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Cliff Guffey,
President |
President's Viewpoint
Can We Help the Postal Service?
(This article by former APWU President Wiliam Burrus first appeared in the September/October 2009 issue of The American Postal Worker magazine.)
The Postal Service’s financial difficulties are a frequent topic of discussion among union members, and recently I have received several suggestions about ways employees can help the USPS remain solvent. Most of the ideas involve efforts to increase mail volume by promoting letter-writing campaigns or other activities. A submission by Todd Manganello (of the Baton Rouge Local) to Ask the President on the union’s Web site suggested a stamp-buying lottery aimed at increasing use of the Postal Service by individuals.
I am encouraged that so many employees are thinking about the future of the Postal Service, but in response to the repeated suggestion that we attempt to generate additional mail, I must reluctantly point out that there is a widespread misunderstanding.
Categorizing Decline
The general assumption is that individual citizens are responsible for generating the volume that supports the national postal network — and the employment of 650,000 people. This idea assumes that changes to individual habits — such as the increased use of cell phones, e-mail and the Internet — have negatively affected total volume.
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While delivery to citizens’ homes makes universal service and the postal monopoly necessary, the amount of mail contributed by individuals is an extremely small percentage of total volume. To put it in perspective: Total volume reached its highest point in history in 2006 at 213 billion mail pieces; but mail originating from individual citizens was only 19.4 billion pieces, just 9 percent of the total volume.
In 2009, mail volume is expected to decline to approximately 180 billion pieces — a 33-billion-piece reduction from the record high of 2006. This decline has occurred primarily in mail sent by businesses, which comprises approximately 90 percent of the domestic mail stream.
Despite the dominance of business mail, discussion of declining volume often focuses on individual mail, which is separated into several categories: mail from Household to Household; Household to Non-Household, and Non-Household to Household. A review of these groups reveals that the decline in mail originating in Households has a minimal impact on the staggering reductions experienced over the past two years.
Household to Household mail — typically a First-Class letter or card sent from an individual to an individual — declined from 3 percent of domestic volume in 2006 to 2.9 percent of total domestic volume in 2008, a reduction of 400 million mail pieces. (If volume predictions prove accurate, by the end of 2009, this decline from2006 could exceed 1 billion pieces, but even this higher number would represent just 0.006 of domestic volume.)
Household to Non-Household mail — typically financial transactions such as car or mortgage payments — comprised approximately 7 percent of total domestic volume in 2008, or about 15 billion pieces. This mail has been affected by electronic conversion, but even when added to the Household-to-Household category, such conversion is only a small percentage of the losses suffered over the past two years.
In 2006, among the 213 billion total pieces, 193 billion — more than 90 percent, originated in Non-Household mailings by businesses and non-profit organizations. These business-to-business communications, bills to households and businesses, solicitations, advertising, etc., facilitate and encourage financial transactions and are driven by the economy. When the economy is robust, this volume is high; when the economy is weak, it is low.
The Facts of the Mix
Because individual citizens contribute such a small percentage to the total mail stream, their use of the Internet, email, and fax transmissions has had only a marginal impact on total mail volume.
Every letter counts, but with 33 billion fewer letters delivered in 2009 than in 2006, estimates indicate that less than one billion pieces have been lost from Household mail, while 32 billion pieces were lost from Non-Household mail. It is the business community’s reduction in mailings that has had such a serious impact on the mail stream and postal revenue.
The Postal Service recently reported that for each reduction of 1 billion pieces, revenue declines by $360 million. This means that for every loss of 6 billion pieces, the USPS loses revenue approximately equal to cost of one biweekly payroll.
The dissection of these numbers may seem to be at odds with my criticism of the large mailers and their influence on postal decisions, especially on excessive postage discounts. Even when criticizing the unhealthy relationship between mailers and USPS management, I am mindful of our reliance on large mailers to generate volume sufficient to maintain a national network that supports universal service: Without their mailings, neither the Postal Service as we know it nor the union would exist; postal employees most certainly would not earn $50,000 or more per year.
But my criticism is based on the reality that the Postal Service is an agency of the U.S. government and belongs to the people, not the large mailers. The concept of universal service at uniform rates was established to facilitate service to the people. Every postal building, every vehicle, and every machine is the property of the government; every employee works for the government, and is responsible to the people. The U.S. Postal Service is not a delivery force for large mailers, but a service authorized by the government of the people, by the people and for the people. If businesses include their mail in the government postal system, they must do so under the terms set by the people.
No Allegiance
Businesses use the USPS because mail plays a role in their business plans, not because they “support the Postal Service.” The drastic reductions in business mail during the current economic slump demonstrate that their allegiance is to their bottom line. This is not necessarily a negative, because commercial entities are not charities; but spare us the public relations mirage of a concern for the Postal Service.
