February 20, 2012
Last year, when the Postal Service was studying the Processing and Distribution Center in Frederick, Maryland, for consolidation, postal officials said customers could expect the same level of service as before. It doesn't look like things have worked out that way. Numerous problems have come to the attention of the local press, and several former employees at the plan have filed a formal complaint with the USPS Inspector General.
On November 19, the Frederick P&DC was closed, and its processing work moved to the facility in Baltimore. Frederick’s 180 employees were excessed to various other plants, including Baltimore (a congested 50-mile drive away) and Linthicum, Maryland (also 50 miles away).
The consolidation actually began in October, and troubles occurred almost immediately. Julie Maynard, editor and owner of The Brunswick Citizen and The Valley Citizen newspapers, told the Frederick News-Post on Nov. 21 that some of her customers still had not received papers that were printed Nov. 9. Usually her subscribers receive the issue the day after it goes to press. Maynard thinks that she lost a number of subscribers because of the delay, and she told the News-Post, “It’s just the beginning.”
As Christmas approached and mail volumes increased, the problems got worse. The News-Post asked post office customers who had noticed a delay in mail service to contact the newsroom, and about 50 people responded.
One told the News-Post that medication refills he ordered in November from an online pharmacy in Florida were delivered to his home a month later. A jewelry designer said pieces she sent to mail-order customers in early December had not reached their destinations two weeks later, forcing her to remake the pieces and resend them via UPS. Other complaints described bills, insurance documents, and invitations that arrived late or never at all, and sale flyers arriving after the sale was over.
Last week, several of the former workers at the Frederick plant wrote a formal complaint to the USPS Inspector General. The letter identifies examples of when the mail was significantly delayed, when mail was diverted to facilities other than Baltimore, and when trucks of mail were backed up for days, sometimes parked illegally on public roadways.
February 19, 2012
The former Soviet Union was famous for five-year plans. Between 1928 and 1991, it announced thirteen of them. The plans were designed to increase economic production, achieve efficiencies through centralized planning, and redistribute the wealth along Marxist principles. Each was announced with great fanfare and fantastic posters designed by progressive artists employing the latest propaganda techniques. (The one at the left, done in 1930, says, "Fulfill the five-year plan not in five years, but in four.")
The Postal Service has just released a Five-Year Plan of its own. Entitled “Plan to Profitability,” the new Business Plan is designed, like the Soviet plans, to take advantage of automation and improve efficiencies. It too will redistribute the wealth, though the money will not be flowing in a direction Marx would have approved of.
The new Business Plan is basically a version of what the Postal Service floated this past summer in a couple of white papers on "workforce optimization" and the retiree benefit plans. There may be a more thorough business plan sitting somewhere in postal headquarters, but the document released to the public is basically a Powerpoint presentation with a lot of groovy graphs and charts. It's mostly PR, and the Postmaster General is doing the media circuit promoting the plan. It's crunch time. The moratorium on closing post offices and plants ends on May 15, and Congress needs a kick in the butt or else the Postal Service will have to execute its endgame, whatever that is.
The Soviet plans were mostly disasters — they caused famine, failed to reach goals, and led to a deteriorated standard of living — and the last of the plans, unrolled in 1991, didn't get past year one — the Soviet Union dissolved before it could be implemented.
We'll have to see how things go with the Postal Service's Five-Year Plan. The headlines have all focused on the fifty-cent postage for a First-Class stamp, but there's a lot more in the plan worth noting, starting with who wrote it.
The Postal Service outsources its business plan
The Business Plan was produced with the help of Accenture and Boston Consulting Group, joined by the new member of the team, Evercore. The Postal Service has hired the first two several times in the past to make projections and prepare action plans. Their help does not come cheap. Accenture received $125 million in 2011 in business from the Postal Service (it’s #7 on the list of biggest suppliers).
Accenture is a global management consulting and technology outsourcing company that the Postal Service contracted to help produce the 2010 Action Plan and the background report for the USPS's 2008 "Report On Universal Postal Service and The Postal Monopoly," which argues the Postal Service needs "flexibility" in the way it defines the "universal service obligation."
The Boston Consulting Group is another of these global management consulting firms. It “has played a major role in preparing companies for deregulation and privatization in post-Cold War Europe.” BCG prepared a report projecting mail volumes through 2020 that the Postal Service frequently cites.
