Mailers must back postal cuts

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Hamilton Davison
Hamilton Davison

The fur is flying and everyone is yammering now that the US Postal Service is taking steps to rationalize its network. In August, USPS served public notice of its intent to close underperforming retail 
locations. More recently, it announced a much more aggressive plan to restructure its entire processing network, getting down to as few as 200 plants from the 500 that exist today. 

Postmaster General and CEO Patrick Donahoe wants to get nearly $20 billion out of the cost structure. As he noted, "at that point, the Postal Service won't have any underwater products." Noteworthy highlights from his plans include:

• Consolidation of postal-processing machines to run for more hours each day

• Dramatic trimming of real estate and facility maintenance costs

• Layoffs of 120,000 (28%) of today's approximately 550,000 postal employees

• Stripping unnecessary costs everywhere from the system.

All of this comes on an aggressive timetable that captures savings by 2014.

Since Congress has not stepped in to address USPS finances, Donahoe and his team are taking an aggressive restructuring approach to right the ship rather than stand by and watch the Postal Service become insolvent.

Questions remain, and members of the mailing industry have raised concerns. No doubt, the transition issues are huge and likely to involve some pain. However, mailers cannot lose sight of the forest for some large trees that must be cleared out of the way. 

If the USPS brings all its supply chain partners into the decision-making, mailers have an opportunity to benefit from a more efficient network, while minimizing transition disruptions. These changes will also force a redo of service standards, resulting in longer delivery times, but this too is good news. Today's standards are not routinely achieved. Setting realistic expectations with accurate service standards, then achieving these with precision, is ultimately what mailers want. 

Aggressive action, well-conceived plans with input across the supply chain, relentless attention to customer service, and cost control are what will make the Postal Service competitive in the future. The alternative is disaster for the remaining postal employees and retirees, as well as for the 8 million American jobs dependent on a strong and efficient national post. 

The old trajectory is unsustainable. Now is the time for all mailing interests, particularly catalog mailers and their suppliers, to let Congress know they favor USPS cost reductions. Without this, no matter how reliable or unreliable your delivery service is today or how much you bemoan the high cost of postage, it will be a whole lot worse tomorrow.

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