French La Poste chief delivers shake-up
Jean-Paul Bailly, chairman of La Poste, yesterday met Jean-Pierre Raffarin, French prime minister, to seek political backing for the restructuring of France's state-owned post office as trades unions stepped up warnings about heavy job losses and branch closures. Mr Bailly, appointed two years ago to prepare the public company for liberalisation of Europe's postal sector by 2009, used yesterday's meeting to seek assurances that his modernisation drive will secure government backing. Mr Raffarin said after the meeting: "The French are very attached to their public postal service. That is why La Poste must, in an increasingly competitive environment, successfully evolve to improve its performance and guarantee a quality public service."
Unions have increased the pressure on La Poste's chairman in recent weeks by leaking alarmist reports to the French press, claiming he plans to close as many as 6,000 of France's 17,000 post office branches and cut 10,000 jobs out of 320,000.
Mr Bailly has denied the reports and committed La Poste to maintaining at least 17,000 "contact points", including branches and in-store counters. He also insisted there would be no forced redundancies, only early retirements and staff relocations.
The 57-year-old is no stranger to union resistance. Before joining La Poste he spent eight years as head of RATP, the Paris public transport authority, where he was credited with transforming a militant and inefficient state body into a profitable and well-run business.
"La Poste is poorly understood by the French," Mr Bailly told the Financial Times recently. "It is well known and liked for its public service role but it is also a big industrial player with €18bn ($22bn) of revenues last year."
He says that 60 per cent of La Poste's revenues are open to competition, in packages, express mail delivery and financial services. The remainder will soon follow, when the market for letters weighing more than 50g is liberalised in 2006 ahead of full deregulation in 2009.
While La Poste is losing its monopoly, it also faces a shrinking mail market, being eroded by growth of e-mail and electronic payment systems. "Our business plan is based on a 2 per cent market shrinkage annually," says Mr Bailly.
This increases its need to catch up with leading European competitors, Deutsche Post and Holland's TPG. "You can't ask La Poste to keep a quality network without allowing it to fight on equal terms with its rivals," he insists.
The group has returned to profit since Mr Bailly took over and increased net profits six-fold to €202m last year. But it is still the poor postman of Europe, trailing Deutsche Post and TPG, which had profits of €1.3bn and €359m respectively.
A central part of his modernisation effort, already being tested in the Loire-Atlantique region, is the replacement of under-used branches with "Pointe Postes" in groceries or bakeries. Mr Bailly says about 4,000 branches "suffer very low volumes", making them obvious candidates to be replaced.
The government has given La Poste a boost by granting it permission to start offering mortgages from next year, without the need for customers to have an existing savings plan. The company also plans to spend €3.4bn on modernising its mail sorting and delivery systems.
Also, a top-heavy age pyramid will allow Mr Bailly to cut staff relatively painlessly, with 10,000 employees retiring this year against only 5,000 new recruits.
Union officials seem to have understood La Poste needs to restructure if it is to survive. The CFE-CGC union has declared its "opposition to the frenzied attachment to the status quo that would lead to the collapse of La Poste". Mr Bailly must hope their understanding continues.