Evercore is the investment banking firm founded by Roger Altman, the “ultraconnected” Wall Street and DC insider who’s made millions parlaying his connections and giving out high-priced advice, like helping with the restructuring of General Motors. The Postal Service hired Evercore a few months ago to provide the agency with advice on “restructuring.”
(Update: The USPS press release about the Business Plan says that it "reflects prior business model analysis from McKinsey & Company." McKinsey is another of these global management consulting firms. According to Wikipedia, it has an interesting track record: Enron CEO Jeffrey Skilling is an alum of McKinsey, Swissair entered bankruptcy after following recommendations from McKinsey, AT&T was told by McKinsey in 1980 that cellphones would only be a "niche market," and McKinsey has been named as a defendant in Hurricane Katrina litigation. McKinsey was hired by Japan and India when their postal systems considered privatization, and the company website says, "We support our clients as they position themselves to meet regulatory requirements and accompany them on the road to successful privatization." More here and here.)
With consultants like these pitching in on the Business Plan, it’s not hard to guess what direction the Postal Service is heading.
February 16, 2012
In order to comply with the National Environmental Policy Act (NEPA), the Postal Service has prepared a Programmatic Environmental Assessment (PEA) for the Mail Processing Network Rationalization Initiative. Although 250 communities and 35,000 postal workers will be directly affected, the PEA states that the consolidation plan will have “No Significant Impact."
The “environment” includes not just air quality, noise, land use, and waste disposal but also socioeconomic considerations, like the economic impacts on the community. It’s hard to believe that the Postal Service thinks closing a large processing plant will have no significant impact on a community, and there’s not much in the report to support the claim, either.
As part of the report, the Postal Service has provided more detailed numbers about the reduction in the workforce than it initially included in the Request for an Advisory Opinion to the Postal Regulatory Commission (PRC). Nearly 35,000 positions would be affected. The breakdown is summarized in the following table.
The Postal Service has previously provided a discussion about how the workforce reduction would be achieved, given that the union contracts have no-layoff clauses. In the materials provided to the PRC back in December, there’s testimony by Kevin Rachel, a Manager in the USPS labor relations department, so for more details about RIF, VER, eReassign, etc., see his testimony, here.
The PAE also includes a discussion about the economic impacts on communities that lose their processing facility. As the report explains, “These impacts may be direct impacts through loss of employment and expenditures to service providers and suppliers, and indirect through loss of jobs in other sectors of the local economy and loss of sales at local trade and service businesses, such as restaurants and gas stations. In addition, service providers who are contracted directly with the Postal Service would also be impacted.”
The following table shows how the workforce reduction breaks down in terms of dollar amounts:
As the table shows, cutting 34,058 jobs would have a direct labor impact of $2.58 billion. That’s nearly $2.6 billion no longer flowing into communities through the salaries of postal workers. But that’s just the beginning of the impact. There’s also a huge ripple effect on the rest of the community — non-postal workers in the service and retail sectors who lose their jobs, lost retails sales, lost tax revenue, and so on.
In order to assess what that might mean to an individual community, the Postal Service turned to a study of the economic impact of job losses in Springfield, Illinois (Sangamon County), where the Postal Service has a mail processing plan slated for consolidation. The study was commissioned by the Greater Springfield Chamber of Commerce, and it was conducted by the Regional Development Institute of Northern Illinois University.
The study provides the following table showing the losses that closing the plant would cause:
The "direct" employment number refers to the 300 postal workers who would lose their jobs, and the “indirect” employment figure of 145 refers to service, retail, and other non-USPS jobs that would be lost if the plant closed. The next three lines offer three different ways of calculating the losses. The first, 'Employee Compensation," calculates the total salaries for the 300 postal workers (it uses an average of salary of $78,333, including benefits), plus the salary of 145 non-postal workers. “Output” refers to the value of an industry’s business activities, including retail sales, that would be lost. “Value added” refers to the gross domestic product of the county, and it includes employee compensation, rent, interest, taxes, and profit paid or earned.
The NIU study shows that you can't measure the impacts on the community by just looking at the salaries of postal employees. The losses in "indirect" costs would be very large as well, whatever method of calculation you choose to use. In the case of output losses, for example, the indirect losses are almost 40% of the total loss.
