[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
MAKING SENSE OF IT ALL: AN EXAMINATION OF USPS'S STATION AND BRANCH
OPTIMIZATION INITIATIVE AND DELIVERY ROUTE ADJUSTMENTS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FEDERAL WORKFORCE,
POSTAL SERVICE, AND THE DISTRICT
OF COLUMBIA
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JULY 30, 2009
__________
Serial No. 111-17
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio JOHN L. MICA, Florida
JOHN F. TIERNEY, Massachusetts MARK E. SOUDER, Indiana
WM. LACY CLAY, Missouri JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts LYNN A. WESTMORELAND, Georgia
JIM COOPER, Tennessee PATRICK T. McHENRY, North Carolina
GERALD E. CONNOLLY, Virginia BRIAN P. BILBRAY, California
MIKE QUIGLEY, Illinois JIM JORDAN, Ohio
MARCY KAPTUR, Ohio JEFF FLAKE, Arizona
ELEANOR HOLMES NORTON, District of JEFF FORTENBERRY, Nebraska
Columbia JASON CHAFFETZ, Utah
PATRICK J. KENNEDY, Rhode Island AARON SCHOCK, Illinois
DANNY K. DAVIS, Illinois ------ ------
CHRIS VAN HOLLEN, Maryland
HENRY CUELLAR, Texas
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
------ ------
Ron Stroman, Staff Director
Michael McCarthy, Deputy Staff Director
Carla Hultberg, Chief Clerk
Larry Brady, Minority Staff Director
Subcommittee on Federal Workforce, Postal Service, and the District of
Columbia
STEPHEN F. LYNCH, Massachusetts, Chairman
ELEANOR HOLMES NORTON, District of JASON CHAFFETZ, Utah
Columbia JOHN M. McHUGH, New York
DANNY K. DAVIS, Illinois MARK E. SOUDER, Indiana
ELIJAH E. CUMMINGS, Maryland BRIAN P. BILBRAY, California
DENNIS J. KUCINICH, Ohio
WM. LACY CLAY, Missouri
GERALD E. CONNOLLY, Virginia
William Miles, Staff Director
C O N T E N T S
----------
Page
Hearing held on July 30, 2009.................................... 1
Statement of:
Burrus, William, president, American Postal Workers Union,
AFL-CIO; John Hegarty, president, National Postal Mail
Handlers Union; Louis Atkins, vice president, National
Association of Postal Supervisors; Fred Rolando, national
president, the National Association of Letter Carriers,
AFL-CIO; Don Cantriel, president, National Rural Letter
Carriers' Association; and Mark Strong, executive vice
president, National League of Postmasters of the United
States..................................................... 110
Atkins, Louis............................................ 121
Burrus, William.......................................... 110
Cantriel, Don............................................ 137
Hegarty, John............................................ 115
Rolando, Fred............................................ 129
Strong, Mark............................................. 145
Sires, Hon. Albio, a Representative in Congress from the
State of New Jersey........................................ 28
Small, Jordan, acting vice president, Office of
Accountability and Compliance, Postal Regulatory
Commission; John Waller, director, Office of Accountability
and Compliance, Postal Regulatory Commission; Phillip Herr,
Director, Physical Infrastructure Issues, U.S. Government
Accountability Office; Art Sackler, executive director,
National Postal Policy Council; Jerry Cerasale, senior vice
president, Direct Marketing Association; and Michael
Murphy, president, Japs-Olson Co........................... 38
Cerasale, Jerry.......................................... 84
Herr, Phillip............................................ 54
Murphy, Michael.......................................... 91
Sackler, Art............................................. 73
Small, Jordan............................................ 38
Waller, John............................................. 46
Letters, statements, etc., submitted for the record by:
Atkins, Louis, vice president, National Association of Postal
Supervisors, prepared statement of......................... 123
Burrus, William, president, American Postal Workers Union,
AFL-CIO, prepared statement of............................. 112
Cantriel, Don, president, National Rural Letter Carriers'
Association, prepared statement of......................... 139
Cerasale, Jerry, senior vice president, Direct Marketing
Association, prepared statement of......................... 86
Chaffetz, Hon. Jason, a Representative in Congress from the
State of Utah, prepared statement of....................... 24
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, prepared statement of............... 165
Hegarty, John, president, National Postal Mail Handlers
Union, prepared statement of............................... 117
Herr, Phillip, Director, Physical Infrastructure Issues, U.S.
Government Accountability Office, prepared statement of.... 56
Murphy, Michael, president, Japs-Olson Co., prepared
statement of............................................... 92
Norton, Hon. Eleanor Holmes, a Delegate in Congress from the
District of Columbia, Congressional Research Service's July
23, 2009 report............................................ 2
Rolando, Fred, national president, the National Association
of Letter Carriers, AFL-CIO, prepared statement of......... 131
Sackler, Art, executive director, National Postal Policy
Council, prepared statement of............................. 75
Sires, Hon. Albio, a Representative in Congress from the
State of New Jersey, prepared statement of................. 30
Small, Jordan, acting vice president, Office of
Accountability and Compliance, Postal Regulatory
Commission, prepared statement of.......................... 40
Strong, Mark, executive vice president, National League of
Postmasters of the United States, prepared statement of.... 147
Waller, John, director, Office of Accountability and
Compliance, Postal Regulatory Commission, prepared
statement of............................................... 48
MAKING SENSE OF IT ALL: AN EXAMINATION OF USPS'S STATION AND BRANCH
OPTIMIZATION INITIATIVE AND DELIVERY ROUTE ADJUSTMENTS
----------
THURSDAY, JULY 30, 2009
House of Representatives,
Subcommittee on Federal Workforce, Postal Service,
and the District of Columbia,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:22 a.m., in
room 2154, Rayburn House Office Building, Hon. Stephen F. Lynch
(chairman of the subcommittee) presiding.
Present: Representatives Lynch, Chaffetz, Norton, Davis,
Cummings, Kucinich, Connolly, and Bilbray.
Staff present: William Miles, staff director; Margaret
McDavid, detailee; Daniel Zeidman and Christina Severin,
interns; Dan Blankenburg, minority director of outreach and
senior advisor; Adam Fromm, minority chief clerk and Member
liaison; Howard Denis, minority senior counsel; and Alex
Cooper, minority professional staff member.
Ms. Norton [presiding]. The Subcommittee on Federal
Workforce, Postal Service, and the District of Columbia will
come to order.
The chairman will return shortly. Meanwhile, I want to
welcome the ranking member, Mr. Chaffetz, members of the
subcommittee, hearing witnesses, and all of those attending
today.
Today's hearing is intended to discuss the Postal Service's
recently proposed initiative to study the activities of nearly
3,200 postal stations and branches across the country for
consolidation purposes, as well as to examine the Postal
Service's cost-cutting and consolidation related efforts,
including mail delivery, route adjustments, and related
impacts.
The Chair, ranking member, and subcommittee members will
each have 5 minutes to make opening statements and all Members
will have 3 days to submit statements for the record.
At this time, I would like to ask unanimous consent that
the Congressional Research Service's July 23, 2009 report on
postal retail facility closures be entered into the record.
Hearing no objection, so ordered.
[The information referred to follows:]
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Ms. Norton. Ladies and gentlemen, today's hearing comes on
the heels of the Postal Service, as you may have read, being
placed on the Government Accountability Office's 2009 high-risk
list, which is largely due to the Service's abysmal financial
condition, an issue this subcommittee has followed closely.
But even before the Postal Service returned to GAO's high-
risk list, alarms had already sounded regarding the Postal
Service's revenue generating problems. For the first time in
decades, the organization reported a net loss of over $2
billion for fiscal year 2008. Losses for this year may exceed
$7 billion, despite the Postal Service targeting of $6.1
billion in cuts.
While we may be unable to pinpoint whether the recent
economic downturn, the steady diversion of mail to other
mediums, or a combination of both is to blame for the current
troubles, what we do know is that mail volume has dropped
precipitously, from roughly 213 billion pieces in fiscal year
2007 to a total of 203 billion pieces in 2008, and projections
for this year indicate that the volume will continue to fall by
possibly 28 billion pieces, to a total low of 175 billion
pieces.
The writing is on the wall and the Postal Service obviously
has to make some tough decisions if it expects to weather this
current storm. These decisions may involve more across-the-
board cuts and work hour reductions, as well as accelerated
consolidations of facilities and operations, which brings us to
the subject of today's proceeding, ``Making Sense of it All: An
Examination of USPS's Recently Proposed Station and Branch
Optimization Initiative.''
Although at first glance the initiative seems to simply be
the latest step in the Postal Service's multi-pronged effort to
reduce its costs by removing excess network capacity, we all
know that the devil is in the details, and that is what we are
here to find out this morning. It is critically important that,
even in the preliminary phases of studying the consolidation of
nearly 3,200 station and branch locations, we all have some
level of understanding about the potential impact such changes
could have on costs.
Perhaps more importantly, we need to understand what effect
these proposed changes may have on postal customers, committed
employees, and communities in general. To that end, today's
oversight hearing has been convened. The subcommittee is
interested in having the Postal Service fully articulate its
recently proposed station and branch consolidation initiative.
Today's hearing also is intended to take an in-depth look at
the Postal Service's efforts to achieve greater delivery
efficiency through the adjustment of letter carrier routes.
This subcommittee looks forward to learning more about
route adjustments, the impacts associated with these changes,
and the savings achieved from these actions. It is my hope that
the testimony and feedback we receive from today's witnesses
will allow us to gain that knowledge.
Again, I thank each of you for being with us this morning
and I look forward to your participation.
Ms. Norton. I am now happy to yield to the ranking member,
Mr. Chaffetz, for 5 minutes to make his opening statement.
