Rider, Potter Praise USPS Cost Cutting

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Though the U.S. Postal Service finished its 2001 fiscal year with a $1.7 billion loss, Robert F. Rider, chairman of the postal service's Board of Governors, and postmaster general John E. Potter said yesterday that the agency has cut costs significantly for the 2002 fiscal year.


Speaking at a Board of Governors meeting in Phoenix, Rider said that the USPS has cut 33 million work hours from the beginning of the fiscal year in September through Jan. 25 compared with the same period last year.


The number of career employees has been reduced by 5,600 in the first five months of the fiscal year, Rider said, and overtime expenses have been cut 25 percent. The board is pleased with USPS management's focus on finances, he said, and the board will continue to monitor the financial health of the postal service.


"We have asked postal management to continue to search and seek out ways for additional cost savings," he said. "One area of specific concern to the governors is the use of outside consultants and contractors. We look forward to hearing management's report on this next month."


Rider also said the governors were pleased by the Postal Rate Commission's decision last month to extend the agency's "ride along" experiment through June 30. The PRC's action means that a piece of Standard Mail can continue to ride along with a host periodical.


"Mailers save money by not having to independently prepare and enter two separate mailings," he said. "The postal service benefits by saving time and effort in processing and delivery. By agreeing that the ride-along experiment can continue through the current rate case, the commission has supported our creation of an environment that makes it easier for mailers to take advantage of our services."


Potter updated meeting attendees on the USPS' Automated Flat Sorting Machine 100 program and its Breakthrough Productivity Initiatives.


The USPS deployed the first of the machines in April 2000 in Harrisburg, PA, he said, and now the agency has 428 machines operating in 184 locations.


"One of our long-term goals is to move flats processing -- traditionally one of our most labor intensive -- from a manual-mechanized environment to one that is automated," he said. "These machines are doing that and helping us capture significant savings."


Nationwide, Potter said, flat productivity in plants has improved by more than 200 pieces per hour from last year.


"This means we are using about 700,000 fewer work hours per accounting period -- a cost savings of $15 million per accounting period," he said. "The machines are doing what we expected them to do, and with the increasing popularity of flats mail among mailing groups in recent years, that's good news for our customers."


As for the initiatives program, Potter said the agency has saved $2.8 billion since the program began in 2000.


"Our goal was to reduce costs by $4 [billion] to $5 billion over five years," he said. "I believe we will exceed that target."


Potter said the USPS also continues to scrub headquarters programs, looking for added savings, and that the postal service's functional headquarters and field restructuring is on target for a May-June completion.


Potter also announced that chief postal inspector Kenneth C. Weaver planned to retire next month after more than 30 years with the Postal Inspection Service and the postal service. Weaver, who has spent the past several months at the forefront of the anthrax crisis, will retire March 2.


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