their entire careers, to keep them employed within their own community."
Upton joins fight for postal jobs
Congressman Fred Upton has joined the fight to save postal jobs in Kalamazoo County.
Upton Sends Angry Snail Mail to Postamaster
OSHTEMO -- Congressman Fred Upton has sent an angry letter to the Postmaster General complaining about an unauthorized study that suggested that the Kalamazoo Postal Distribution center in Oshtemo should be moved to Grand Rapids.
Upton tries to stop postal-plant closing
KALAMAZOO -- U.S. Rep. Fred Upton will tour the U.S. Postal Service processing plant in Oshtemo Township today in an effort to stop officials from studying the consolidation of the plant to Grand Rapids.
The value of interfering with postal management decisions come from the positive news stories in local newspapers and on TV. No member of Congress can pass up good press. Any interview or press statement supporting a local plant and its workers or retention of a local post office is good press. Good press relating to constituent service raises the Congressperson's visibility and positive ratings and may even endear him or her to voters of opposing political viewpoints.
The headlines relating to one postal plant illustrate the point.
Upton says postal facilities are here to stay
Congressman Fred Upton, R-St. Joseph, says a U.S. Postal Service processing plant in Oshtemo Township and downtown Kalamazoo's Arcadia post office will not be closed.
U.S. Rep. Fred Upton will tour the U.S. Postal Service processing plant in Oshtemo Township today in an effort to stop officials from studying the consolidation of the plant to Grand Rapids.
Congressman Fred Upton fights to keep Kalamazoo postal plant open
"Local postal facilities serve as a cornerstone to communities large and small, and provide hundreds of good-paying, stable jobs," said Upton, R-St. Joseph, in press release. "We owe it to our postmen and women who have faithfully served our community, many for their entire careers, to keep them employed within their own community."
Upton joins fight for postal jobs
Congressman Fred Upton has joined the fight to save postal jobs in Kalamazoo County.
Upton Sends Angry Snail Mail to Postamaster
OSHTEMO -- Congressman Fred Upton has sent an angry letter to the Postmaster General complaining about an unauthorized study that suggested that the Kalamazoo Postal Distribution center in Oshtemo should be moved to Grand Rapids.
Upton tries to stop postal-plant closing
KALAMAZOO -- U.S. Rep. Fred Upton will tour the U.S. Postal Service processing plant in Oshtemo Township today in an effort to stop officials from studying the consolidation of the plant to Grand Rapids.
``Local postal facilities serve as a cornerstone to communities large and small, and provide hundreds of good-paying, stable jobs,'' said Upton, R-St. Joseph, in press release. ``We owe it to our postmen and women who have faithfully served our community, many for their entire careers, to keep them employed within their own community.''
Rep. Upton discusses mail handling
Upon learning of an unauthorized study recommending the consolidation of the Kalamazoo Automated Mail Processing facility into Grand Rapids, Congressman Fred Upton (R-St. Joseph) immediately voiced his concerns directly to the Postmaster General, John Potter. Upton is concerned with the intent of the non-sanctioned study and its recommendations that will have widespread implications upon postal efficiency in Kalamazoo as well as impact many postal families within the community. Upton has heard from dozens of local postal workers who may be faced with the decision to either move their families or commute over a hundred miles a day just to keep their current job. Upton is also concerned with rumors swirling over the closings of regional post offices including the Arcadia Creek Station post office in downtown Kalamazoo.
Congressman Upton vows to fight to keep postal jobs in Oshtemo
OSHTEMO, Mich. (NEWSCHANNEL 3) – The prospect of hundreds of jobs being lost in his district didn't sit well with Congressman Fred Upton.
That was the prospect facing Upton and many others when they learned that a postal processing center in Oshtemo could be shut down and then consolidated to another facility in Grand Rapids.
Rep. Upton said he'd fight for the jobs, but his fight has led him to make some pretty dramatic declarations.
Thursday, September 3, 2009
Managing the Workforce
This blog's previous post, "Management Approaches to Restructuring,' generated substantial number of comments regarding my use of the word "layoff" to describe Canada Post's planned 15% reduction in positions in Winnipeg. The original memo used the word "cut" to describe Canada Post's planned reduction in full time position and that word follows CUPW's labor agreement that guarantees jobs to full time employees.
A subsequent investigation into the labor agreements and data available from CUPW and the Postal Service provide some insight as to how Canada Post will achieve the reduction without layoffs.
Unionization and Labor Negotiation
Employees that work in processing plants and retail post office are unionized in Canada and the United States. All of these employees at Canada Post are represented by the Canadian Union of Postal Workers (CUPW). At the United States Postal Service, two unions represent workers performing similar jobs, the American Postal Workers Union (APWU) and the National Mailhandlers Union (NMHU).
Labor law in Canada allows postal employees to strike and CUPW employees have struck on numerous occasions prior to reaching contract agreements with Canada Post. Postal labor law in the U.S. does not have the right to strike and agreements are signed either following negotiation or the decision of an arbitrator.
Contact Provision and Management Flexibility
The following table provides a brief summary in contract provisions as they relate to the control over workforce size and composition. (Readers with greater knowledge of all three agreements are encouraged to make comments as to how the table ca be improved.) While the description below is limited, management at both Canada Post and the Postal Services both have restrictions on their control over hiring and firing employees. There is one important difference that is not included in the labor agreements. Canada Post employees do not have civil service protections that Postal service employees do.
| | Postal Service – APWU & NMHU Agreements | Canada Post – CUPW Agreement |
| Guaranteed Jobs | Regular full and part time employees guaranteed job after 6 years | Regular full and part time employees guaranteed job after 5 years |
| Transfers | Involuntary transfers allowed within 100 miles of origin facility; longer transfers possible with compensation | Involuntary transfers allowed within 25 miles of origin facility |
| Full Time / Part Time / Casual/Transitional Employees ratio | APWU: Part time employees limited to 2.5% of employees within a district; casual employees limited to 6% of employees with a district; different limits apply to drivers | Full time regular employee workhours must exceed 80% of total workhours after accounting for absences. |
| | Canada Post | USPS |
| Straight Time Regular | 76.9% | 80.2% |
| Part-time Regular | 16.5% | 12.4% |
| Casual/Transitional/Temporary Regular | 6.7% | 7.4% |
| Total Regular Hours | 100.0% | 100.0% |
The overall difference gives Canada Post slightly more flexibility in staffing its processing plants than the Postal Service. With a higher proportion of part-time employees, Canada Post may be able to deal with the changing nature of work with the decline of single-piece mail.
The difference in the mix of employees is most important in trying to cut staff without layoffs. Canada Post's full time employees tend to be both older and have many years with the corporation. Part-time workers are younger and have a significantly higher normal turnover rate than full time employees. Temporary employees have no employment guarantees.
Canada Post's could reduce its workhours by reducing temporary employees and allowing the turnover in part-time employees to provide work for full-time employees until normal attrition patterns within the Winnipeg plant and postal locations within 25 miles open up enough positions to bring the full time complement down 15%. Clearly this will take a couple of years but it is doable if the full time attrition rate is 4-5%. Canada Post's plans really depend on employees finding better opportunities elsewhere.
The employment guarantee and part-time maximum provisions of labor contracts of Canada Post and the United States Postal Service were both signed before the decline in single-piece mail changed the nature of managing workhours in mail processing plants. In all likelihood, reworking these long-standing provisions will come up in future labor negotiations as Canada Post and the United States Postal Service adjust its labor contracts to new market realities. It will be interesting to see how the differences in the negotiating processes in Canada and the United States result in changes in these provisions.
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