Mr. Chaffetz. Thank you, Madam Chair. I appreciate it.
On June 24th, the subcommittee amended and marked up H.R.
22, allowing the Postal Service to adjust required payments to
future retiree health benefits. The full committee adopted our
approach by marking up the bill on July 10th. To this date, it
is still very disappointing that the Democrats have chosen not
to bring up this bill to the floor with such broad bipartisan
support.
The U.S. Postal Service correctly advised us at the time
that the legislation, while substantial, would not completely
resolve all of their financial issues. That has certainly
turned out to be the case. Just this week, the GAO announced
that the U.S. Postal Service would be designated as ``high
risk.'' This is sobering news.
In 2006, the Postal Accountability Enhancement Act was
passed in part to help get the Postal Service off the high-risk
list, which it did. Thus, GAO's renewed designation should
serve as another powerful reason for Congress to act, and act
quickly, in passing H.R. 22, and any other legislation which
will help get the Postal Service out of the financial swamp it
now finds itself in.
Consolidating branches is important and complex.
Consolidation can best take place on the merits for the system
to work. A primary reason the Postal Service is in trouble
right now is because it lacks some of the flexibility to adapt
in a changing environment. The U.S. Postal Service has
experienced the largest drop-off in mail volume in its 234-year
history, greater than the declines during the Great Depression.
A number of major mailers are in financial straits. Bulk mail
volume and advertising mail is down. This is due in part to the
poor state of the economy. Also, the postal monopoly does not
extend to email and Internet advertising, which continues to
grow.
The forecast for the return of these volumes are not
optimistic. The Postal Service must right-size itself to the
market it serves. When looking to make cuts and finding long-
term solutions, one must evaluate the entire operation of the
Postal Service. I look forward to discussing the rearranging of
delivery routes and other potential structural changes. But
even that is not a complete solution.
One of the changes being pondered is an exigency rate
increase of 2.4 percent to be established ``only when justified
by exceptional or extraordinary circumstances.'' But raising
the price of an item will only reduce sales, in my opinion, not
increase them, especially when demand is clearly decreasing.
Thus, the rate increases appear counter to any sound economic
logic and will only serve to further complicate the U.S. Postal
Service's woeful financial circumstances. I will not support,
nor do I believe we need, a rate increase on postage stamps.
There are those who suggest that the Postal Service is a
dinosaur living in a modern world. It is certainly a paper-
based, labor-intensive service at a time when most Americans
are more and more comfortable with email and Internet
communication. However, the Postal Service remains essential,
vital, in want of a constitutional imperative. In my own
personal opinion, I think the Postal Service as a whole has
done a very substantial amount of work to decrease the costs
associated with it.
Not only do we need to look at cutting the costs; we also
need to look at how to make the Postal Service more relevant in
the modern world. It is vital to our communities; it is vital
to business interest, and I think we all support and want to
see the Postal Service thrive. I know that is why the
gentleman, representative is here today.
One thing that I would hope that we would explore, Madam
Chair, with the discussion today is the difference between the
rural components and the urban components, because there are
factors that are distinctly different in the rural areas, for
instance, in my district, than some of the urban issues, and I
want to make sure that we explore those in the discussions
today.
With that, I will yield back.
[The prepared statement of Hon. Jason Chaffetz follows:]
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Ms. Norton. I thank the ranking member.
Are there other members of the committee who wish to make
an opening statement? Mr. Connolly.
Mr. Connolly. I thank the chairlady and I thank Chairman
Lynch for holding this hearing.
I am afraid the Postal Service leadership has leapt to the
conclusion that the only way to keep the Postal Service
solvent, in addition to passing H.R. 22, is to cut back on
hours, and even days, of operation. I believe that any short-
term steps must be taken in the context of consideration of the
long-term business model for the Postal Service. Short-term
cuts and service will have long-term impacts on utilization of
the Postal Service.
We must learn how the Postal Service intends to remain
solvent during future cycles of economic growth and
contraction. Cuts in hours and service for post offices
represent a major loss of service for northern Virginians, for
example. Without operating in the evening, most residents are
not able to use their post office due to the length of commutes
in our region. Bristol, Prince William County, had the longest
commute in the United States. Unfortunately, changes in hours
have been executed in the past without coordination or even
notification of elected officials. This examination is
particularly important in light of GAO's recommendation that
USPS consider restructuring to address its current and long-
term financial viability.
Efficiencies that can be derived without loss of service or
jobs should be considered first, before employees or consumers
are asked to make those sacrifices. The Postal Service should
identify all the savings that can be realized through area mail
processing consolidations and network distribution center
closures, and make every possible effort to avoid layoffs
associated with those closures.
I appreciate the opportunity, Madam Chairwoman, to explore
these issues and look forward to hearing about the protections
the Postal Service must employ to protect their consumers and
their employees. In the final analysis, however, USPS must move
to a new business model, one that takes cognizance of vigorous
competition and the impacts of technology on the traditional
rain, snow, sleet, or hail model that has provided exemplary
service to the Republic for over two centuries.
I thank you and yield back.
Ms. Norton. Thank you, Mr. Connolly.
Mr. Kucinich.
Mr. Kucinich. I thank the gentlelady.
I am a strong supporter of the Post Office and I am deeply
concerned about the USPS's financial condition, and I
appreciate the magnitude of the task that is ahead for the
Postal Service to ensure that it continues to be a postal
service.
On July 16th, the Postal Service announced 16 Post Office
branches in the Greater Cleveland area would be reviewed for
possible consolidation. After reading the testimony and the GAO
report for this hearing, and after hearing from my
constituents, I have many concerns. I am concerned that final
decisions regarding each branch under consideration for
consolidation will be made without full community participation
and input.
I am concerned that people in my community and communities
across the country will face a significant and unnecessary
reduction in access to crucial services. I have concerns about
the private sector taking over services that these facilities
provide, because privatization of a public need like the Postal
Service would be a disaster. And I think this committee ought
to be very wary of privatization being an undercurrent in the
Post Office. I can tell you, as chairman of the Domestic Policy
Subcommittee, the general topic of privatization is something
that we are looking into.
I just want to say that this review process has to be done
at the local level and must consider the unique demands on each
individual facility to ensure that the concerns of the
community, customers, postal workers, and the effects on the
local economy are fully considered.
Madam Chair, beyond the serious local concerns that I have
about Cleveland, look what is happening in our country right
now. Over the last few decades, we have seen a de-
industrialization, insurance redlining, mortgage redlining, the
subprime loan fiascos, the foreclosures, bankruptcies, high
unemployment, business closings, even churches and schools
closing. And look at the communities that are affected the
most, exactly the communities that have the highest need for
postal service. Start closing some of these branches, you are
talking about creating ghost towns.
I have concern about the finance of the Post Office, but it
is very interesting. When you talk about maintaining universal
postal service, which is really a right in a democratic
society, good people say, well, how are you going to pay for
it? Where was that question when the TARP came out, how are you
going to pay for it? Seven hundred billion dollars thrown away
to Wall Street. Trillions of dollars given to big banks, banks
parking money right now at the Fed; Fed paying banks not to
loan money to businesses in our community. How are you going to
pay for it? Three trillion dollars, at least. How are you going
to pay for it? No one really asks that question.
When it is the Postal Service, something that everyone
uses, how are you going to pay for it? It is the same kind of
crummy debate that is going on right now over universal health
care, where the insurance companies are hovering over
Washington like a flock of vultures, just waiting to see what
they can pick up from the taxpayers. How are you going to pay
for it?
If we are committed on universality of service, then we are
going to take a stand on behalf of the Post Office. If we are
committed to university of service, then we are going to take a
stand on behalf of postal retirees, who the U.S. Postal Service
right now is looking at cutting into their retirement benefits.
If we are going to take a stand on behalf of universal service,
then we have to do it and challenge those who somehow believe
that if the Government has to pick up an increased cost here,
then somehow that is anathema.
Well, we have to ask what is the Government for, is it just
for war? Is it just for being a gas station for wealthy special
interest groups? Or are we a Government of the people, as
Lincoln prayed? We are about to find out.
Mr. Lynch [presiding]. The Chair now recognizes the
gentleman from Maryland, Mr. Cummings.
Mr. Cummings. Mr. Chairman, I want to hear the witnesses,
and I would associate myself with my colleagues' statements.
With that, I yield back.
Mr. Lynch. The Chair recognizes the gentleman from
California, Mr. Bilbray.
Mr. Bilbray. Yes, Mr. Chairman.
In the spirit of transparency, I want to admit and announce
that, yes, the James Bilbray on the Postal Commission is my
first cousin, the former House Member, as the delegate knows.
But I have to sort of reflect, again with my colleague from
Cleveland, that there are a whole lot of things this town does
and a whole lot of money that the Federal Government spends
that has no nexus to the constitutional responsibilities.
Postal Service is one that is specifically enumerated in
the Constitution; it is specifically a responsibility solely of
the Federal Government. It is not an incursion onto States' or
local rights; it is not an expansion beyond the founding
fathers' intention for us to maintain and enhance the Postal
Service. So I think this is one place that Republicans and
Democrats should finally find a middle ground we can cooperate
and agree on.
I yield back.
Mr. Lynch. I thank the gentleman.
In full disclosure as well, I have mentioned this on
numerous occasions, but I think at last count I have 17 members
in my family, extended family--cousins, in-laws, uncles, aunts,
sisters, mom--who are either actively working for the Post
Office or are retirees.
So, that much being said, it gives me great pleasure to
welcome Representative Albio Sires from New Jersey, who was the
sponsor of a piece of legislation that is coming before the
committee and I want to recognize him for 5 minutes.
Actually, it is the custom of this committee to swear
witnesses who are to provide testimony before it, so could I
please ask you to stand and raise your right hand?
