The numbers on Network Rationalization just don't add up

March 4, 2012

The Postal Service says closing about 250 processing facilities will eliminate 34,000 positions and save $2.1 billion a year.  But the numbers on cost savings and affected positions that postal managers presented at the public meetings for each facility don't add up to anything like that.  The estimates provided at those meetings appear to have downplayed how many jobs would be lost, and they also raise the question, Will the Network Rationalization initiative really save as much as the Postal Service says?

In presenting its case for the plant consolidation initiative to the PRC, the Postal Service provided a lot of data about its operations and the savings it hopes to achieve by closing over half its processing facilities.  The numbers are apparently derived by modeling what the future network would look like, calculating how much it would cost to operate, and then figuring how much closing the plants would save in labor, fuel, lease costs, and so on. 

How the Postal Service arrived at its cost saving estimate is very difficult for non-experts to understand since it involves very complex calculations and a thorough knowledge of the nuances of the mail stream.  But the basic principle is not hard to grasp.  Eliminating 34,000 positions would save about $2 billion a year (figured at $60,000 per position for salary and benefits).  Another half billion would be saved in non-labor costs, but there would also be a half billion dollar loss in revenues due to the reduction in service standards.  That leaves us with about $2.1 billion in total savings.

The PRC docket on Network Rationalization is filled with page after page of details about how the cost savings would be achieved, but there’s no plant-by-plant breakdown.  The Postal Service has been very reluctant to provide any detailed financial data about individual plants.

There may be a good reason for that.  When you look at the numbers for cost savings on each plant, they just don't seem to add up to the Postal Service's estimate of total cost savings.  And we're not just talking about a minor discrepancy.  We're talking about over a billion dollars a year, nearly half of what the Postal Service says it will save.

At each of the public meetings held in the communities where plants were studied for consolidation, the Postal Service gave a PowerPoint presentation that included some financial estimates, but they were very sketchy.  In some cases, the presentation simply provided the total amount that would be saved and the number of positions that would be eliminated, with no other details.  In other cases, the presentation broke down the cost savings into four main categories —mail processing work-hour savings, mail processing management savings, maintenance savings, and transportation costs — but no additional details were provided.

Getting anything more out of the Postal Service in the way of financial analysis has been virtually impossible.  Even elected officials have run into a wall.  One wonders what the Postal Service doesn’t want us to see.

Last summer, for example, Congressman Steve King (R-Iowa) tried to get the study report on the plant in Sioux City, and got nowhere.  His staff spent weeks exchanging emails and phone calls with the Postal Service, and when he finally got the study, the key information was blacked out.

Then Sioux City officials filed a Freedom of Information Act request to get the information.  The Postal Service said it would provide the report, but it would cost $831,143.16.  Yep, you read that right, over $800K to get a copy of the report — and the Postal Service wanted half the money upfront.  

Congressman Connolly Defends PRC Chairman Goldway as Advocate of Innovation

March 2, 2012


The Washington Post recently published an article about the travel expenses of Postal Regulatory Chairman Ruth Goldway.  The author of the article seems to have missed that the reason for Ms. Goldway’s travel is to pursue positive business model reforms for the Postal Service.  These innovative reforms are connected directly to her travel and her exchange of ideas with postal systems in other countries. 

Here in America, the Postal Service earns three times less money from innovative non-postal products and services than its European postal system counterparts.  Partially because Ms. Goldway has learned from best practices overseas, she has been an articulate advocate for innovation that would allow the Postal Service to earn more revenue rather than focus myopically on downsizing. 

For example, Ms. Goldway has explained how far-reaching reforms to the Postal Service vehicle fleet could reduce maintenance and fuel costs while generating revenue through creative vehicle-to-grid contracts with utilities.  This is the kind of fresh thinking we need to reinvigorate a moribund, shrinking Postal Service. 

