DMA Calls for End to Politics-As-Usual And Urges Congress to Reform USPS

The Direct Marketing Association (The DMA) announced today its support of Chairman Dan Burton's (R-IN) House Government Reform Committee hearing to review the finances and operations of the United States Postal Service (USPS). This hearing is the first step from the new 107th Congress toward, what is hoped will be, a bi-partisan effort in reforming the 31-year-old law that has put a financial straitjacket on the USPS's ability to compete and survive.
Two separate, recent announcements from the General Accounting Office (GAO)
and from the USPS underscore the major problems in which the USPS finds itself
unless there is immediate and comprehensive legislative reform. By being
placed on the GAO's 'high-risk' list, the USPS has essentially gained junk bond
status.

"Chairman Burton is to be congratulated for putting the interests of
American consumers and businesses who rely on the Postal Service ahead of
politics-as-usual and confronting the problems plaguing the Postal Service
because of an out-of-date federal law," said H. Robert Wientzen, president &
CEO, The DMA. "Congress must act now to rescue the Postal Service. Without
legislative reform, the Postal Service will go the way of the horse and
buggy," Wientzen said.
"The DMA continues to call for reform of the 1970 law that shackles the
USPS's ability to compete in a 21st century economy," added Ed Gleiman of The DMA, who served as Chairman of the Postal Rate Commission (PRC) and who now is
spearheading The Direct Marketing Association's campaign for congressional
postal reform. "The USPS must be granted the ability to be financially
viable,especially in this era when there are so many competitive options."
"The many American businesses and charitable organizations that have, for
over a century, relied on the Postal Service for affordable, reliable and universal delivery services are going to pay dearly," Wientzen said. "This is all the more alarming in light of the current economic downturn."
Compounding the image problem created by being placed on the "high-risk"
list, the USPS is also considering eliminating Saturday mail delivery to cut
operating costs in the face of stiff electronic and private sector competition and mounting losses, which could reach $2 billion to $3 billion this fiscal
year, which ends this September.
"The DMA is dismayed at the continued, rapid disintegration of the financial
condition of the Postal Service," Wientzen said.
"The current financial situation — as exemplified by inclusion on the
'high-risk' list, the consideration of eliminating Saturday delivery, and
talk of a double-digit rate case being filed this June or July — shows how
fragile the Postal Service is to volume and economic changes," said Gleiman.
"If there ever was a time to find solutions to updating the 31-year-old
federal statute under which the USPS operates, it is now," Gleiman added.
Antiquated legal hurdles as well as the continued loss of market share to
electronic communication channels and private sector package delivery
companies are adding to the USPS' woes. "Raising rates to make up for reductions in mail volume is counterintuitive and a sure-fire way for the Postal Service to drive itself out of business," Gleiman said.
"Fewer and fewer Postal Service customers will be able to afford the
increases or will be willing to tolerate its reduction in services," Wientzen said.
"The erosion of its customer base to other media, especially the Internet, will
proceed at an alarming pace. The USPS must change soon — or it will be too
late," Wientzen added.
"The Postal Service needs flexibility to meet market demands and to control
costs," Gleiman said. "These are two mechanisms that the 1970 Postal
Reorganization Act limits. Unlike its competitors, the Postal Service lacks
the ability to effectively control labor costs, which represent more than 80
percent of the Postal Service's expenses despite the billions they have spent over the past decade on automation equipment," Gleiman added.
"The members of The DMA need a financially robust Postal Service, and The
DMA is committed to work with the Administration, the Congress, Postal Service
officials and the mailing community to get the legislative reform that is
imperative if the Postal Service is to survive in the Digital Age,"
concluded Wientzen.
The DMA is the leading and largest trade association for businesses
interested in interactive and database marketing, with nearly 5,000 member companies from the United States and 53 other nations. Founded in 1917, its members include direct marketers from every business segment as well as the nonprofit and electronic marketing sectors. Included are catalogers, Internet retailers and service providers, financial services providers, book and magazine
publishers, book and music clubs, retail stores, industrial manufacturers and a host of other vertical segments, including the service industries that support them.
According to a DMA-commissioned study, direct and interactive marketing
sales in the United States exceeded $1.7 trillion in 2000, including $110 billion in catalog sales and $24 billion in sales generated by the Internet. The DMA's WebSite is http://www.the-dma.org and its consumer Web site is
http://www.shopthenet.org.
SOURCE The Direct Marketing Association CONTACT: Media – Louis Mastria of
DMA,
212-790-1529, [email protected] Web site: http://www.the-dma.org
PR NEWSWIRE, 04th April 2001