[Witness sworn.]
Mr. Lynch. Let the record reflect that the gentleman has
answered in the affirmative. And the gentleman is recognized.
STATEMENTS OF HON. ALBIO SIRES, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF NEW JERSEY
Mr. Sires. Thank you, Mr. Chairman, ranking member, members
of the subcommittee. Thank you for allowing me to testify
before you today regarding my experience with a post office
closing in my district and the need to properly inform and
involve the public in the closing process.
I am very concerned about the Postal Service's recent
announcement to consider closing more than 3,000 retail post
offices. I understand that the Postal Service's financial
problems are daunting. I know they are having problems
operating. But no amount of financial stress should relieve
them from providing a transparent closing process with
significant community involvement.
Post offices are an important part of communities. I
witnessed this firsthand. My experience with the closing of a
Postal Service in the Lafayette Station in Jersey City, with
almost no notification to the public or public officials, the
reason given was that it was security reasons, that it was not
safe.
Well, the community became upset, very upset. They had a
demonstration in front of the main post office in Jersey City.
They responded by putting a mobile station where the post
office was. A few weeks later, again, the mobile station was
removed; no reason given other than security. And there was
very little notification to the community. The closing of the
post office was hard on seniors around this particular post
office.
I was able to involve the other two Members of Congress,
plus the two Senators, in this post office closing. Very little
information came forward from the Postal Service regarding the
reason why this post office was closed. And when you think of
two Senators and three Congressmen not getting information, to
me, that is just not the way it is supposed to be. I don't
think even the President could have saved this post office.
To me, it showed a lack of compassion and a lack of
sensitivity to communities, and we finally, after many, many
months, find out why, the reason of the closing of this
particular post office, and it was financial. This is the
reason why I introduced my bill.
Basically, the bill limits the effect of financial reason
on closing of the post office. It doesn't eliminate it, but it
is not the main reason for closing a post office. It eliminates
the dual system and makes one unified closing process. Right
now, if you have a main post office, there is a process
established by Congress for the main post office, but the
satellite post office they can close at any time, without any
reason.
I am not an expert on post office, but I know at least in
the urban area--I don't know outside the urban areas and
suburban areas, but usually there are one main post office with
many satellite post offices. That this bill does, it increases
the notification to the public and it extends the public
comment from 60 to 90 days.
It is my hope that to make the closing transparent and
inform the people that are going to be affected by the closing
of a post office. I have more than 80 Members that have signed
on to this post office bill and I do hope that in the hearings
that you have in the future, that you recognize that finances
are important, but I think community, what it does to an area,
access to people who do not have the ability to drive, seniors,
that you take all those into consideration, because, like it
was stated here before, in the Constitution, it does state that
this is one of the services that we have to provide.
So I thank you for allowing me to testify here today and I
do hope that, in the end, we can make this Postal Service a
little more responsive. Thank you very much.
[The prepared statement of Hon. Albio Sires follows:]
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Mr. Lynch. I thank the gentleman.
Do any Members have any questions for Mr. Sires?
Mr. Chaffetz. Thank you, I appreciate it.
We were talking about this before. How can we distinguish
the difference between the urban components and the rural
components? I mean, this is a real concern. They both have
issues, but they are both different issues. How do you see us
addressing that?
Mr. Sires. Congressman, I have to admit I am an urban
person. [Laughter.]
I live in a community that is 1 square mile. I have 50,000
people in my community. I love to sit down with someone that is
not an urban person and talk about these issues.
Mr. Chaffetz. So just addressing the urban component, what
are the issues? You talk about, in general, in the bill, about
there are community issues, you have a large elderly component.
Kind of list out off the top of your mind what those issues are
that you have to deal with in the urban component.
Mr. Sires. Well, access. Seniors do not have the ability to
walk a mile away in Jersey City to deal with the post office.
Seniors do not use computers. Seniors do not have computers.
Seniors that I deal with can barely pay their electric bill. So
basically it is access to the postal services, which I am sure
that is also in your areas. This is the main concern of many of
the people in the area, plus the fact that it was just closed
from 1 day to the next. There was no plan other than say, well,
there is a post office a mile away; deal with that post office.
Mr. Chaffetz. How are we ultimately going to make these
decisions? My guess is, if you were to ask all 435 Members of
Congress, nobody wants to have a post office closed in their
district. Yet, clearly, we have to do some sort of
consolidation. Certainly, there are some criteria by which we
need to consolidate some of the facilities. The number may or
may not be right. What are those criteria? How are we
ultimately going to come to that decision? Should it be a BRAC-
like process? How do you see this happening?
Mr. Sires. I don't think that is such a bad idea, something
like that, or in terms of what else can we do for the Post
Office, whether we have to--I know you don't believe in giving
them more money, but if this is a service that must be
provided, I am not opposed to that.
Mr. Chaffetz. Well, I actually think there is probably more
justification for using Federal funds to help fund the Postal
Service, given its constitutional designation, than probably
most every other thing that we do in this Government. So I am
not necessarily, out of hand, just opposed to supplementing
what is happening there.
Mr. Sires. I agree with you on that issue.
Mr. Chaffetz. Specifically about that review process, that
open comment process, how do you see that happening? Because
the difference between 30 days or 60 days or 60 days to 90
days, if the process itself doesn't allow for the dialog to
happen and true consideration of maybe some of the other
factors that go into how important that post office is in that
community. Help me understand how that process should work, in
your viewpoint.
Mr. Sires. Well, in my viewpoint, there should be
notification through the newspapers that this is taking place.
The local elected officials should be informed that this is
happening. I think that there should be some sort of
announcement by the Post Office long before that. The reason I
extended it to 90 days is to get more participation in this
process.
To me, it is just plain wrong to go in there and close the
post office without giving any reason why. I mean, there has to
be a better reason than just finances to close a post office,
and that is what I tried to do with this bill.
Mr. Chaffetz. Thank you, Mr. Chairman. I yield back.
Thanks.
Mr. Lynch. Thank you. Just claiming a few minutes of time.
I do, as well, represent an urban district, mostly urban,
although I have suburban. I have 19 towns that are more
suburban in nature, but I represent a significant part of the
city of Boston and the city of Brockton, which are clearly
urban. I just want to say I agree with the gentleman's
observation that these post offices and stations and branches
are intensely local institutions. They are not only commercial
centers; they are also social centers.
And I think we remember that when we ask the general public
to grade public employees, they consistently grade their postal
workers, their mail handlers, their letter carriers, postal
supervisors and postmasters the highest of any public employee.
So those relationships between the communities and the Post
Office at that local level is intensely personal.
And when we see the disruption that is created by a
closing, it has very real and dramatic impact on the people
that we represent, so it creates a real dilemma for us, and we
need to figure out a way to be able to guide the community when
something like this has to happen.
Someone once said there is nothing more disruptive to the
human condition than the power of a new idea. People just hate
change and, unfortunately, we have seen 9 billion pieces of
mail taken out of the system last year; 23 billion projected
out of the system this year because of the economy and people
moving to electronic media like email and electronic payment
systems. We clearly have to reconcile our revenues with the
size of our system, so that is going to be a very delicate
process.
I do agree with the gentleman that whole process needs to
be more inclusive with the community and with the
representatives who are responsible for those areas, and that
is our task, that is part of the responsibility of this
hearing, and we really appreciate your bill.
I do have to say that I don't know where the Post Office
turns if they can't right-size their system based on cost. It
leaves them with very little opportunity. They have very
limited power right now, very limited flexibility. And this is
a challenge not for the Post Office alone, it is for all of us;
it is for the employees, for the unions.
Our task is to preserve high quality, affordable, universal
service through the Postal Service, and we need to bring the
Post Office into the next century, the next iteration to
compete with all of these new technologies. So we have a task
here of preserving that. Otherwise, either we are going to have
a big bailout, and I don't know if the Nation and the taxpayer
are going to entertain another bailout, this time for the Post
Office.
I am just very leery about the changes that collapse, we
are on the verge of somewhat of a collapse here in terms of the
funding mechanism, and what that might bring. It might bring a
lot of changes that none of us, the customer, the unions, the
users, the mailers, none of us want. I just don't want to see
us, by default, allow the economic forces to define what the
Postal Service will look like in the future.
The Chair recognizes the gentleman from northern Virginia,
Mr. Connolly.
Mr. Connolly. I thank the Chair.
Mr. Sires, your bill, as I understand it, does not preclude
the closing of branch post offices, it addresses the need for
notification to the community and elected officials, is that
correct?
Mr. Sires. Yes, and financial reason is not the only reason
for closing a post office.
Mr. Connolly. So it requires some proffer of the rationale
for why the consolidation?
Mr. Sires. Yes.
Mr. Connolly. But in and of itself, your bill does not
preclude the contemplation of such consolidation?
Mr. Sires. No.
Mr. Connolly. Does your bill also address the issue of
changing the hours of operation?
Mr. Sires. No.
Mr. Connolly. Let me just suggest to you that certainly in
my urban area, that is as much an issue as how many branches
there may or may not be. Particularly with long commutes,
evening hours are very important for people to access postal
services and to do their business, and I would just suggest to
you that we may want to think about adding that to the
notification procedures to local officials and the community.
It may or may not be necessary, but to do it without any
notification is terribly disruptive and has impacts that start
to rival those of closure itself.
Mr. Sires. Thank you, Congressman Connolly.
Mr. Chairman, I certainly agree with all the comments that
you said, and I would just end by saying that this is not my
first encounter with the Post Office. I couldn't even get
response from the Postal Service when they removed a mailbox in
Elizabeth, NJ.
Mr. Lynch. You need to call me, then. When you have
problems like that, you need to call me. That is unacceptable.