I am critical of policies and rates that are designed to appease large mailers. Postal executives operate under the false assumption that if they keep the rates low enough and regulations friendly enough, major mailers will generate sufficient volume to keep the Postal Service afloat. They seem to believe that unless they allow the big mailers to dictate postal policy, the mailers will take their business elsewhere.
The fact is, businesses will make decisions in their own self interest: This is proven by the recent reduction in business mail volume during this period of economic downturn.
Large mailers have no fundamental loyalty to the Postal Service: They will mail 30 billion fewer pieces this year — despite large postage discounts that result in extremely low rates, and despite easy access to postal decision-makers. Not a month goes by without another postal announcement of a rate-reduction gimmick, yet volume continues to decline. The simple fact is that if the Postal Service offered free postage to large businesses, the affect on volume would be minimal.
‘Postal Reform’ Miscalculation
The support by major mailers for H.R. 22 demonstrates that their loyalty is only to their own bottom line. Although large mailers support the bill, which would provide temporary relief to the Postal Service from the overwhelming burden of $5 billion in payments each year for future healthcare liabilities, they — with help from some postal unions — were responsible for the legislation that imposed this liability. Absent their brand of “postal reform,” H.R. 22 and other financial relief would not be necessary — this obligation would be funded in the same manner as it is for every other federal agency.
APWU stood alone in opposing the postal reform measure that included as a principal change the obligation to fund future healthcare liabilities. Imposing this staggering cost on the Postal Service was in the interest of large mailers, who viewed it at the time as a means of forcing a reduction in labor costs.
This coalition was determined to change the law and force the Postal Service to pay beyond its means on the eve of the worst economic slump in a generation, and used the boom in electronic communications as an excuse to initiate their concept of reform.
How Can We Help? Can We Help?
It has been repeatedly suggested that we initiate a campaign among our co-workers, families, and friends, to encourage them to increase their use of mail. But it would take one million citizens writing an additional 1,000 letters each to increase postal volume by one half of one percent. Put another way, it would take 100 million citizens writing 10 more letters every year to achieve the same anemic increase in total volume.
And if every piece of mail originating in households were shifted to the Internet, the impact would be a loss of only 10 percent of domestic mail volume — about 20 billion pieces. By comparison, analysts anticipate that there will be 32 billion fewer pieces of Non-Household mail in 2009 than in 2006.
Although the amount of mail has plummeted, it is expected that with an economic recovery volume will return to healthy levels. This will occur not because individuals will eschew the new technology and not because large mailers suddenly choose to be postal benefactors, but because mail serves a purpose in our democracy.
What Can Management Do?
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Postalmanagers could address the decline in volume by taking their heads out of the sand. Decision-makers at postal headquarters operate in the same fashion as many other business leaders who failed to grasp the true nature of their enterprise. The first rule of business is to correctly identify the scope of the organization and adjust accordingly as conditions change. Blacksmiths believed that they were in the “horseshoe” business, rather than the transportation business, and did not adjust when automobiles evolved into the primary means of transportation. Likewise, postal management believes that the U.S. Postal Service is in the hard-copy mail business: Wrong. Mail is what we process, transport, and deliver, but as the dominance of business mail demonstrates, the Postal Service is in the advertising business.
Television, newspapers, radio and other competitors concluded years ago that their principal product was advertising. TV programs, radio shows, and newspapers are all vehicles for ad sales. It is time for postal executives to recognize that their business is advertising, through the use of mail. This realization should lead to a shift — from acting as a passive recipient of mail to becoming an engine that generates mail through advertising initiatives.
The Postal Service could do so much more to actively encourage citizens and business owners to use the USPS Web site to create customized messages for delivery by the Postal Service. Invitations to weddings or birthday parties; announcements of new business ventures; promotions of products and services — the possibilities are endless, constrained only by the imagination. Why isn’t the USPS advancing this concept rather than relying so heavily on messages developed by others?
We must use advertising as a tool that generates mail. The USPS has the potential to become a full-fledged advertising giant that, with extensive use of electronic media, creates volume.
The recent USPS television commercial promoting Priority Mail is an example of absolute surrender. Television is our competitor, so why would management use that medium as the principal vehicle to advertise our product? We deliver to every home and business six days every week! We should emphasize our strength by making mail the cornerstone of our advertising campaigns.
I believe that the Postal Service can and will survive the current economic downturn. The danger is not limited to the decline in mail volume; the danger is that the system will be irrevocably changed based on the false premise that individual conversion to electronic communications has caused the current crisis. It was not true during the run-up to “postal reform;” it was not true in 2006 when postal volume reached an all-time high; it is not true now as volume suffers because of the very weak economy; and it will not be true
tomorrow.
