USPS hires corporate restructuring gurus to help cut costs
The US Postal Service has hired top corporate advisors from the investment banking sector to help it make “fundamental” changes to its business model. The struggling USPS is looking to alternative avenues to cut $20bn in annual expenses from its operations by 2015, with Congress dragging its collective feet on much-needed postal reforms.
Today, it confirmed hiring Evercore Partners, a firm of corporate restructuring experts that was integrally involved in the reshaping of automotive giant General Motors in 2009.
Evercore was set up by formed Lehman Brothers partner Roger Altman, a member of the elusive but influential Bilderberg Group, who was assistant secretary of the US Treasury in the late 1980s, as well as being an advisor to Presidential candidates John Kerry and Hillary Clinton.
Issuing a statement, USPS said today that Evercore Partners would review its consolidation plans and advise on the ongoing restructuring of its business model.
“Evercore Partners has assisted other large, complex organisations experiencing financial challenges, including auto and other transportation companies,” said the USPS statement, adding that its new advisors were “recognised as an industry leader” in advising on financial restructurings and other strategic transactions.
USPS reported a $5.1bn loss last week for the 12 months up to the end of September 2011, a loss that was lightened considerably by the two-month deferment of a $5.5bn payment due to the federal government. The previous year saw a $8.3bn loss reported.
In the current year, the organisation could be on track to making a $14bn loss, except that it is legally limited in its government borrowing to $15bn in debt.
Yesterday, the Postmaster General Patrick Donahoe said delays in Congress passing key reforms to allow USPS more flexibility to run its own affairs could “kill the Postal Service”.
Donahoe wants Congress to allow elimination of Saturday deliveries to cut $3bn of annual costs, restructuring of pension and healthcare arrangements to save billions more each year, help to add more flexibility to the work force and provide more powers on product pricing.
Having already closed 500 post offices and 50 processing facilities in the last year, USPS is already planning to cut 3,500 post offices from its 33,000-strong network, while the 460 processing plants are to be slimmed down to less than 200 by 2013.
The National Association of Letter Carriers, one of the major postal unions in the US which is currently in extended talks with USPS regarding a new work contract, hired its own restructuring guru last month, to help advise on where USPS could improve its network without resorting to compulsory job losses. Ron Bloom is a former White House advisor who was also a key part of the restructuring of the US auto industry in 2009.
Yesterday, Donahoe said his team had already spoken with Bloom, adding: “I’ll say only he’s involved with the focus on how do we ensure the organisation thrives.”