Mr. Sires. I am looking for responsiveness; I am looking
for sensitivity. I am looking for some sort of compassion from
the Postal Service.
Mr. Lynch. Let me just say that I think what the gentleman
is looking for here is notice so that he is able to represent
the people who elected him, which is a very basic right and
obligation, a right in terms of the people to be represented
and an obligation on the gentleman to do his job. But, to do
that, he needs notice and he needs to know what the rationale,
the reasoning is for any proposed closing. He needs a fair
opportunity to address that.
He needs to know what the factors are that have been placed
behind this decision and he needs to have and the people that
he represents need to have a part in this process so that
essential services are not eliminated and that the employees
here, the letter carriers, the mail handlers, the clerks, the
postal supervisors and postmasters are treated fairly during
this process and they are not just blind-sided by this.
I actually think if that type of conduct were to be the
norm that you experienced, it would stop; it would basically
stop any changes, because we can't have it done that way, and
that simply cannot be tolerated.
But I want to thank the gentleman for offering his
thoughtful legislation.
The Chair recognizes the gentleman from California, Mr.
Bilbray.
Mr. Bilbray. Thank you, Mr. Chairman. I know you want to
move on, but I just have some questions for the author.
When you talk about notification in the paper, you are not
talking about legal advertisement, are you?
Mr. Sires. Yes.
Mr. Bilbray. Congressman, how many of your constituents--I
know there are some that do that, but wouldn't a news release,
a media communication that ends up somewhere on the front page
or on one of the pages that people read be a so much better way
of informing the public than putting it back and basically--
and, let's face it, it is a financial situation for papers to
put it in the legal notifications, but I will tell you
something, being a mayor, being a county worker, I just found
that legal notifications were the worst way to notify the
public of anything.
Mr. Sires. Well, I was a mayor for 12 years; I know exactly
what you are talking about. But I still say that is just not
the only reason, through the news, to inform the public. There
are some type of ads that are not as expensive, but I think it
gets the message, at least from what I experience.
Mr. Bilbray. Well, wouldn't you find out that in most
communities where the media was directly notified that, look,
we are considering closing the local post office, that would
not carry enough of a story to be able to allow the public to
know that the media would respond to that kind of notice?
Mr. Sires. Sure, the media would respond, but that is a 1-
day story, maybe a 2-day story. But how do you follow it up?
Mr. Bilbray. OK. I still say that I just think that it is
fine if you want to do a legal notice, but the fact is the
public doesn't read legal notices. That is a way we finance
papers. And I know papers are the next crisis that we are all
talking about.
Mr. Sires. I don't necessarily mean the legal notice that
you are talking about, the small section in the back, but there
are other ways of noticing it.
Mr. Bilbray. OK. And your issue of it shall not be solely
for finance, what other conditions would be required to close a
station? I think of Mr. Connolly's--in fact, I know he already
has his memorial post office picked out there at Mt. Vernon,
which is a trailer. I assume Mt. Vernon makes money for the
Postal Service because it is right there at Mt. Vernon. But
what are the other conditions that would be required under your
bill before they can close it?
Mr. Sires. Well, in my particular district--not other
districts--I have four senior citizens' buildings around this
post office, large senior citizen buildings. They need access
to the post office. Basically, they come down, they walk a
block or two, and they are at the post office. That could be a
consideration, access to the most needy. Also, you have people
doing business, small businesses, mom and pop shops that need
some of this post office nearby. Time is money.
Mr. Bilbray. But you haven't enumerated examples of what,
in your bill, would also be required besides the financial; you
just basically say financial cannot be the sole.
Mr. Sires. There is a bill already in Congress that takes
into consideration a number of issues before closing a post
office. I just don't want, in my bill, the financial aspect to
be the only aspect. The other ones that are in the bill are
fine also.
Mr. Bilbray. OK. Thank you.
I yield back, Mr. Chairman.
Mr. Lynch. I thank the gentleman.
We thank you for your thoughtful testimony and coming
forward and helping the committee with its work, and we
appreciate it. There may be questions for you from other
Members who aren't here right now, and we will just ask you to
respond to those in writing.
Mr. Sires. I want to thank you, Chairman. I want to thank
all the Members. Thank you very much for your interest.
Mr. Lynch. Thank you.
The Chair will now welcome the second panel. Good morning.
It is the customary practice of this committee to swear all
witnesses who are to provide testimony. Can I please ask you to
rise and raise your right hands?
[Witnesses sworn.]
Mr. Lynch. Let the record reflect that all of the witnesses
have answered in the affirmative.
As you may notice, there are two small boxes in front of
you. The practice here is to allow each witness 5 minutes. It
will show a green light while your testimony is being given.
When that light turns yellow, it means you have 1 minute to
wrap up, and when it shows red, it requires you to stop
speaking.
What I would like to do is just offer a brief introduction
of our second panel of witnesses.
Mr. Jordan Small is acting vice president, Network
Operations for the U.S. Postal Service; Mr. John Waller is
director of the Office of Accountability and Compliance at the
Postal Regulatory Commission; Mr. Phillip Herr is Director of
Physical Infrastructure Issues at the Government Accountability
Office; Mr. Jerry Cerasale is senior vice president of the
Government Affairs for the Direct Marketing Association; Mr.
Arthur Sackler is the executive director of the National Postal
Policy Council; and Mr. Michael Murphy is president of the
Japs-Olson Co., a printing and logistics company in St. Louis
Park, MN.
Thank you all for your willingness to come forward and help
the committee with its work. I now recognize Mr. Small for 5
minute for an opening statement.
STATEMENTS OF JORDAN SMALL, ACTING VICE PRESIDENT, OFFICE OF
ACCOUNTABILITY AND COMPLIANCE, POSTAL REGULATORY COMMISSION;
JOHN WALLER, DIRECTOR, OFFICE OF ACCOUNTABILITY AND COMPLIANCE,
POSTAL REGULATORY COMMISSION; PHILLIP HERR, DIRECTOR, PHYSICAL
INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE;
ART SACKLER, EXECUTIVE DIRECTOR, NATIONAL POSTAL POLICY
COUNCIL; JERRY CERASALE, SENIOR VICE PRESIDENT, DIRECT
MARKETING ASSOCIATION; AND MICHAEL MURPHY, PRESIDENT, JAPS-
OLSON CO.
STATEMENT OF JORDAN SMALL
Mr. Small. Good morning, Mr. Chairman and members of the
subcommittee. I am here to talk to you about the steps the U.S.
Postal Service has taken to make mail delivery as efficient as
possible, our future operational plans to continue to improve
delivery efficiency, and the station and branch optimization
initiative.
As you are well aware, the financial situation of the
Postal Service is grave. It would be far worse were it not for
the aggressive actions we have implemented. For example, since
2002, we have reduced cost by more than $1 billion annually.
These efforts are particularly impressive when you consider
that our delivery network continues to grow at a rate of about
1.2 new delivery points each year. In effect, we are delivering
less mail to more addresses, which means we receive less
revenue per address served.
Cutting costs in deliveries is particularly challenging
because a substantial portion of delivery costs are fixed. Our
carriers must deliver to each address whether there is one
piece of mail or several. Within these constraints, we have
embarked upon several initiatives that have improved delivery
efficiency. The first initiative is the historic interim
alternate route adjustment process that we have agreed to with
the National Association of Letter Carriers, NALC, in 2008.
This agreement enabled us to jointly conduct evaluations on
some 93,000 routes and rapidly eliminate approximately 2,500
routes. Realizing that additional process improvements could be
made, both parties jointly agreed to a new modified agreement
in April 2009. The cost savings are estimated to eliminate
approximately 25 million city delivery work hours, or some $1
billion over fiscal years 2009 and 2010.
One consolidation activity that is underway is the review
of station and branch locations in larger cities where we have
a number of offices in close proximity. We began the review
with some 3,200 locations that handled the most retail
transactions and the most deliveries. We anticipate that out of
these 3,200 locations, less than 1,000 will be considered as
viable candidates to study further.
Changes in mail processing technology have reduced the
amount of space needed for carrier operations at many stations
and branches. As a consequence, opportunities exist to
consolidate carrier operations into fewer locations without
affecting service. Many stations and branches were established
at a time when first class mail volume growth was robust. There
were few means of alternate access to postal services and
virtually all retail revenue came from window transactions.
Today, about 29 percent of retail revenue is generated through
alternate access channels, such as our Web site, USPS.com, and
automated postal centers.
As local management undertakes the station and branch
review, they will consider factors such as customer access,
service standards, cost savings, impact on employees,
environmental impact, real estate values, and long-term postal
needs. We are taking all of these actions to use our resources
wisely and position the Postal Service to survive this
financial crisis, while continuing top-quality service to the
American public.
Along this line, I ask Congress to support the Postal
Service's efforts to operate in a business-like manner as we
make necessary decisions. As you know, the Postal Service has
alerted stakeholders that mail volume levels can no longer
sustain 6-day-a-week delivery. In prior testimony, the
Postmaster General asked Congress to consider allowing a change
in delivery frequency. At the same time, the Postmaster General
tasked postal management with undertaking an internal review of
5-day delivery so we have sufficient information and data to
share with stakeholders.
We are in the process of finalizing our study and have
targeted the next months to share the results with our
stakeholders and to begin a series of community outreach
meetings. We plan to share this study with employees,
customers, mailers, and Members of Congress. Moreover, we will
be asking the Postal Regulatory Commission for an advisory
opinion.
In closing, I would like to thank this subcommittee and the
Oversight and Government Reform Committee for their action on
H.R. 22. I hope in the near future the House will be able to
quickly move retiree health benefit legislation. Finally, I
would like to reiterate our commitment to continuing to make
mail operations as efficient as possible while maintaining our
excellent levels of service to the Nation.
