The US Postal Service is bringing forward plans to close dozens of mail processing plants that had been scheduled for consolidation in 2014.
USPS alerted unions on Tuesday to its intention to close the plants in 2013, and confirmed to Post&Parcel today that it plans to accelerate consolidation of about 55 Area Mail Processing (AMP) sites.
Officials said the cash-strapped Postal Service had found ways to accelerate its network consolidation plan while maintaining the current service standards for its mail processing activities.
Unions were told the accelerated closure plan was needed because of the state of the economy and ongoing diversion of mail volumes to Internet communications, which has led to “historically large deficits” in the USPS budget.
USPS spokesperson Sue Brennan told Post&Parcel this morning that when the network consolidation plan was reviewed by regulators last year, USPS made it clear that it might need to move some of its plant consolidations forward.
“The Postal Service’s dire financial condition requires us to accelerate the consolidation of approximately 55 AMP sites from 2014 to 2013,” said Brennan.
“As First Class Mail declines, we must continue to improve operational efficiencies and reduce costs by making better use of space, staffing, equipment and transportation in processing the nation’s mail.”
The USPS spokesperson did not comment on the impact that the accelerated consolidation would have on mail service standards. But, she said the consolidations may result in staff being reassigned, under the conditions of USPS regulations and policies as well as union collective bargaining agreements.
The USPS Board of Governors issued orders back in January for the Postal Service to speed up its cost-cutting efforts after last year’s failure by the US Congress to pass postal reforms to help turn around multi-billion dollar annual losses.
The American Postal Workers Union, which represents more than 220,000 USPS workers and retirees, said yesterday that it was “outraged” by the USPS plans.
The union, which stated that USPS has now brought forward plans for 71 mail processing plants to be closed, claimed the accelerated closure plan would “drastically” curtail local mail sorting and “virtually eliminate overnight delivery”.
The union’s president, Cliff Guffey, warned that the USPS action would “permanently damage our treasured institution”.
“These closures could have been avoided entirely,” Guffey said. “They are a casualty of congressional inaction. Congress must act now to enact meaningful postal reform – reform that restores the Postal Service to financial stability without destroying service or harming postal workers.
“And Congress must act now to prevent the Postal Service from implementing these devastating cuts in service.”
The USPS network consolidation reflects the fact that US mail volume fell by around 42% in the first decade of the Millennium, and more than 25% since 2006, resulting in “excess” processing capacity in the system.
USPS believes it can cut its annual operating costs by $3bn a year by cutting its network of processing facilities down from 461 at the start of last year. It closed 48 plants last summer, and this year is in the process of closing more than 160.
USPS recorded a $16bn loss in the 12 months up to September 2012, although $11bn of that related to payments it had refused to make to the federal government that year.
The latest financial figures from USPS show that the Postal Service made a $838m loss in February on a $5.1bn revenue, which mostly stemmed from obligations to pre-fund future retiree healthcare benefits and pay for workers on sick leave. Operationally, USPS made a $12m loss for the month.
Compared to the same month a year ago, revenues are down 1.3% with total mail volumes (including competitive shipping) down 4.1%, First Class Mail volumes down 5.8% and Standard Mail volumes down 2.3%.
In the financial year to date, which began in October, USPS has made a $2.5bn loss so far on revenues of $28.4bn, but only a $102m loss from its mail activities.
In the year so far, USPS mail volumes have been falling just 0.5%, but revenue has actually increased by 0.5%. First Class Mail volumes have fallen 4.3%, Standard Mail volumes have risen 2.7%.