Just to put the losses in context, the total output losses of $42.7 million would be about 2.1% of Sangamon County's total output (in sales) of $2.1 billion. Not a lot percentage-wise, perhaps, but still a considerable sum.
To get a sense of the impacts nationwide, we can extrapolate from the Sangamon numbers. The Postal Service is planning to reduce the workforce by 35,000 jobs. The Postal Service's own numbers show an impact of over $2.5 billion in salaries alone (that includes benefits). But the output impacts, direct and indirect, would total $5 billion, and the lost wealth in terms of GDP would be about $3.7 billion.
The PAE does not calculate nationwide impacts like this. It simply concludes the discussion of economic impacts as follows: "The Proposed Action would result in a moderate adverse impact on local economies. However, these impacts would not be significant. On a national or programmatic level the economic impacts would be negligible because the overall economic system is much larger and some of the jobs lost at 'study' facilities could be offset by additional jobs at 'gaining' facilities. Therefore, any impacts on the national economy would not be significant."
Deciding whether a particular economic impact is "moderate," "significant," or "negligible" is a qualitative judgment. What may be "negligible" to the Postal Service may be very "significant" indeed to the community suffering the economic impacts of a consolidation. And the notion that more economic activity in the communities with the "gaining" facilities will offset losses for the closing facilities makes little sense. It's not as if the jobs are just going from one town to another. The whole purpose of the consolidation plan is to eliminate 35,000 jobs.
The Postal Service says the consolidation plan will lead to "significant" cost savings for itself of $2.1 billion — about 3% of its annual budget. In order to achieve this relatively modest cost savings, the Postal Service is willing to put 35,000 postal employees and 17,000 non-postal employees out of work and inflict $4 or $5 billion of losses on 250 communities across the country. All so that it can save maybe $2 billion. That’s postal math for you.
(Photo credit: Springfield IL post office & processing facility)
February 15, 2012
BY GRETA COBAR
Venice Beach, California, is an idyllic, bohemian, beach-side community that was once home to The Doors, Jimmy Hendrix, Janice Joplin, and Beat generation poets Stuart Perkoff and John Haag. Today it still embraces alternative lifestyles and artists and performers who don’t seem to fit in anywhere else.
The town's romantic archiecture, beaches, and piers have also attracted many filmmakers, and Venice has been the backdrop of several movies, like "They Shoot Horses Don't They?", "Heat," and "The Net." The famous opening title sequence in Orson Welles' "Touch of Evil" was shot in Venice back in the fifties.
Also known as Venice of America, the city was founded in 1905 by tobacco millionaire Abbot Kinney, who re-created the Italian sister city’s architecture, canals, a lagoon with gondolas, the whole bit. After its annexation by the city of Los Angeles in 1925, Venice saw many of its historical buildings, canals, and lagoon destroyed. What survived is now considered to be the number one tourist destination in Southern California.
In the center of town majestically sits the Post Office, a 1939 Works Projects Administration building. It houses the 1941 “Story of Venice” mural by Edward Biberman, a renowned California painter. The beautiful, well-preserved mural depicts Abbot Kinney and his vision of Venice, as well as the oil wells and the destruction that followed annexation.
Truly the heart of the community, as all roads lead to it much like all arteries lead to the heart, the priceless post office building is now going to be sold. Citizens and local organizations voiced their objections to the U.S. Postal Service (USPS), but they were ignored. Venice residents and community associations then filed an official appeal with the Postal Regulatory Commission (PRC) asking for a hearing, but the PRC granted the USPS motion to dismiss the appeal.
At issue with the PRC was the USPS claim that the closing of the Venice post office was essentially a “relocation,” because services will be moved to what is currently the USPS Annex, located 400 feet away. The appeal argued that the closing of the Venice post office should be considered a formal discontinuance, entitled to a full closure process, including a hearing before the PRC. The Chairman of the PRC, Ruth Goldway, is a Venice resident, so she chose to recuse herself from the vote because the case involved her own neighborhood. The other three members of the PRC unanimously voted in favor of USPS’s decision to dismiss the appeal.
The plan now is to combine postal retail services with the mail sorting activities currently taking place in the Annex, and to sell the historic post office building.