Thank you and I would be pleased to respond to your
questions.
[The prepared statement of Mr. Small follows:]
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Mr. Lynch. Thank you, sir.
Mr. Waller, you are now recognized for 5 minutes.
STATEMENT OF JOHN WALLER
Mr. Waller. Thank you, Chairman Lynch, Ranking Member
Chaffetz, and members of the subcommittee. Thank you for the
opportunity to testify on plans to adjust the retail and
delivery networks.
On July 2nd, the Postal Service requested a Commission
advisory opinion on Postal Service station and branch
optimization and consolidation initiative, the subject of this
hearing. Docket N2009-1 was quickly established and the public
was notified through the Federal Register, the Internet, and
press releases.
This morning the Commission held a conference with persons
interested in this consolidation to identify expectations for
the docket and all procedural concerns. With this input, the
Commission will shortly establish the agenda for examining the
initiative and addressing all the issues. To ensure a wide
range of public input, the Commission is considering holding
hearings outside of the Washington, DC, area.
What the Commission is being asked to do is determine if
this consolidation initiative will generate changes in the
nature of Postal Service on a nationwide basis and, if so,
issue this advisory opinion that the consolidation process
would result in closure decisions which will preserve levels of
service consistent with the policies of postal legislation; in
short, that the process will in fact achieve answers to a lot
of the questions that members of the committee have raised that
should be addressed. We are looking at that process to make
sure that all these issues, community input, etc., are in fact
applied.
Now, the process has been around for several years and
nearly 100 closures have occurred. Some of these have been
addressed here. One will occur tomorrow in Washburn, IA. The
new initiative will significantly accelerate that process. It
began in May of this year with the prescreening for
discontinuance of all stations and branches that reported to
postmasters of 24 pay grade level or higher. This covers
approximately 3,200 stations that are primarily located in
urban and suburban areas.
With this request, there was some certainty in the sense of
the guidelines were given that were supposed to be followed by
the Postal Service, but they did not specify the number of
offices to be discontinued, did not quantify the potential
changes in the nature of any affected postal service, and has
not estimated the expected financial savings. Questions are
being asked in the Commission's docket that hopefully will
clarify these facts and other aspects and criteria that will be
used in the decision process.
The Commission recognizes that, under the PAA, the Postal
Service has the flexibility and authority to make rational
adjustments to its operations and networks to meet its business
needs and create cost savings and efficiencies. This is
especially important in these stressful financial times. But
the Postal Service must be, by law, accountable and transparent
to all postal customers, be sensitive to the needs of the
community at the local level that it serves, and make changes
in a strategic manner.
In its most recent report on universal postal service and
postal monopoly, the Commission found that access to postal
service is a fundamental aspect of the universal service. A
2008 Commission-sponsored study found that households tend to
utilize their local post office extensively. Over half the
respondents reported that a member of their household visited a
post office in the last 7 days; an additional 25 percent
reported visiting within the last 30 days.
The Postal Service is obligated, under past and current
statutes, to provide for thorough public notice and input into
post office closure decision. The statute further gives the
Commission authority to hear customer appeals on such
decisions. The Commission has long held that a post office is
any retail location staffed by Postal Service employees, which
obviously includes stations and branches.
Yet, notification of the public's right to appeal to the
Commission is not part of the Postal Service closure process
being examined. Questions are being submitted, have been
submitted on this issue in the docket, and it is likely to
receive a thorough review in the Commission docket.
Now, the appeal process is simple, it is a letter submitted
to the Commission by postal patrons in that area saying, we
weren't notified, we weren't whatever it has to do with the
procedures weren't followed. It is not a complex, go to court,
procedure.
I see I am out of time, so I will conclude my oral
statement and welcome the opportunity to answer any questions.
[The prepared statement of Mr. Waller follows:]
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Mr. Lynch. Thank you, sir.
Mr. Herr, you are now recognized for 5 minutes.
STATEMENT OF PHILLIP HERR
Mr. Herr. Thank you. Chairman Lynch, Ranking Member
Chaffetz, and members of the subcommittee, thank you for the
opportunity to participate in this hearing. Today, I will first
provide updated information on the Postal Service's financial
condition and outlook; second, discuss GAO's decision to place
the Postal Service's financial condition on our high-risk list
this week; and, third, discuss the need to restructure postal
mail processing, retail, and delivery networks.
The Postal Service's financial condition has deteriorated
sharply over the past year. Mail volume is projected to decline
28 billion pieces this fiscal year, leading to some sobering
statistics: a net loss of $7 billion, an increase in
outstanding debt by the annual statutory limit of $3 billion,
and an unprecedented $1 billion cash shortfall that will
threaten the Service's ability to make its mandated annual
payment of $5.4 billion for future retiree health benefits.
The outlook for fiscal year 2010 is even more challenging,
as the Service is projecting its outstanding debt to increase
to $13.2 billion, just under its $15 billion statutory limit.
The Postal Service urgency needs to restructure to address its
current and long-term financial liability.
This week, GAO added the Postal Service's financial
condition to our list of high-risk areas needing attention by
Congress and the executive branch. We have called for a broad
restructuring plan that addresses key timeframes, and the plan
should address both short and long-term challenges. These
include realigning postal services to reflect changes in the
use of mail; better aligning costs with revenues; optimizing
its operations, networks, and work force; increasing mail
volumes and revenues; and retaining earnings to finance needed
investments and repay debt.
The restructuring plan should also include a strategy for
optimizing its networks to eliminate growing excess capacity,
maintenance backlogs, and reduce costs. Stakeholders need to
recognize that major changes are urgently needed. Such action
would also set the stage to reduce its work force through
attrition. In the next 4 years, a total of 300,000 employees
are eligible or will be eligible for regular retirement, close
to half of the career work force. The Postal Service has taken
some actions toward realigning its network, and I would like to
point out several of these.
In the retail areas, as discussed today, the Service
recently began a national initiative to consolidate some of its
roughly 37,000 post offices branches and stations.
Specifically, operations at over 3,200 retail stations and
branches located in urban or suburban areas are looking at for
opportunities for consolidation, and decisions are expected
starting this October. In terms of mail processing, the Postal
Service has taken actions to close smaller facilities and
consolidate other mail processing and transportation
operations. However, only one of approximately 400 major
processing facilities has been closed.
With regard to delivery operations and the report being
released today to this subcommittee, the Postal Service has
over 350,000 carriers, and delivery costs represent the Postal
Service's largest cost segment. There are two efforts underway
to enhance delivery efficiency. One, realigning city routes is
expected to generate about $1 billion in savings annually
through the elimination of work hours and routes, reduced space
needs, and more consistent delivery.
Through realignment, about 4,300 routes have been
eliminated to date, so there is some good progress. A second
delivery-related initiative focuses on the $1.5 billion flat
sequencing system that will automatically sort large mail
pieces such as catalogs and magazines into delivery order. On
routes covered by the new machines, city carriers, on average,
will manually sort nearly 500 fewer flat-sized pieces of mail
each day, allowing them to spend more time delivering mail.
In closing, while we recognize that the Postal Service will
face resistance in realigning its networks on several fronts,
we believe broad restructuring is imperative to help the Postal
Service achieve sustainable financial viability. For
realignment to succeed, the Postal Service must use a
transparent process that is consistently applied; engage with
unions, management associations, the mailing industry, and
political leaders; and it must also demonstrate results.
Mr. Chairman, this concludes my prepared statement, and I
am pleased to answer any questions you have. Thank you.
[The prepared statement of Mr. Herr follows:]
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Mr. Lynch. Thank you, sir.
Mr. Sackler, you are now recognized for 5 minutes.
STATEMENT OF ARTHUR SACKLER
Mr. Sackler. Thank you, Mr. Chairman. Good morning to you,
Ranking Member Chaffetz, and members of the subcommittee. The
National Postal Policy Council greatly appreciates the
opportunity to present its views on the station and branch
initiative.
In a nutshell, our members support this initiative to help
address the current financial contraction facing USPS and, in
the larger context, of providing the Postmaster General and his
team true flexibility to manage.
NPPC is the trade association for large business users of
letter mail, primarily in first class. Before the downturn, our
approximately 30 members collectively mailed about 39 billion
pieces and contributed some $9.5 billion in postage every year.
At the outset, let me say that the acceptance of the need
for meaningful change in the postal system has been growing in
recent days. Through no fault of its talented management team
or its truly dedicated working men and women, the Postal
Service is experiencing a catastrophic decline in volume,
volume that won't come back robustly and for years. Grappling
with the thorny issues of managing USPS to its actual volume
has become essential for preserving a bedrock institution still
essential to commerce and communications in the United States
in the 21st century.
So, as one aspect of change, we are pleased to be able to
discuss this initiative, for it is necessary not only in the
short-term, but in the longer term. NPPC has not undertaken a
scientific survey of its members, but the consensus view is
that, when the economy comes back, mail will not follow. There
should be some recovery in standard, but first class, which is
the most lucrative for the Postal Service, as you know, will
continue its decline, albeit at a slower rate. We support the
initiative because the current system of post offices and other
facilities grew up haphazardly with population growth and
shifts.
An orderly rethinking of the system is long overdue and
efficiencies in services are very likely to be obtained.
Second, the initiative will help streamline a system built
for far more mail volume than it has or is likely to have for
the foreseeable future.
Third, a carefully planned and thought-through effort to
close or consolidate facilities should yield some cost savings.
Fourth, the closings and consolidations will occur largely,
if not exclusively, in metropolitan jurisdictions. This should
lead, we hope, to a less emotional public reaction than in some
smaller communities. And given that there are other post
offices or facilities nearby, there should be continued easy
access for the public.
