Backlash against USPS mail plant closures threatens reform bill

The massive political backlash against US Postal Service plans to reduce the size of its mail processing network by 50% has reached fever pitch, threatening to completely block any postal reform legislation. A key postal reform bill could reach the Senate floor as early as Monday, sources in the Senate suggested today, but a Senator has come forward threatening to block the debate.

Debate could still go ahead if 60 of the 100 Senators vote a cloture motion on the bill.

But, today also saw damaging claims put forward by Senator Susan Collins and Representative Gerry Connelly, respectively a Republican and Democrat, that would fuel protests against hundreds of USPS mail plant closures planned to begin later this year.

Losses

Collins and Connelly, two Congressmen who have campaigned for months against the job losses and mail service impacts from widespread mail plant closures, said they had obtained information from USPS showing that closures would likely have a much worse financial impact on the Postal Service than it had stated publicly.

USPS is currently pushing forward with plans to close at least 223 of its 461 mail processing plants, and in order to do so, it needs to stop delivering much of its First Class Mail overnight.

Collins and Connelly said today that information they had forced out of USPS suggested that the reductions to the mail service would lead to a $5.2bn loss of gross revenue for USPS in the first year alone. This figure would be brought down to a $1.96bn net loss when including the lower cost of processing the reduced mail volume.

USPS had previously issued numbers saying it was expecting to lose about $1.34bn in gross revenue as a result of service downgrades related to its network optimisation, a $500m net revenue reduction including the related lower operating costs.

Expecting its closures to generate $2.6bn in operational savings, it said originally the whole plan would lead to a $2.1bn net annual saving for its bottom line. The Collins-Connelly numbers would suggest only a $640m net annual savings from closing half the USPS processing network.

Senator Collins said: “Today we learn that the Postal Service’s own analysis, submitted secretly to its regulators, reveals that the destructive service reduction plan to delay mail and shut down postal plants will lead to a more than 9% decrease in First Class Mail and a 7.7% reduction in mail of all classes.”

The Senator added: “The Postmaster General should abandon this counterproductive plan and work with Congress on worthwhile reforms to save the Postal Service from a death spiral.”

It is understood that the $5.2bn gross revenue loss figure was the result of a survey of USPS mail customers asking them their expectations for using the mail following the USPS network optimisation plan.

A second version of the survey, on which the $1.34bn revenue loss figure was based, was based on differently-worded questions, in which other proposals to cut USPS costs, such as abandoning Saturday delivery and closing post offices, were not mentioned when asking customers their expectations for future mail usage.

• (Update, 23 March: The US Postal Service has sought to explain the discrepancies in its survey figures here.)

Block

The Democrat Senator for the State of Maryland said today that she has written to Senate Majority Leader Harry Reid to notify him of her intent to oppose debate of the Senate bill.

Senator Barbara Mikulski is unhappy that USPS is planning to close a plant in Eastern Maryland, moving its activities across the state border to the plant outside Wilmington, Delaware.

She said today she was “unhappy” with the amount of public consultation on the closure plan, and was therefore going to place a block on the Senate bill, S.1789, the 21st Century Postal Service Act.

“While I absolutely agree that the United States Postal Service must be reformed to meet the country’s needs in the 21st Century, I must object to moving forward on consideration of this legislation while the USPS continues a rushed study to close a needed mail processing centre on the Eastern Shore of Maryland,” said Senator Mikulski.

USPS executives say they need to make $20bn in cuts to annual operating costs over the next few years to remain solvent, and that half of that cost-cutting needs Congressional action to achieve.

Senator Tom Carper, one of the sponsors of the Senate bill that has already been through committee, insisted today that “clearly we must act, and act quickly, if we hope to save the Postal Service”.

Carper, who is Senator for Delaware, the state that would gain the mail processing activity from the plant whose closure Senator Mikulski is opposing, said the Postal Service had to adjust its operations to reflect the changing demand for its products and services.

“This bill – the only bipartisan proposal from members in either Chamber – presents a comprehensive solution to the Postal Service’s financial challenges,” he said.

Mail industry

Meanwhile, major USPS customers have been lobbying against any plans to significantly raise postal rates as part of an overall package to help restore financial viability at the Postal Service.

The Coalition for a 21st Century Postal Service said today that the mailing industry would work to oppose any postal reform legislation that raises postal rates.

The lobby group said USPS was calling on Congress to allow a 12% increase for First Class Mail in order to raise revenues “rather than address the significant problems they face with excess capacity”.

Art Sackler, the group’s co-ordinator, said higher postal rates would force more companies to stop using the mail altogether.

“No one can be forced to use the mail. History has shown that higher postage rates result in less volume and revenue for the Postal Service,” said Sackler. “Such a dramatic hike would inflict a huge blow on workers, private companies and ultimately the Postal Service itself.”

• Updated (March 23): Article updated to clarify that Senator Collins’ figure of $5.2bn related to a gross revenue loss, adding in information about expected net revenue losses from the plant closures. More information on the two USPS surveys can be found at Steve Hutkins’ “Save the Post Office” website  here.