Industry support for US Senate's Postal Service rescue plan

The mail industry has expressed initial support for the latest rescue package for the US Postal Service, as proposed yesterday by leading postal reform advocates in the US Senate. Industry groups are currently mulling over the details of the 21st Century Postal Service Act, which would provide a number of pension and healthcare finance reforms to help the loss-making USPS, as well as measures to pave the way for a downsizing in the USPS network.

The Act was released yesterday by the Senate’s Homeland Security and Government Affairs Committee, which is expected to mark up the proposals later this month for a hearing before the full Senate.

With the backing of the Senate, the legislation could see changes made in order to gain support in the House of Representatives if it is to pass Congress ahead of gaining President Obama’s signature. Separate rescue measures are being discussed in the House, and also in a “super committee” currently considering a national deficit reduction plan.

The US Postal Service issued a guarded statement yesterday regarding the Senate proposals, to the effect that it was reviewing the proposals within the bill “to determine how it addresses our financial crisis and the need for a more flexible business model”.

Meanwhile, it said: “The Postal Service continues to take aggressive actions under our control to cut costs and increase revenue to return to profitability and urgently needs passage of comprehensive, long-term legislation to get us there.”

Elsewhere in the US mailing industry, USPS customer groups were generally pleased with the bipartisan nature of the Senate bill and the “balanced” provisions of financial assistance and structural reform.

The unions, however, while pleased that some of the more “anti-worker” measures from the House of Representatives have been ignored by the Senate, did reveal disappointment at some of the Senate proposals.

They object to the continuing talk of eliminating Saturday deliveries, efforts to cut doorstep deliveries where it currently applies, and allow arbitrators deciding on union labour deals to take USPS financial conditions into account in their decisions.

Mailers

Mailers were generally supportive of measures within the bill, particularly the $6.9bn rebate from the FERS pension fund and its use in cutting the USPS work force, as well as the changes to the Postal Service’s requirement to pre-fund 75 years’ worth of retiree healthcare benefits over a 10-year period. The prefunding changes would mean prefunding the liability over 40 years, saving USPS around $5bn a year over the next decade, mailing industry analysts believe.

The Coalition for a 21st Century Postal Service lobby group described the Senate bill as a “smart and balanced approach”.

It praised the Senators for not seeking to increase postal rates, in a move it said would push postal customers away.

Art Sackler, the group’s co-ordinator, said: “When a business has declining sales, the last thing it should do is raise prices. Raising postage rates would only hasten the demise of the Postal Service as its customers would simply turn to other, less expensive avenues to communicate.”

The Direct Marketing Association described the bill as a “huge step” towards agreeing bipartisan legislation that could actually be signed into law by the President.

The marketing industry group highlighted its support for the difficult decisions the bill took, for protecting non-profit group postal discounts and for looking into reasons why some postal products do not cover their costs before jumping to significantly increase those products’ prices.

“This bipartisan bill tackles the difficult issues of USPS retiree health benefit prefunding, five-day delivery, door delivery, labour arbitration and USPS downsizing,” said the DMA, adding: “We are pleased that the bill maintains nonprofit rate preferences and requires a study of underwater classes and products to determine how their costs are affected by USPS excess capacity.”

The American Catalog Mailers Association was similarly supportive of the Senators’ efforts to avoid postal rate increases.

Its president Hamilton Davison said: “Today’s bill appears to contain all the major elements necessary to allow the Postal Service to complete its restructuring and meet its obligations, while removing the surplus capacity that is neither needed or cost affordable.”

Unions

America’s postal unions were also in the process of reviewing the bill’s details, but appeared pleased that the Senate proposals rejected some of the key House proposals to which they have been particularly opposed.

Notably, the Senate proposals do not seek to set up new control authorities to take over USPS and force closures, or to expressly breach existing collective bargaining agreements.

However, there was disappointment among the unions that the bill was supporting the view that a “drastic” reduction in the USPS network and work force was needed.

“We are very disappointed with the overall thrust of the legislation,” said Frederic V Rolando, president of the National Association of Letter Carriers, who warned that slashing service could do “serious damage” to the mail industry.

“The Senate bill could end Saturday delivery in two years and would phase out most door-to-door delivery by 2015,” said Rolando. “This would negatively affect tens of millions of Americans – particularly senior citizens, rural residents and small business owners – who depend on the Postal Service’s commitment to high quality service.”

The National Postal Mail Handlers Union praised the Senate for rejecting some of the “anti-worker and anti-union” provisions from the House bill, supporting temporary relief for the USPS healthcare prefunding obligation.

However, it described proposals to allow arbitrators in union negotiations to take account of USPS financial difficulties when deciding on labour deals as “troublesome”.