Fifth, and most importantly, NPPC believes that the
Postmaster General and his team need to have as much
flexibility to manage the system as possible, to run it like a
business. Over this decade, Postmaster General Potter, Deputy
PMG Donahoe and their management team have demonstrated
tremendous ability to drive costs out of the system. They have
done so while improving service and reducing the work force,
without alienating the unions and management associations.
In fact, it has been an intense cooperative effort. Because
of that outstanding track record, the senior postal management
team should be granted broad latitude to manage the system,
including optimizing stations and branches.
The urgency animating this plan and much else from USPS is
the daunting financial challenge it confronts. You know very
well that it is projecting 175 billion pieces of mail this
year, off some 37 billion from its peak just 2 short years ago,
with a $13 billion drop in revenue. So, Mr. Chairman, NPPC is
grateful to you, Ranking Member Chaffetz, Chairman Towns,
Ranking Member Issa, and the members of the full committee for
rapidly reporting out H.R. 22. We are particularly appreciative
of the prime sponsors, Messrs. McHugh and Davis. We urge H.R.
22's passage by the entire House at the earliest opportunity.
But, regrettably, USPS is going to need further financial
attention to right itself. When H.R. 22 was introduced last
winter, it seemed to give USPS enough relief. Unfortunately,
the accelerating loss of volume since has simply overwhelmed
the relief offered through H.R. 22.
We don't pretend to have the solution. Many possibilities
have been raised in this subcommittee and elsewhere. In
general, we believe that any long-term solution should be
balanced and call on all postal stakeholders to make equivalent
sacrifices to maintain the system. However, we feel constrained
to note that one possibility, an exigent rate increase, would
be profoundly counterproductive. We know neither the Postal
Service nor Members of Congress have called for such an
increase, but others in the postal community have raised it.
So let us be direct. Mailers simply cannot afford an
increase. They are doing everything they can to restrain costs
as their own businesses severely decline in recession. The
number of layoffs in the postal-based industries is, at
minimum, in the hundreds of thousands. There are also mergers
and bankruptcies. Budgets for all items in these industries
very much, including postal, are under tremendous pressure.
Even a small increase may have a significant adverse reaction.
But an increase large enough to address USPS losses would
virtually guarantee a large volume drain. Postal budgets simply
would not stretch to meet higher prices.
Thank you once again for this opportunity to present our
views. I would be pleased to answer any questions you may have.
[The prepared statement of Mr. Sackler follows:]
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Mr. Lynch. Thank you, sir.
Mr. Cerasale, you are now recognized for 5 minutes.
STATEMENT OF JERRY CERASALE
Mr. Cerasale. Thank you, Mr. Chairman, thank you,
subcommittee, for giving us the opportunity to be here. DMA
wants to thank you, Mr. Chairman, the subcommittee, and the
entire committee for H.R. 22. We all need a postal service, a
financially viable one, and the short-term--sadly, it is now
short-term--help that H.R. 22 gives us imperative.
The financial condition of the Postal Service is precarious
and, sadly, it is not improving at this point in time. The
Postal Service has to grow volume; it has to become more
efficient. But, at the same time, mailers are facing the same
financial conditions. The 22 percent drop in standard mail
advertising reflects that fact.
As the economy comes back, some of this mail will come
back. But, sadly, we don't think all of it will come back.
Mailers cannot shoulder another rate increase. As a matter of
fact, that rate increase may in fact prove fatal, both for it
and the Postal Service. We therefore support the summer sale
the Postal Service has put together in trying to increase mail
volume. We hope that this will be duplicated in the future with
more advanced notice and will be taken greater advantage of to
try and get mail back into the system.
Looking on the cost side, everything has to be on the
table. As our group, mailers, we are willing to talk about
everything to try and reduce cost. The things you are looking
at here today, looking at the delivery route adjustments, they
have been going on for my entire lifetime. My time up here as
an employee in the House, one of the complaints that I always
had at the Committee on Post Office and Civil Service was my
mail is not coming at the same times it used to; complaints
from businesses as well as individuals, and that, in fact, has
happened all the time as the demographics, the geographic
distribution of the American population has changed.
Right now we have to look at it from the point of view of
decreased volume, decreased revenue to afford the route system
that we currently have, and the good thing is that the Postal
Service is working with the NALC on looking at these route
adjustments. But these have been happening before. Sadly, the
economic times are forcing this to happen more rapidly at this
point in time.
But I think, from our view, the Postal Service is doing the
right thing and working with their employee groups to try to
get this right. Now, it hurts some of our members, because they
are not going to get the mail at the same time they received it
before, but that is one of the things that we are all working
together to try to keep the Postal Service strong and viable.
Looking at the stations and branches, it is our
understanding that the Postal Service is looking at not at
rural offices. They are looking at the proximity of other
stations and branches to the one that they are thinking about
closing; looking at the retail trends at that branch; looking
at the impact on the employees, the impact on the community,
which is very important; they are looking at the savings, the
net savings. If you close this facility and you have to move
employees and carriers come out there, there is more time. The
net savings has to be there. And then the ability of other
stations and branches to handle the traffic that is being
closed. So those are the things.
I think the setup that the Postal Service has put together,
they are looking at the right things; they are asking the
correct questions. And there is always the point of a PRC,
Postal Regulatory Commission, appeal. As the Postal Rate
Commission in 2006, the PRC, in an opinion, did say that if
this closed, the only postal retail service in a community,
even if it wasn't specifically a post office with a postmaster,
but a station and branch that they had jurisdiction. Not
everyone agrees, but that ability stays and this effort by the
Postal Service doesn't change that factor.
We all need the Postal Service, and we all have to chip in.
All of us have to chip in for its survival. We appreciate the
fact that you are aware of that, you are looking at that, and
we are here to try and help and do our part as well. Thank you.
[The prepared statement of Mr. Cerasale follows:]
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Mr. Lynch. Thank you, sir.
STATEMENT OF MICHAEL MURPHY
Mr. Murphy. Mr. Chairman and members of the committee,
thank you for allowing me an opportunity to appear before you
today to discuss some of the challenges facing the mailing
industry and the Postal Service.
My name is Michael Murphy. I am the president of Japs-Olson
Co., located in St. Louis Park, MN. We are a family business
that has been in operation for more than 100 years. Our
business is printing and mailing. We will produce more than 600
million pieces of mail this year for all types of customers
across the country.
I am here today also as chairman of the Board of the
Mailing and Fulfillment Service Association. MFSA is the only
association solely representing the mailing industry. We have
approximately 600 members, which are comprised of printers,
mailing service providers, product fulfillment companies, as
well as suppliers to the trade.
Needless to say, the Postal Service is a vital partner in
our businesses. Therefore, we believe it is important that the
Postal Service have the complete support of Congress to manage
its networks efficiently and to scale its infrastructure in
proportion to its business needs. Our company and MFSA members
urge the Congress to allow the leaders of the Postal Service to
do their jobs and to manage their public institution with the
same goal of efficiency as that of private industry.
The Postal Service's Board of Governors, the Postmaster
General, and the agency's senior executives must be given the
latitude to make the decisions necessary to return the postal
system to profitability. Those decisions include the necessary
measures that are essential to control cost and, in turn,
postal rate control.
We hear some suggest that many of the messages carried by
the Postal Service can be diverted to electronic distribution.
To the extent that this is true, it could result in hundreds of
thousands of jobs lost in the industries that depend on this
distribution system. In just the current recession, thousands
of jobs have already been lost in the supply chain that relies
on the mail.
Our association's experience over the past 18 months
suggests that, from just those companies that have gone out of
business, we have lost 1,500 jobs. Extrapolating that to the
industry as a whole, we believe that the industry has lost no
less than 15,000 permanent jobs during that same period.
Even with the challenges we have been facing, there are
still more than 8 million people whose employment is affected
by the postal system. We owe it to these people to ensure that
the postal system is on firm financial footing and will be a
viable public service in the future.
Thank you.
[The prepared statement of Mr. Murphy follows:]
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Mr. Lynch. Thank you, sir.
I yield myself 5 minutes.
May I start with Mr. Small? What I would like to avoid is
the situation that we had with the AMPs, what is it, the mail--
area mail processing facilities. All these acronyms.
We had a situation with the mail handlers out in Atlanta, I
think it was, where they identified one of their stations for
closure, one of these AMPs, and they gave the employees the
opportunity to relocate to Oklahoma City as part of that
closure. Obviously, that sent the employees through the roof,
and I don't think it was a thoughtful process.
While I admit that the finances here are very grave, as a
number of you have pointed out, there is the need,
nevertheless, to conduct ourselves with, I think, a thoughtful
approach to this consolidation and do it in a way that causes
the least bit of disruption and with all respect to these
communities and to the employees that are affected; and I think
it is possible. We have 37,000 post offices out there, and I am
sure that there are some that are close to each other and that
we can work this out.
But I have to ask you what are the criteria? You are making
these decisions. You have, what, 3,200 that you have
identified?
Mr. Small. Correct.
Mr. Lynch. And there are, you think, probably 1,000 out
there or a little less than 1,000 that might actually be
eligible for closure?
Mr. Small. Less than 1,000 that require further review.
Mr. Lynch. OK. Well, I know that the rural post offices are
off the list because, if you close one of those, you have
somebody driving 200 miles to a post office; and I understand
that. So we have a hold harmless provision for those post
offices that says even though they are not making enough money
to sustain themselves, we are going to leave them in there
because we have to provide essential services. Yet, you have
another post office in an urban area, maybe a poor minority
area in an inner city that is not generating enough revenue to
sustain itself either, and we are going to close that; and I
think Mr. Sires's testimony was on that point.
