Union leader calls for Canada Post to get into financial services

The president of the Canadian Union of Postal Workers (CUPW) said yesterday that Canada Post was “panicking” in its response to its mounting losses, and that the solution should be to develop additional services like postal banking. Denis Lemelin was in the audience of yesterday’s annual public meeting of Canada Post in Ottawa, where he spoke out against proposals for cutbacks for the Corporation, as it responds to its declining mail volumes and loss-making status.

Canada Post is currently facing something of a perfect storm at the moment, with a combination of catastrophic problems, not least the substitution of physical mail by the Internet.

A $6.6bn pension deficit, a $150m court settlement and a 20-month stalemate in a collective bargaining process with CUPW have all added to the Corporation’s misfortune, helping end 16 consecutive years of profitability in 2011.

As mail volumes decline, Canada Post is also finding the number of addresses to which it must deliver mail growing by 150,000 a year, adding to spiraling costs.

Canada Post recorded a $253m loss in 2011, with executives forecasting a $100m loss this year.

Lemelin said today his union was supporting moves to modernise Canada Post and bring in more motorised delivery in order to prepare for the Corporation’s repositioning towards the growth ecommerce business.

But the president of a union representing around 50,000 of Canada Post’s 69,000 workers criticised Canada Post’s long-term intention to reduce the size of its infrastructure in light of volume declines, and also renewed calls to diversify into areas like financial services.

“We think that Canada Post is panicking a little bit about what is happening,” he said. “Why shrink the organisation, knowing historically that if you shrink something it will die faster?

“Banking and financial services are the best idea, building on the brand,” added the union president.

“No chance”

Canada Post’s leadership did state their intention to review the Corporation’s business model and reposition for growth in ecommerce, direct mail and digital services.

But, they insisted it was not right for the company to get into markets “we don’t know anything about”.

Canada Post chairman of the board Marc Courtois said: “We have looked at financial services, we have looked at telecommunications, and it was very clear to our board that this was not an area where we had any chance of success.”

The Corporation’s president and CEO, Deepak Chopra, insisted that his plans for the company were not about shrinking the company, but about “staying relevant”.

“Canada is shifting and changing all the time, and we want to shift and react,” he said.

During the question and answer session of today’s public meeting, Chopra criticised current union leadership as not responding to the pressures facing Canada Post at present.

“What’s missing today in my opinion when the entire labour movement is talking about the future is leadership,” he said. “It’s great to share the profits when we have the great bull run, but when see see the market become more challenging, we need more creative leadership.”

Nevertheless, Chopra said he was “optimistic” that some progress could be made towards resolving the long dispute with CUPW in the coming months.

“I am optimistic that there will be courage to deal with some of these difficult issues,” he said. “We can always have a solution, but is this solution a real solution, is it affordable, will it allow you to build on the legacy of the Corporation?”

CUPW started negotiations with Canada Post over a new work contract for its 48,000 urban-based members back in October 2010, culminating in last June’s strike and lockout, which Canada Post says cost it $200m in lost revenue.

After workers were forced back to work at the end of June 2011 by government legislation, the contract was supposed to go to arbitration, but union pressure has seen one ministerially-appointed arbitrator quit and a second appointee was ordered to quit this month, after a lawsuit brought by CUPW.

Canada Post offered a fresh contract offer to CUPW last month in the hope of agreeing a deal outside of the arbitration process, but the union has not accepted the offer.