If Postal Service management shows no interest in innovation while Congressional partisans wish to dismantle the Postal Service for political reasons, it is more necessary than ever that Ms. Goldway and her PRC colleagues learn from international postal best practices.  It is a shame that more postal officials are not interested in such innovations.

[Gerald E. Connolly (VA-11) is a member of the Federal Workforce and Postal Service Subcommittee on the Oversight and Government Reform Committee.]

(Photo credit: Congressman Connolly)

Postal workers give management a vote of "No Confidence" on VOE survey, but who's listening?

March 2, 2012

The results of the Voice of the Employee (VOE) survey for FY 2011 were made public this week, and there's some bad news for postal headquarters.  Two-thirds of the employees responding to the survey could not say they trusted senior management to ensure the success of the Postal Service.  That’s a loud vote of “no confidence,” and it’s probably just the tip of the iceberg.

The Postal Service conducts the VOE, as the cover story for the most recent issue of Postal Bulletin explains, as a “measure of employee engagement" —  "the extent to which people enjoy and believe in what they do, and feel valued for doing it.”  The 2011 survey had 35 questions about things like diversity, communication, and safety.

The question about trusting management was worded like this: “I am confident in the ability of senior management to make the decisions necessary to ensure the future success of the Postal Service.” 

The responses were overwhelmingly negative.  Only 32% of employees said they had a "favorable" view of senior management's ability, while 47% had an unfavorable opinion.  Some 22% were neutral on the question, which isn't much of an endorsement either.

This means nearly half of those surveyed have little or no confidence that senior management knows what the hell it’s doing, and fewer than a third are confident that management can get the job done.  Think maybe workplace morale is down?

The survey is voluntary, so one can only speculate about what the results would have been if every employee had participated.  Many of the most disillusioned workers probably just tossed the thing in the trash.  Plus, many of those surveyed replied early in FY 2011, before the plans to close up to 3,652 post offices and 250 plants were announced.  (It’s not been possible to locate the results of surveys in years past, so we don’t whether this unfavorable rating represents a significant departure from previous surveys.  That question may also be a new one on the survey, since some earlier versions don’t include it.)

The Postal Service surveys 25% of the workforce at a time, and about half reply, so in the first quarter of FY 2011, for example, 76,000 employees — 54 percent of those surveyed — responded, and in the last quarter of 2011, 71,000 replied.  A copy of the survey is available here, the results for FY 2011 are here, and the original Excel document with the results can be downloaded here.

While results of the survey in years past are not readily available online, the Postal Service does publish what it calls the “performance indicator.”   This index is calculated by averaging employee responses to eight key questions on the survey:

Survey Question
Strategic Direction
I am aware of current business conditions facing the Postal Service.
I am confident in the ability of senior management to make the decisions necessary to ensure the future success of the Postal Service.
Contribution to USPS Growth
Rate the quality of the service provided by your office/facility to your customers.
Rate your immediate supervisor on communicating regularly to keep you informed.
Diversity and Respect
The Postal Service values diversity of backgrounds, talents and perspectives.
I feel personally responsible for helping the Postal Service succeed as a business.
Personal Safety
I receive information to perform my job safely.
Work Effort and Quality
I understand how the work I do impacts the service the Postal Service provides.

The averages over the past decade, since the survey began in 1999, have been fairly consistent, with about 63% giving the USPS a favorable rating.  (The index results for 1999 – 2002 are here; 2001 – 2004, here; and 2005 – 2010, here, p. 38.)

Historically, there have been many issues and controversies with the survey.  In 2005, for example, there were allegations that postal workers who elected not to complete the survey were called to a supervisor’s office where they were verbally asked questions similar to those asked on the VOE Survey.  At around the same time, the APWU called for a boycott of the VOE because it believed postal management used selective responses to justify regressive contract proposals.  In 2009, the National League of Postmasters voted not to support it because of the deteriorating working condition of postmasters.