What are you using as the standard here? What are the
criteria? Can we figure that out? Do you have that laid out
somewhere? With 37,000 facilities here, we would like the
opportunity to be able to explain to our constituents what the
process was. It needs to be transparent, it needs to be fair,
it needs to be consistent; and hopefully it will make sense, it
will make sense economically, consistent with your goals, while
at the same time providing adequate access.
So what are the factors you look at in determining whether
somebody is eligible on the 3,200 list? How are they
determined?
Mr. Small. Thank you, Mr. Chairman. As I stated and you
stated, we are looking at, now, less than 1,000 offices,
because, out of the 3,200, the 2,200 were immediately
eliminated for consideration for various reasons, which I will
go into as part of the criteria.
Part of the criteria is what is the proximity of nearest
services; what are the mailing habits and consuming habits of
the American public with the Postal Service within those areas.
We have found that we have seen close to 5 percent less
activity at our retail units, while the percent of the American
public going to our Web site at USPS.com has increased.
Customers also go to various other means of alternate
access. So we look at the proximity of the nearest services; we
look at is there adequate parking at the nearest services; we
look at the mailing habits of the public in that area where a
station and branch is being served.
Mr. Lynch. OK. Well, I think my time has just about
expired, so I will do a followup later on, maybe in the second
round.
The Chair recognizes the gentleman from Utah.
Mr. Chaffetz. Thank you.
I appreciate you all for being here and sharing your
comments and expertise. I would like to start with the GAO, if
I could.
How many agencies or government entities are currently on
the high-risk list? I am just trying to get a perspective.
Mr. Herr. Twenty-nine, sir.
Mr. Chaffetz. Twenty-nine?
Mr. Herr. Twenty-nine, yes.
Mr. Chaffetz. At one point, the Postal Service was taken
off the high-risk list.
Mr. Herr. That is correct, yes.
Mr. Chaffetz. Just to highlight again--I know you talked
about this in your testimony, but the top reasons on why the
urgency. I think I understand the financial needs, but is there
something else above and beyond the financial peril that they
are in?
Mr. Herr. There are two different ways we look at the high-
risk list. In the one we used with regard to the Postal Service
is areas or agencies that we think are in need of broad
transformation. So, in this case, the Postal Service met that
criteria. I think the other thing is we tracked the financial
condition over the past year and we looked at those numbers
deteriorating. That made the case more compelling. If you add
in the mail volume drop, it suggests that a broad look at this
was needed and we, therefore, made that decision.
Mr. Chaffetz. I would like to hear about the 5-day
delivery. Is that something, Mr. Small or Mr. Waller, that has
definitively been decided? You are thinking about it. Is that
something that you think would happen week in, week out?
Mr. Small. We haven't concluded the study. We should be
finished with the study in the next couple of months, but----
Mr. Lynch. Mr. Small, is your mic on?
Mr. Small. Yes, sir.
Mr. Chaffetz. Maybe a little closer, just a little closer.
Mr. Small. We have yet to complete the study. The study
should be completed shortly, and we view it as the only viable
option right now----
Mr. Chaffetz. Can you give me a specific date?
Mr. Small. I don't have a specific date, but I will provide
one for the record.
Mr. Chaffetz. That would be great.
And who is participating in that study? We have a lot of
organizations, unions, whatnot, that are here. Who is
participating or, more importantly, not participating in the
input that will go into that study?
Mr. Small. We are working with the various stakeholders to
get their feedback; our customers, the PRC, and also the
unions. We have talked to the unions about these tough issues
associated with 5 day delivery. Members of Congress. So we are
making sure that we talk with all of our stakeholders to
understand what potential issues they would have by going to 5
day delivery.
Mr. Chaffetz. And those of you that represent the use of
the Postal Service from more of a customer standpoint, can you
give me--maybe starting with Mr. Murphy--your perspective on
what would happen with 5 day delivery, as opposed to 6?
Mr. Murphy. Well, we would support 5 day delivery in the
sense that it is a big area to control cost, and we feel that
is very, very important, overall, for this system to be pegged
to what is happening in the marketplace. So I would rather not
have it, but it is one of those items that is on the table and
will be valuable.
Mr. Cerasale. Our membership is somewhat divided. Some of
them----
Mr. Chaffetz. Five and a half day delivery?
Mr. Cerasale. Right. Some of them 5 day delivery would not
be a major impact. The Postal Service is talking about
Saturday. Saturday delivery is very important for them.
But I think all of them are looking at what are the
tradeoffs. The savings from 5 day delivery, what other things
are going to happen to try and improve the Postal Service? One
of the things we have to worry about is dramatic reduction in
service and raising rates. That really doesn't come out to a
very good solution. So those are the things that we are looking
at. We are waiting to take a look at an entire plan and we are
hoping to see what the study the Postal Service comes up with
is.
Mr. Chaffetz. Mr. Sackler.
Mr. Sackler. Mr. Chaffetz, we are in a similar position to
Jerry's members. We are not so much divided. I think the
sentiment generally is we wouldn't want to do this. We need to
have 6 days of delivery, but, again, what are the tradeoffs?
How do you get to a position where you resolve the Postal
Service's difficulties? So as part of a larger solution, I
think it could be something that could be seriously
entertained, and if it were done, it would be a sacrifice.
Let me just give you one example. We have quite a few banks
and financial institutions in our group, and for them
remittances flowing 7 days a week are vital. But it is not just
that. If there is a day of delivery that is taken out, then it
takes longer for bills to get there in the first place; there
are changes to float and, therefore, to business practices, to
financial viability, to responsibilities to shareholders, and
so forth. It is not an uncomplicated situation. So our view is,
if it is done, it has to be part of a larger long-term
solution.
Mr. Chaffetz. Thank you. I see my time has expired.
Thank you, Mr. Chairman.
Mr. Lynch. I thank the gentleman.
Who seeks recognition? The Chair recognizes the gentlelady
from the District of Columbia, Ms. Holmes Norton, for 5
minutes.
Ms. Norton. Thank you very much, Mr. Chairman.
First, let me go to get something clarified. Mr. Herr, the
GAO report, with this title, could have been written, at least
this title, any time in the last, I don't know, 10 years.
Broader restructuring needed to address deteriorating finances.
Why was the Postal Service taken off the high-risk list in
2007, please?
Mr. Herr. There are a couple of things factored into that.
At that point, the Postal Service didn't have outstanding debt.
The other thing is Congress had taken action to pass the PAEA
Act and we thought that would lay some of the groundwork going
forward.
Ms. Norton. But it would still have needed across-the-board
restructuring, would it not?
Mr. Herr. Well, the other thing is mail volumes have
dropped precipitously since that point. We have seen, just this
year----
Ms. Norton. But, of course, that was predictable in 2007 as
well. I ask this question because the only thing I can think of
that is worse than collapse of the constitutionally mandated
Postal Service is for it to do what it is doing now, falling
apart piecemeal before our very eyes; and when that happens, it
is the element of surprise and clear absence of planning.
My question really goes, I suppose, to Mr. Small initially.
Here we are still talking about a 5-day week. Even though
almost 70 percent of the American people say that they would
favor a 5-day week, we are still talking about it. We have been
talking about it now for a very long time. I noted in your
testimony you talked about flat sequencing, indicating the
Postal Service did understand that sometimes you have to invest
in order to, if I may use the word, right-size. Only now are we
talking about consolidation in any kind of meaningful way.
Is there a plan for right-sizing the Postal Service so that
we do not come to these hearings to hear of various economies
and efficiencies that one would expect from a business that has
to do what many have to do now, which is simply take some
efficiencies pending something? I don't know what is pending
here except collapse, and I don't hear that there is a right-
sizing plan of any kind that the Postal Service is engaged in,
seeing all the handwriting on the wall that I think even the
average American can see right now. What right-sizing plan do
you have or do you intend?
Mr. Small. Well, I think if you look at the cost-cutting
and efficiency gains that we have employed this year, we are on
track to save over $6.1 billion. The major components of future
right-sizing of the network, the big issue to provide
significant systemic response to the problem, and that would be
5 day delivery. The second issue, we have undertaken the
transformation of our BMC network----
Ms. Norton. Are you moving toward erasing deficit, Mr.
Small----
Mr. Small. By cost-cutting----
Ms. Norton [continuing]. So that you can operate the Postal
Service without a deficit, inasmuch as the Treasury is not open
to you?
Mr. Small. The network change and the changes in
improvements in efficiencies are working toward reducing the
deficit.
Ms. Norton. Could I ask if any of you know what your
competitors, the private post offices, what kind of shape they
are in, the FedExs, UPS? UPS might be a good example because it
is a union company. You are competing with these various
privatized version of much of what you do. They don't deliver
the mail, but you have gotten into their business. Have you
looked into those businesses to see how your competitors are
faring and whether or not there is anything that they are doing
that you could benefit from? Yes, sir.
Mr. Small. Yes. We are in constant communication with our
competitors. Matter of fact, we have ventures with our
competitors, such as FedEx, using their air network to fly our
product. Also, both FedEx and UPS use us as their last mile for
many of their products.
Ms. Norton. I think we need to hear more about that, in
terms of right-sizing the post office.
Now, look, I am going to ask you a question. This is not a
NIMBY question; I will not object. And Members have to
understand that if you are more transparent about it and if it
is part of right-sizing, we have to be prepared to defend what
you have to do with respect to postal services. Having said
that, are there any post offices in the District of Columbia,
or postal stations, under review for closing? See, that is
something that any Member ought to be able to ask and get an
answer to.
Mr. Small. I believe that a list was submitted to this
committee yesterday. Offhand, I couldn't personally tell you if
there are or not stations in the District of Columbia, but I
would be happy to provide you with a copy for the record.
