WASHINGTON, Feb. 20 (UPI) -- Lots of people like to complain about the U.S. Postal Service but, like the weather, no one ever seems to do anything about it. That may change thanks to a White House initiative on postal reform that has drawn the attention of legislators on Capitol Hill.
Achieving real reform is no small task. The U.S. Postal Service is so large that it would rank No. 9 on the Fortune 500 list. It delivers over 200 billion pieces of mail each year and is, by itself, an essential part of the U.S. economy.
But it is also the core of the $900 billion U.S. mailing industry, which employs 9 million workers in areas ranging from overnight delivery service to manufacturing to printing, publishing and more. All told, the mailing industry accounts for close to 8 percent of the U.S. gross domestic product.
Postal reform is big-ticket item -- one the White House looks ready to punch.
In December 2002, President Bush announced the formation of a nine-member commission on postal reform, asking it to recommend ways to create a 21st century postal service.
Its report, finished on time and under budget, was delivered to the president on Dec. 8, 2003, when the commission met for almost an hour with Bush, Postmaster General Jack Potter and Treasury Secretary John Snow, a meeting that has been described as something more than the usual pro forma photo-op.
The White House followed up the meeting by announcing a set of principles for postal reform that strongly parallels the commission's recommendation and includes a call for Congress to make a comprehensive effort "to ensure that the United States Postal Service can continue to provide affordable and reliable universal service, while limiting exposure of taxpayers and operating appropriately in the competitive marketplace."
The basic elements of reform as defined by the commission are: greater flexibility, better management, increased transparency and more accountability. These are not new ideas and should be familiar to anyone who follows corporate restructuring.
In the government model, things are very different. What is obvious in the private sector is oblivious to the government.
The commission proposals for greater reliance on technology, work sharing partnerships with the private sector where appropriate and other reforms of that type are going on in corporate America every day as CEOs work to bring up bottom lines. Cost, regrettably, has never had the same impact in the public sector as the private, which may explain why the White House felt the need to specify a fifth principle: that the reforms ensure the postal service "is financially self-sufficient, covering all its obligations."
Cost is a tricky issue for postal reform advocates. The postal service monopoly on first-class mail has, for years, had the effect of underwriting waste and inefficiency. That is changing, thanks to the proliferation of alternatives -- beginning with FedEx and including fax, e-mail and other technological breakthroughs -- which have caused a contraction in market that Sept. 11 only accelerated.
In the long run, say economists familiar with issue, the picture is bleak. Mails volumes are down as consumers utilize new technologies and USPS competitors to do what the postal service once did. The commission's call for greater flexibility for postal managers in pricing and the need to be competitive should allow for major cost savings as should the inevitable shrinkage in the total USPS workforce.
The cost of the workforce accounts, by most estimates, for almost 80 percent of total expenses. Advocates for reform are pleased by the way Potter has used attrition to reduce the total number of employees without much effect on service levels. But there is more to do.
The commission estimates that, over the next 10 years, half of the total workforce will retire or leave the service. This will allow the cost to taxpayers to come down considerably without workforce disruptions.
This is new ground and, on Capitol Hill, a thorny one as well. Previous suggestions for cost cutting have centered on the closure of local post offices or on the end of Saturday delivery, ideas that are dead on arrival as far as Congress is concerned.
A major goal of reform is to maintain price stability. Doing things more efficiently, again through technology, work sharing partnership and the like, will allow the postal service to do more with the same money. This is a good thing, as the well is running dry.
Postal rates have been raised three times since 2000. The increases fuel the perception that the post office is bureaucratic, wasteful and inefficient; further rate hikes would have political consequences as well as economic ones.
If it continues, says some economists, the USPS may enter a death spiral from which it might not recover: Rate hikes driving customers to seek other ways to do what they need the postal service to do, thus reducing the volume of mail in the system, thus driving revenues down further, thus leading to more rate hikes which drive even more consumers to look for alternatives
A group of corporate CEOs whose businesses depend on the postal service have created the Mailing Industry CEO Council, a non-profit group providing senior executive input on postal issues. The organization includes some of America's best-known companies, including FedEx, Time Inc., and Pitney Bowes, whose chairman, Mike Critelli, spoke to the House Committee on Government Reform and Oversight on the issue earlier this month.
He told the committee that postal reform was essential because, "mail is critical to commerce. ... The way in which the postal service conducts its functions has a dramatic impact on American business."
Critelli and the other industry leaders involved in the issue envision a reformed postal service "as a booster of economic growth -- not a drain on public resources." But before that point can be reached, he said, the Congress needs to clarify that "the mission of the postal service is to maintain universal physical mail service."
Giving managers more flexibility may help push the USPS into refocusing its efforts on its core business, the delivery of physical mail and packages to America's homes and businesses, the so-called "last mile."
With the backing of the White House and high-powered support in the business community, the postal reform commission's work, unlike earlier attempts, is likely to keep moving forward. The White House's FY 2005 budget document includes a section on to postal reform that praised the commission's report, calling it "comprehensive and balanced."
The budget statement stresses the need for "affordable and reliable universal service" to continue, "while limiting exposure to taxpayers."
The recommendation of the White House is that Congress "enact comprehensive postal reform legislation" guided by the principles it put forth on Dec. 8, 2003. Washington, it seems, may be ready to deliver on the promise of postal reform.
