USPS to close 48 mail plants this summer, 92 next year

The US Postal Service has changed its plans to close more than 230 mail processing plants, and is now set to carry out the consolidations in two phases. The first phase will see 140 consolidations carried out up until February 2013, with 48 plants closed in July and August, and a further 92 closed in January and February 2013.

Closure activity is to be suspended between September and December 2012 in the run-up to Christmas and as the US conducts elections.

A second phase and “final” phase will see 89 consolidations carried out from February 2014, unless “the circumstances of the Postal Service change in the interim”.

The changes to the nationwide network of 461 mail processing plants comes in response to the 27% reduction in First Class Mail volumes in the last six years, which has meant the Postal Service is currently losing $25m a day.

The confirmation that USPS is moving ahead this summer with plant closures came two days after the end of a six-month moratorium on closures as agreed with the US Senate.

The moratorium had been intended to give Congress time to pass postal reform legislation to rescue the Postal Service from its $22.5bn annual budget deficit. Congress has so far failed to pass legislation, although a bill did get through the Senate last month.

“We simply do not have the mail volumes to justify the size and capacity of our current mail processing network,” said Postmaster General Patrick Donahoe of the need to begin plant closures.

“To return to long-term profitability and financial stability while keeping mail affordable, we must match our network to the anticipated workload.”

Workforce reduction

USPS believes its first phase of closures will reduce annual operating costs by $1.2bn, and reduce the workforce by 13,000, while the full two phases of closures would save $2.1bn each year and potentially see the workforce reduced by 28,000.

Employees and equipment will be moved from closed facilities to enlarge surviving plants, while eligible staff will be incentivised to retire early where possible. About 158,000 USPS staff are eligible to retire at present.

The first staff – about 5,000 employees – will be receiving notifications as early as next week about consolidations.

US Postmaster General Patrick Donahoe said his team had revised the consolidation plan to allow more time for customers and staff to plan for service changes.

Donahoe told reporters this morning that the Postal Service had modeled out the number of facilities that would be closed in the second phase, but there was not a final plan for which plants could be included.

“We will be working through phase two changes as we hear more back from our customers,” he said.

“The focus at this point is get resolution around what we need to do in the first phase, that the employees’ moves are taken care of, make sure that the customers are all set and then we would move into the second phase.”

Delivery standards

Delivery standards are set to change alongside the mail plant consolidation, particularly in the overnight delivery of First Class Mail, which will reduce to local deliveries only.

USPS said today that its plans should see about overnight delivery volume preserved for about 80% of volume.

Further service standard changes, and changes to overnight delivery, would be made in 2014 along with the phase two changes.

A final rule is set to be submitted to the Federal Register tomorrow detailing the service standard changes.

“We are essentially preserving overnight delivery for First Class Mail through the end of 2013, although we are collapsing the distance that we can provide overnight service to the distribution area served by a particular mail processing facility,” explained USPS chief operating officer Megan Brennan.

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