Community input to the USPS has centered on selling the Annex instead, which could fetch three times more money than the beautiful post office building. Venice mail sorting operations could easily fit into the basement of the current post office, and sorting operations for all other neighborhoods could move to other, less expensive locations.
It seems as if the effort to privatize the Postal Service by selling off post offices is spearheaded not just by the owners of private shipping organizations, but by USPS higher-ups as well. Even the Public Representative of the USPS supported the dismissal of the appeal, even though the community is overwhelmingly united and outspoken against such action.
Aside from implementing cuts and closures that can only diminish revenue, the USPS has been intentionally suppressing revenue at the Venice branch. For example, on January 22, when the price of stamps increased from 44 to 45 cents, the Venice post office did not have one cent stamps for sale. It consistently has had only a limited selection of stamps, which is a major deterrent to stamp collectors and picky customers.
Furthermore, for the past two years only two of the five windows have been open for customer service regardless of the length of the line or the waiting time. The USPS’s own provision to provide service in less than 20 minutes has been ignored on a daily, hourly basis. Overworked clerks have to constantly deal with frustrated customers, which only contributes to their poor morale.
The retail facilities planned for the Annex consist of only two service windows, fewer parking spots for customers and employees, and significantly less mail sorting space in a facility that, according to current Venice postal employees, is already overcrowded. In addition, the neighborhood surrounding the Annex is strictly residential, and the establishment of retail operations would have a negative environmental impact in a coastal zone that has not been addressed or considered.
Bill Maher, press spokesperson for the USPS, told Venice residents that the local post office has historical status, which proved to be untrue, as federal buildings are ineligible for such status. Locals are now trying to place the building on the National List of Historical Buildings, which would not stop the USPS from selling it, but would prevent the buyer from tearing it down. Public access to the building and the mural cannot be guaranteed, though, if the sale does proceed.
Los Angeles has a poor history of historical preservation. The covenants attached to the sale of historic downtown hotels have easily been broken in recent years. In addition, a Biberman mural removed from the downtown post office has disappeared and has not been found since. In the mid 1980s Biberman himself embarked on a mission to find his displaced mural, to no avail.
The Venice community has been extremely outspoken and active in its efforts to save the post office. Two very successful rallies took place, attended by the likes of Bill Rosendahl, District Councilperson, and Debra Padilla, Executive Director of The Social and Public Art Resource Center (SPARC), alongside dozens of community members and activists.
A third rally is planned for February 18, 2 to 4 p.m., in front of the post office. Thousands of petition signatures have been collected in the neighborhood and online at www.change.org (search Venice Post Office to sign). For the latest updates or to just show that you "like" our efforts, please visit our Facebook page at www.facebook.com/savethevenicepostoffice.
Many local organizations and politicians have come together to stop the sale. They include the Free Venice Beachhead, SPARC, Venice Arts Council, Venice Chamber of Commerce, Venice Neighborhood Council, Venice Peace and Freedom Party, Venice Stakeholders Association, Venice Town Council, Art Deco Society of Los Angeles, Edward Biberman Estate, New Deal Preservation Association, Los Angeles Conservancy, Council member Bill Rosendahl and Congressperson Janice Hahn.
Just like many other communities across the country, Venice is heart-broken to lose its post office. Public outcry continues, the local paper covers the topic in its every edition (www.freevenice.org), and we are still collecting petition signatures. Gibson, Dunn & Crutcher, the law firm that has been representing us pro bono thus far, is currently assessing the possibility of a legal challenge before deciding whether it will continue to represent us.
Let’s not allow one of our oldest government institutions — with its strong labor unions ensuring good wages for workers and a network of post offices that benefit the poor, disabled, rural residents — to be dismantled in ways that favor big, private business. Contact your Congress representatives and urge them to support H.R.1351 and S.1853, which would ease the requirement that the USPS pre-fund the health benefits of employees for the next 75 years in a ten-year period and would refund $18 billion of overpayments (and that’s aside from $75 billion the USPS has overpaid into the Civil Service Retirement System).
The USPS is a self-sufficient federal business that private shipping companies want destroyed. Let’s not allow our politicians to be bought out this time as well.
(To contact Greta Cobar, email firstname.lastname@example.org.)