Can Royal Mail afford to strike?

Last week’s postal union ballot in favour of national strike action threatens to deal a body-blow to many in the direct marketing industry – not least of which will be the embattled Consignia, currently losing up to #1.5m a day.

Yet perhaps the most severely affected will be the financial services community (PM February 1), for whom the months of February and March are the most crucial.

Last week’s vote – in which 63 per cent of the Communications Workers Union (CWU)’s members agreed to take strike action unless they get a minimum wage of #300 a week – could well sound the death-knell of many financial services campaigns.

A Norwich Union spokeswoman says: “Future direct marketing campaigns are likely to experience service problems, including the slow processing of applications and customer confusion. Our call centres will particularly be strained by frustrated customers, unless we react to the increase in phone activity.

“To avoid such pressures and low responses we will implement all our campaigns at once, instead of staggering them. Either way, this means reviewing our customer contact points.”

Finance providers are now likely to outsource mailing services to maintain seamless one-to-one communication with customers. Strike action, says Norwich Union, will just push it further away from Consignia.

“Consignia is not our only service provider. If industrial action went on for lengthy periods, we would definitely shift some work to other providers and review our future with Royal Mail. But none of this changes our commitment to direct marketing – it will always be an invaluable part of our mix.”

The last six one-day postal strikes in 1996 fuelled in-fighting, managerial and financial problems in Royal Mail’s dealings with mailing houses (PM September 9, 1996). And even though it has offered workers a #60m package to avoid strike action, the relationship could get worse.

Denise Downing, senior business development manager at mailing house Prolog, says: “Everything we do depends on Royal Mail taking mailings away and distributing them, and this has caused delays to operations in the past. Any strike action will just make the situation worse.

“Financial services will bear the brunt of the strikes. I can also see telephone operating services and data capture being hit. The only alternative to Royal Mail is a courier service, but this is too expensive for many companies. No-one can compete when it comes to putting mail through letterboxes.”

While Royal Mail argues that companies in similar situations are enforcing pay freezes, it admits: “There are already rival companies with licences planning to capitalise on a strike, at the expense of Royal Mail jobs.”

But Downing has worries, too. She says: “My worst fear is redeploying staff away from mail to other services. Those running pure mailing houses could be faced with redundancies.

“This will not deter financial services companies from direct marketing, but it will make others look to alternative postal delivery operators.”

And that is the crux – if the strike goes ahead, how much more custom will Consignia lose?