Postal Service to Consolidate 48 Mail Processing Centers in Summer
By RON NIXON
Published: May 17, 2012
WASHINGTON — The United States Postal Service announced Thursday that it would begin consolidating 48 mail processing centers beginning in July, the first phase of a cost-cutting plan that is intended to save the agency nearly $1.2 billion a year as it tries to adjust to declining mail volume.
Times Topic: United States Postal Service
Postal Service Reports Quarterly Loss of $3.2. Billion (May 11, 2012)
The agency said it would consolidate an additional 92 processing centers in February, and 89 more in early 2014.
In all, the Postal Service said it would close 229 processing centers — about half of the total — and it expects to save about $2.1 billion a year after the plan is fully carried out in 2014. About 5,000 workers will be immediately affected by the consolidations, the agency said, though it was unclear if they would be reassigned or given incentives to retire. About 13,000 employees will be affected once the first phase is completed by February. A total of 28,000 positions will be eliminated by 2014.
The service’s latest plan to reduce costs comes as the agency continues to endure financial losses. In the first two quarters of the 2012 fiscal year, which ended March 31, the agency lost more than $6 billion.
A decline in first-class mail and the development of automated equipment have left the mail processing network larger than needed, and revenue has not kept up with the cost of maintaining the system, the agency said.
“We simply do not have the mail volumes to justify the size and capacity of our current mail processing network,” said Patrick R. Donahoe, the postmaster general. “To return to long-term profitability and financial stability while keeping mail affordable, we must match our network to the anticipated workload.”
Nearly all the consolidations this year will occur in July and August, and they will resume early next year. No consolidations will occur from September through December because of the election and holiday mailing seasons, the agency said.
The Postal Service also announced that it would soon issue a new regulation on changes to overnight delivery.
In the 2011 fiscal year, which ended in September, the Postal Service had a mail processing network that included 461 facilities, 154,325 full-time employees and about 8,000 pieces of mail processing equipment. But mail volume has dropped precipitously over the last few years, to 168 billion pieces in 2011 from a high of 213 billion in 2006.
The agency is considering other cost-cutting initiatives, including moving to a five-day delivery schedule from six days and reducing compensation and benefits, with the aim of saving a total of $22.5 billion by 2016.
The agency says it wants to reduce its total processing, delivery and customer service work force of 574,000 full-time employees by about 150,000, and it hopes to do so by offering retirement incentives, rather than by conducting layoffs.
Last week, the service announced that it would reduce the hours at thousands of post offices rather than closing them. The measure is expected to save the agency about $500 million a year.
But Senator Thomas R. Carper, Democrat of Delaware and a sponsor of a postal reform bill, said the closings and reduction in hours did not go far enough.
“Given these dire circumstances, it shouldn’t come as a surprise that the postmaster general is moving forward to reduce costs with the limited tools at his disposal,” Mr. Carper said in a statement, “but the reality is that efforts of this scale are not enough to fundamentally fix the Postal Service’s financial problems.”
A coalition of mailing industry groups endorsed the Postal Service’s plan to shrink its mailing network.
“If the Postal Service is to be saved, then it must be streamlined, and this is a good first step,” said Art Sackler, coordinator of the Coalition for a 21st Century Postal Service, a group that includes FedEx and United Parcel Service.
The American Postal Workers Union disagreed. “It’s a terrible plan that’s not going to save much money and drive customers away,” said Sally Davidow, a spokeswoman for the union.