Potter: None Immune to Postal Reform

WASHINGTON — Postmaster general John E. Potter warned mailers yesterday that the reforms recommended by the presidential postal commission would affect everyone in the mail community, including them.

Potter, speaking at the Mailers Technical Advisory Committee at the U.S. Postal Service headquarters here, said it would be “premature” for any sector of the community to assume that it was immune to the impact of the commission’s proposed reforms. Postal labor leaders have complained that the recommended changes lay the burden of reform entirely on USPS workers at the benefit of the commercial mail community.

“It’s important that, as we proceed, we not begin by assuming that the issues will be dealt with by others,” he said. “We can’t assume it will be others who will bear the burden.”

Postal officials still are examining the 208-page report released by the commission last week, Potter said. However, he said he was pleased that many of the recommendations matched the postal service’s existing transformation plan.

“These are important times for the postal service,” he said, noting that the MTAC meeting was standing room only, unusual for an August meeting of the group.

During the meeting, officials pointed out signs that the USPS was moving toward fiscal health. Civil service retirement reform legislation passed by Congress earlier this year is starting to pay off, they said.

The legislation, which corrected and reduced the postal service’s annual payments into the federal civil servant retirement system, has enabled the USPS to pay down its debt, said Richard Strasser, the USPS’ chief financial officer and executive vice president. The postal service has made a $3.5 billion payment this fiscal year, with another $2.6 billion to follow next year.

The USPS will convert its long-term debt into short-term debt, paying the cost of the transaction over the next 18 months, Strasser said. The refinancing should reduce the postal service’s annual interest payments from $330 million to $50 million, resulting in a significant benefit to postal customers, he said.

However, Strasser said the ongoing rebound of the economy has not been as robust as expected, resulting in lower than predicted mail volumes and revenues for this fiscal year. Other business discussed at the MTAC meeting included:

* The postal service is taking another look at the AFSM 1000 automated flats sorting machine, which postal officials said isn’t pulling its weight. The machine is “somewhat” more productive than manually sorting flats mail, but its efficiency is questionable when the cost of maintaining the machine is factored in, said John Rapp, senior vice president of operations at the postal service. Potter has directed Rapp to conduct a review of the AFSM 1000. The review may reveal that the USPS shouldn’t have invested in the machine or that it shouldn’t investment any more capital in the machine, Rapp said.

* The automated package processing system, produced by Lockheed Martin, has tested successfully at the postal service’s Twin Cities Metro hub in Minneapolis, said Tom Day, vice president of engineering at the USPS. The new technology will replace the small parcel and bundle sorter, which was developed in the early 1980s. APPS provides improved throughput, can handle a broader range of products than the old system and can process up to 9,500 packages per hour, Day said. The USPS purchased 74 of the systems last September for use in postal processing plants nationwide. It expects to bring the APPS online early next year.

* The civil service retirement legislation and the postal service’s promise not to raise rates before 2006 are affecting product redesign efforts, said Don O’Hara, the USPS’ manager of product redesign. Redesign efforts are now focused on finding ways to reduce costs before 2006 to reduce future rates. However, some product redesign efforts will have to be put on hold until the next rate case. The USPS currently is pursuing return service for Parcel Post and Bound Printed Matter, machinable containers for small parcels and co-palletization of BPM catalogs with standard mail and periodicals flats.

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