Sunday, August 14, 2011

USPS Addresses Financial Crisis

The Postal Service is vital to the U.S. economy — and will remain so for years to come. It’s the cornerstone of a $1 trillion industry.

But USPS faces a deep financial crisis. If it was a private company, it would have filed for bankruptcy and gone through restructuring already — much like major automakers did two years ago.

USPS will be insolvent next month due to significant declines in mail volume and retiree health benefits prefunding costs imposed by Congress. The Postal Service is working with Congress and the Administration to address legislative changes that, if enacted, will help overcome its financial challenges.

Several alternatives — such as moving to 5-day delivery — already are being considered. Given the seriousness of its financial situation, the Postal Service also is exploring additional proposals to ensure it can be a financially stable provider of universal service well into the future.

Health and Retirement PlansThe Postal Service is exploring a proposal to assume control of the postal retirement and health care benefit plans. It’s important for USPS to be able to better manage its health benefit and retirement costs because, combined, they account for one-third of its total labor costs.

USPS believes both programs can be administered more cost effectively than the current federal plans in which employees now participate. The Postal Service also believes it can best protect employees’ and retirees’ interests by managing these funds itself. Taking this step will help improve the Postal Service’s financial position and increase its stability.

Network Optimization The Postal Service is exploring a proposal to accelerate its ongoing network optimization efforts. USPS already is consolidating facilities to eliminate excess capacity through Area Mail Processing studies, Delivery Unit Optimization, and other initiatives.
In the coming weeks, employees will be informed about proposals for a more streamlined processing and distribution network, using fewer facilities to handle reduced volume. Employees also will be hearing about proposals to revise service standards, to better reflect the capacity of a new, smaller network.

Workforce Flexibility Finally, the Postal Service is reviewing with Congress additional ways to improve its workforce flexibility as it adjusts its networks.

The proposals being explored, if acted upon, are significant for every employee and are in the exploratory stage. The Postal Service wants to ensure that employees are aware of these proposals.

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