The United States Postal Service, faced with declining mail volume and a sluggish economy, held high-level meetings with senior postal officials recently to discuss the proposed Transformation Plan. The plan would create a new business model for the Postal Service, preserve universal mail delivery and strengthen the mail system.
"I met with the Postmaster General prior to the announcement of the Transformation Plan," said David L. Solomon, Vice President of Operations for the New York Metro Area of the Postal Service. "In the short term, it will give us the flexibility to keep costs down and to better serve our customers. In the long term, we'll work under a new business model, which will secure mail delivery for our future."
The new model, called a Commercial Government Enterprise (CGE), would create a government owned entity, but one that enjoys some of the operational and financial flexibility found in the private sector. Under the CGE, the Postal Service would set rates more predictably, be able to retain earnings, work under private sector labor laws and, depending on future legislation, could even pay taxes or dividends to the government.
The CGE model would be a structural transformation requiring legislative acts of Congress. The proposed legislative changes would be the most extensive since the Postal Reorganization Act of 1970, which enabled the Postal Service to function effectively until the end of the 20th Century.
"We deliver to more than eight million addresses in this region," said Solomon. "But the legislation we currently work under doesn't give us the tools to survive in the current marketplace. Under this plan, that legislation will change -- and the New York Metro Area will be the better for it."
The plan also outlined short-term, cost-cutting measures. The Postal Service has already cut 30,000 jobs nationwide and $2.5 billion in costs over the past two years. Over 3,000 jobs and $33.5 million in costs were cut in the New York Metro Area. Over the next five years, costs will be cut by $5 billion more nationwide through job attrition, outsourcing, plant consolidation, lifting the moratorium on post office closings and other measures. In addition, the Postal Service will focus on developing new "intelligent" mail products to attract new business and better serve existing customers.
"Mail volume is going down nationwide and in our region, while at the same time 1.7 million new addresses are added every year, costing us billions in lost revenue," said Solomon. "We added over 53,000 new addresses in the New York Metro Area last year alone. But the Postal Service will meet these challenges head-on. Employees in our region will do all they can to implement the necessary changes and get the Postal Service back on sound financial footing."
Since 1775, the U.S. Postal Service has connected friends, families, neighbors and businesses by mail. It is an independent federal agency that visits 138 million homes and businesses every day and is the only service provider to deliver to every address in the nation. The Postal Service receives no taxpayer dollars for routine operations, but derives its operating revenues solely from the sale of postage, products and services, offering some of the most affordable postage rates in the world. The U.S. Postal Service delivers more than 46 percent of the world's mail volume -- some 207 billion letters, advertisements, periodicals and packages a year -- and serves 7 million customers each day at its 40,000 retail locations nationwide.