Strategic ally sought to deliver the goods

THE Government is facing a tough question about the future of An
Post with the nettle of rural sub-post office closures unlikely to
be grasped until long into the next Government's term.

There is concern in Government circles that An Post should not be
allowed to become "another CIE" after a report by experienced public
service trade unionist Phil Flynn pointed out that GBP10m or more
per year would be required to keep marginal rural sub-post offices
open.

In 1999 An Post's post office network earned just GBP10,000 from
revenues of GBP79m and they are thought to have been loss-making in
2000.

Given that there is little political mileage being gained from a
subvention of ten times that level to CIE, broad-spread support for
subsidies to the marginal post offices will be hard to win.

Furthermore, An Post cannot argue that its case has not been
addressed. Mr Flynn's report follows that of PricewaterhouseCoopers.
Officials from the Departments of Finance and Public Enterprise have
no shortage of background material to study in relation to An Post's
rural post offices.

As an island, Ireland has a number of difficulties for providers of
basic services like the rail network or a traditional surface mail
service.

In the case of the mail it is compounded by the population size in
the Republic and by the openness of the economy.

By virtue of its position on the periphery of Europe, 30pc of Irish
mail volumes are destined for addresses outside our shores or arrive
from there. In other European countries the amount of mail to and
from the State's borders is closer to 7pc.

The statistics make the issue of a strategic partner more crucial.
With impending de-regulation, An Post needs a European partner with
a strong infrastructure. But as long as its mail-delivery system and
post office networks are marginal in a commercial sense, the
attractiveness for a strategic investor like the Royal Mail,
Deutsche Post or TPG is low.

One method of improving the commercial return from the mail service
would be to increase the price of a stamp from the current level of
30p.

However, the recent concern in the European Union about Irish
inflation and the Government's resistance thus far to a request from
RTE for a TV licence increase, suggest that this avenue may be
closed to the An Post board.

Furthermore, after a number of years of industrial relations
upheaval, and the move to edge-of-town computerised mail centres
like the Dublin Mail Centre from centre city locations like Sheriff
St, the cost of running the mail system is rising again.

The effects of the Celtic Tiger have manifested themselves in staff
turnover and higher overtime costs.

And now mail is under an ever-increasing threat from e-mail and from
demographics. A retired ageing population will spend less of their
disposable income on letters and cards and the younger generation
may not take up the practice.

In the future, will the current teen generation switch from
instantaneous text messaging in order to adopt so-called 'snail
mail'?

The economy is also a major factor in the use of mail. Booming
economies generate business opportunities and corporate customers
are eager to use direct mail as a modern marketing technique.
Everyone has noticed the growth in junk mail, particularly in
financial services.

However, the mail is a bellwether of the economy. When it slows
down, corporate users reduce or cancel their mail shots.

If consumers aren't buying new cars there is little to be gained by
offering them motor finance.

An Post is also under threat in its contract with the Department of
Social, Family and Community Affairs from the Irish League of Credit
Unions.

The League wants to introduce a credit union account for every
social welfare recipient in the country for direct payments by the
State.

Fortunately for An Post, the massive nationwide computerised system
which would be required is still at the planning stages and the
millions of pounds expended to date without result are a bone of
contention within the League.

With half the country's 1,900 post offices the computerised ones
generating 95pc of revenues, An Post is caught between a rock and a
hard place.

Many of its sub-post offices generate only GBP5,000 per annum for
the post-master or post-mistress, and the younger generation are not
interested in taking on the workload involved.

The rural post office, no more than the creamery, the filling
station, the pub, the school, the church and the village shop is
considered crucial to rural development.

For this reason it needs to be supported by the local community
development organisation as part of a range of measures to create
"critical mass" in a parish or village.

Social welfare grants are already available and being paid to
support community development primarily in our cities.

Perhaps it could be extended to encompass the rural post office?
Copyright 2001 Irish Independent.
Source: World Reporter (Trade Mark) – FT McCarthy.
IRISH INDEPENDENT, 20th March 2001