USPS to close up to 82 more processing plants in 2015

The US Postal Service will close dozens more of its mail processing facilities from January next year, as it continues to seek ways to cut its multi-billion dollar annual losses. Postmaster General Patrick Donahoe announced to employees and customers yesterday that having already closed 141 facilities in 2012 and 2013 to save around $850m a year, as many as 82 more will be closed in 2015.

Key customers received letters yesterday giving a six-month advance notice of the closures.

The fresh closures should be completed by next year’s peak season in the autumn, and are expected by postal executives to cut network operating costs by around $750m a year.

Details on the next stage of network rationalization will be released in coming weeks, although the Postal Service has issued a list of the 82 plant facing consolidation.

Donahoe told his workers yesterday that there was still too much spare capacity in the USPS network as a result of the ongoing decline in letter volumes.

He said: “The Postal Service has recorded substantial losses over the last three years and continues to see steep declines in First-Class Mail volume and revenue. As a result, we find ourselves with excess capacity in the network and few alternatives to reduce costs. Our operating costs are continuing to increase, and our debt and other liabilities threaten our financial viability.”

An internal memo from the Postal Service said reassignment opportunities would be found for the roughly 15,000 employees affected by the new wave of plant closures, claiming that through the 2012 and 2013 consolidation programme no layoffs were required.

Donahoe promised to keep his employees informed about the upcoming changes.

“For now, I ask that you continue to do your job to the best of your ability and continue to work with your customers to assure them that the transition will be smooth,” he said.

Losses

The US Postal Service lost $26bn over the past three years. Much of the losses have stemmed from the way in which its healthcare and pension funding is structured since 2006, but Congress has been unable to pass reform legislation to correct the issues.

The Postal Service told customers that it was continuing to face “significant” financial challenges from the continuing decline of its First Class Mail volumes, along with rising labour costs and its mountain of debt. USPS is currently about $15bn in debt to the US Treasury, right at the limits of its borrowing powers.

USPS also blamed the continuing inability of Congress to pass much-needed postal reforms for its closure plans, and the review of postal rate increases by the courts, was now delaying the capital investments needed — specifically in terms of getting in new package sorting equipment and replacing the aging delivery fleet.

Closures

The Postal Service has already reduced its mail processing network from 673 facilities in 2006 to 320 facilities in 2013. The next phase could see the number shrink to just 238.

The closure of mail processing facilities has come alongside a slowing of the First Class Mail service so that it is no longer a fully overnight service.

Once the next stage of network down-sizing has been completed, USPS said it expected just 20% of its First Class Mail volume to be delivered overnight, about 36% within two days and about 44% in three days.

“We believe strongly that this phase of network rationalization will establish the low-cost, technology-centric delivery platform necessary to serve the mailing and shipping industry for decades to come,” the Postal Service said in its letter to customers.

Postal unions said they would launch a “vigorous” campaign to fight the plant closures, saying the move would require a further lowering to mail service standards and a delaying of the mail.

Mark Dimondstein, the president of the American Postal Workers Union, said: “This is a direct assault on service to the people of the country, on postal workers and on the Postal Service’s own network.

“We need a Postmaster General who will champion the Postal Service. Instead, PMG Donahoe is on a rampage to destroy it.