The Postal Service likes to boast about the fact that it conducts the VOE survey, it uses the covers of Postal Bulletin to encourage employees to respond, it rewards managers for a high response rate, and it apparently thinks that its 63% approval rating is pretty good.  It will be interesting to see what HQ has to say about its dismal rating on the Trust Senior Management question. 

The Clock Nears Twelve: The Approach of Postal Doomsday

February 28, 2012


"These men combine to bring about as much financial stress as possible, in order to discredit the policy of government and thereby secure a reversal of that policy, so they may enjoy unmolested the fruits of their own evil doings.  I regard this contest as one that will determine who shall rule this free country — the people through their chosen representatives, or a few ruthless and domineering men whose wealth makes them peculiarly formidable because they hide behind the breastworks of corporate organization."  — Theodore Roosevelt

IN 1947 A NUMBER OF NUCLEAR SCIENTISTS got together and unveiled a public relations device known as the Doomsday Clock.  It was a symbolic clock face, and the nearer the hands came to midnight, the closer we were coming to nuclear disaster.  The clock was initially set at 11:53, and over the years the hands have been moved, sometimes nearer to 12:00, sometimes backing away, in response to the world’s geopolitical situation.

If such a clock existed to represent the fate of the United States Postal Service, the second hand would be finishing its last few clicks before the clock chimed midnight and disaster struck.  The actions of Postmaster General Donahoe and the USPS Board of Governors have methodically ensured that we would be reaching this moment with an ever-increasing sense of eventuality.

Over the past few years the leadership of the Postal Service has offered numerous predictions regarding the financial status of the organization, each more dire than the previous.  Usually the predictions have been accompanied by a set of Draconian prescriptions intended to “save” the patient.

It has become a predictable exercise.  The PMG announces another huge loss and anticipates even greater losses down the road, and then he claims he must be given the power to radically alter the nature of postal services so that he can pursue a more successful business model.

At each juncture, when the public or politicians have questioned Mr. Donahoe’s plan, he has responded with new, even more dire predictions and even more radical solutions.  He has been goaded on by two Republican Congressman, Darryl Issa and Dennis Ross.  Like villains in an old B-movie, they have licked their chops and curled their mustaches at the prospect of the destruction of several hundred thousand public-service, good-paying, union jobs.

Playing foils to Issa and Ross are Senators Susan Collins and Tom Carper.  They fill the role of the “responsible” parties because they have shepherded previous legislation through the sausage grinder, legislation that has turned out be about as useful as Neville Chamberlain’s claim to have achieved “Peace in our time.”  The PAEA that they designed can take much of the credit for the huge deficit the Postal Service now unnecessarily faces.

The various associations of business mailers have chimed in as a cheering section.  They view the Postal Service as their personal lapdog, and they act as though the sole purpose of the postal system is to provide them with low rates and guarantee their profits.

Sadly, the mechanisms that are designed to provide oversight and regulation of the Postal Service have no real teeth.  The management structure of the Postal Service, from the BOG down through the executive corps, faces nothing that would ensure real accountability.  They do as they please. 


AT THIS POINT I AM CONVINCED that in a very real sense Mr. Donahoe has won. Regardless of what political or legislative actions may take place over the coming weeks and months, Mr. Donahoe has already done so much damage to the image and brand of the Postal Service, it will be impossible to undo it.  He has so thoroughly undermined the organization’s morale and so completely polluted the dialogue with misrepresentations and visions of doom, that it would be nearly impossible to get the stink of a rotting corpse off the Postal Service.

Congress, for its part, will not be able to act swiftly or forcefully enough to prevent at least a significant part of Mr. Donahoe’s agenda from being implemented.  No Capraesque miracle is going to stop the PMG and save the post office.  There's no Jimmy Stewart or Gary available for a heroic climax.

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On Privatization

Good Reading on Postal Privatization

Also: Sarah Ryan's "Understanding Postal Privatization: Corporations, Unions, and the "Public Interest"

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Organizing to Save Rural Post Offices

A Community Organizing Toolkit

Revised November 2012

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