Ms. Norton. I would appreciate it. This is what I think
needs to happen. The Postal Service is just too slow. You are
going to have to reach out to communities. You are going to
have to get feedback. You are going to have to hear all the
protests. Transparency begets protests. You are moving so slow
that I think that you are not ahead of the decline and, forgive
me, fall of the Postal Service unless you can hasten this
process with the kind of right-sizing that puts it all before
us so we know what has to be done.
Thank you very much, Mr. Chairman.
Mr. Lynch. Thank you. Just to clarify, we did get the list
yesterday. I notice there are six Washington, DC, post offices
that have been identified for full study, and I notice in my
district there are three suburban post offices that have been
identified for full study as well.
The Chair recognizes the gentleman from northern Virginia,
Mr. Connolly.
Mr. Connolly. I thank the Chair.
Mr. Herr, is there some concern, should there be some
concern that, with the best of intentions, some of the cost-
cutting measures being contemplated or undertaken could prove
to be counterproductive? When I listen to some of the measures
we are looking at, I am struck by the parallel with the
newspaper industry.
Declining advertising accelerated in the recession, some of
which won't come back; advertising gravitating toward online
newspapers that are free, but not enough to make it a viable
business model, at least not yet; giving away newspapers free
at Metro stations, further accelerating the loss of paid
subscribers, because why would I pay for a newspaper I can now
get for free; consolidating offices; closing bureaus,
downsizing constantly, and, yet, it doesn't seem to have
righted the ship of state, if you will.
In the case of some of the actions being contemplated, we
are looking at consolidation so there are fewer points of entry
on the system, which may be a very prudent thing to do, but I
am struck that the competition has points of entry all over the
place. Not full offices, necessarily, but very convenient drop-
off points if I want to participate in their system.
I think that the competition is available for 6 if I want
to pay for it. Raising fees, as has been stated by Mr. Sackler,
there is probably some upper limit to how much we can get away
with that without making ourselves less viable and driving away
even more customers.
So I am just wondering. There is no implicit criticism,
necessarily, of the steps, but have we looked at the risk of
unintended consequences by way of counter-productivity like
cost-cutting measures?
Mr. Herr. Congressman Connolly, thanks for that question.
It is an interesting point. In looking at this, one of the
things we are suggesting is that the Postal Service needs to
articulate the plan. It talks about how it can take action, but
you mentioned, say, differing entry points for mail. That is
why it would be important to coordinate with the folks in the
mailing industry about how that would roll out, so it could be
done in a way that people understand what that change would
entail. The Postal Regulatory Commission may have a role in
terms of reviewing some of those cases as well.
There are a lot of different pieces that go into
maintaining universal service throughout the country. I
understand that some distribution centers from Maine to
Arizona, from Florida to Alaska, to do that you would require a
network of processing facilities. In terms of the retail side,
one of the things that we noticed, there are 37,000 facilities,
but 30 percent of the retail revenue is not coming through post
offices, it is coming from alternatives; grocery store sales,
things of that nature.
In talking with folks at the Postal Service about this
retail initiative, one of the things I was struck by is there
is somewhat of a qualitative assessment at the community level,
trying to ensure that if there is a senior citizen community or
groups that are being served, that would be factored into that
decisionmaking.
So there are tradeoffs, but the other side of it is that
there is also a great decline in the amount of mail going
through the system. And one of the bedrock principles that the
Postal Service has been operating under is being self-
sustaining. So factoring those things into consideration and
these changes, we think a restructuring plan, Congress, the
administration looking at that would be an important step.
Mr. Waller. A couple of things I would like to say first in
regards to the list of post office stations and branches under
consideration, at the meeting I mentioned this morning that
occurred at the Commission, the Postal Service promised to give
a list of the 677 facilities that are going to be studied. When
they file that, that will go up on the PRC.gov Web site
immediately, and that will be available to all people in the
country through that to look at whose and where, etc.
This issue of looking at it as a whole thing is also of
concern as we look at a process like this. Last time we did an
advisory opinion, it was on the processing facilities and the
Postal Service's plan for looking at that, and found quite a
few problems that existed in the planning process at not
looking at how many real savings were going to be achieved
through that process and what backlashes might occur in
productivity.
Second, in the work the Commission has done so far looking
at the route reduction from 6 day to 5 day, one of the things
the Commission included in its analysis was an estimate of the
drop-in volume that might occur, and that is about a $600
million impact. So looking at all these issues and not looking
at it too narrowly is extremely important.
Mr. Connolly. Thank you.
Mr. Chairman, I see my time is up. I would just say if Mr.
Clay were still here, I know he would want to ask that going
beyond short-term measures to return ourselves to solvency,
what is the long-term business model we are confident is
viable. But, of course, Mr. Clay is not here to ask that.
Mr. Lynch. Maybe Mr. Davis wants to ask that question. The
Chair recognizes the distinguished gentleman from Illinois, Mr.
Davis, for 5 minutes.
Mr. Davis. Thank you very much, Mr. Chairman. Let me thank
you for calling the hearing. I also want to thank all of the
witnesses for appearing.
I think that some of us have known pretty much that we were
going to be at this juncture probably for quite some time. I
think we were hoping against hope that we would not really get
to this point. So let me just say, first of all, Mr. Small, I
don't envy Mr. Potter and yourself and other members of the
staff and the Board of Governors as you try and wrestle with
this problem and figure out what is the fairest, most
effective, most efficient way of making sure that our Postal
Service remains solvent, recognizing the economics and the
status of our economy.
I know that there is the study underway relative to 5 day
delivery. What other cost-cutting proposals did you consider
before reaching the point of sort of settling on the
reorganization of facilities plan?
Mr. Small. I think if you look at our cost-cutting efforts
and what has been able to enable us to achieve $6.1 billion
this year in cost savings, we have reduced overtime; we have
minimized the use of the supplemental temporary work force; we
have adjusted routes, both city and rural; we have currently
implemented a network structure change transforming the bulk
mail centers into network distribution centers, consolidating
package and standard operations to realize economy's scale and
efficiency in processing, and reduced redundancies in
transportation.
We have also embarked upon, as was referred to before, the
AMP effort, where we have consolidated outgoing operations to
better utilize equipment in certain plants, as well as
compressed tours to, again, take advantage of the unprecedented
drop-off in volume and being able to provide a more efficient
means of utilizing our equipment within our plants.
Mr. Davis. So one could really say that you are down to the
point where you don't have many options left; you don't have
many other places to go. Or I guess we would say you are
between a rock and a hard place.
Mr. Small. The last big option is, unfortunately, the need
to go from 6 to 5 day delivery. That is the one big piece out
there that would add to helping us maintain liquidity and be
viable.
Mr. Davis. Thank you very much.
Mr. Herr, let me ask you. I know that GAO has taken the
position, before now, time and time again, that there were some
other cost savings, cost-cutting approaches that the Postal
Service perhaps could have taken sometime before now. How do
you feel in relationship to what they have done and the plan
that they have put together?
Mr. Herr. I think at this point we have been looking over
the past year, at some of the low-hanging fruit in terms of
overtime and things like that have been taken into
consideration; the route adjustment process that Mr. Small
referenced. We have a report that came out today that talks
about that initiative. And I think if volumes continue to
decline, there will be additional opportunities there.
We still believe that there are opportunities in terms of
the broader facilities. We talk about that in terms of the
processing network. We know there are some consolidation
studies that are still underway, but we think that this broader
plan that is referenced in our high-risk report would be a next
starting point to help achieve some consensus about where this
might go going forward, sir.
Mr. Davis. My time is about to expire, but let me ask you,
Mr. Small, did the Postal Service apply for any of the economic
stimulus money?
Mr. Small. No.
Mr. Davis. Is there a reason that you didn't?
Mr. Small. I think that question would be better answered
or is outside of my scope of being able to answer that
question.
Mr. Davis. All right, I understand that. Thank you, very
much.
And thank you, Mr. Chairman.
Mr. Lynch. Thank you, sir.
The Chair now recognizes the gentleman from Utah for 5
minutes.
Mr. Chaffetz. The gentleman brings up a great point about
we are spending all these trillion dollars and here we have a
constitutionally mandated service that truly does benefit and
service every single American. It does seem that it would be
appropriate that while I would have voted and have voted
against the stimulus money, that some of those moneys should
have been allocated to this service, which not only benefits
individuals, but businesses alike. I think we should explore
that a little bit more if there are opportunities moving
forward.
A question for you about the 3,200 or so post offices that
are closed. What is the estimated savings by doing that?
Mr. Small. This is a bottom-up approach, and since we have
reduced and we are continuing to the next days beyond the
preliminary study with the less than 1,000 offices that we are
going to----
Mr. Chaffetz. Do you have some sort of range of dollars?
Mr. Small. No, we won't know until the beginning of October
when we continue----
Mr. Chaffetz. But the other 2,000 or so, you don't have any
understanding what----
Mr. Small. The whole cost center, if you look at the entire
cost center of those 3,200 offices, that includes carrier
operations, which, of course, would not be eliminated; rent;
ownership of facilities; operations. That whole cost center is
worth $16 billion.
Mr. Chaffetz. So if you break out the labor component,
certainly there has to be some estimation of what the number
is, is there not?
Mr. Small. Well, I think the reason why we cannot give you
an estimate until October is because we have not taken a cookie
cutter approach or set targets for how many would need to be
eliminated. And only those that are in close proximity, provide
ready access to the community would be under consideration, and
we just don't know that number until the study is fully
completed.
Mr. Chaffetz. Have you all taken a position on the bill
H.R. 658 that we heard testimony in panel one on?
Mr. Small. Yes, and we don't agree with it.
Mr. Chaffetz. Why not?
Mr. Small. Due to our dire financial deteriorating
situation, we have had this process in place for stations and
branches for 40 years that seems to work. We have to be able to
react quickly and rapidly to this financial situation.
Mr. Chaffetz. So if you gave them an extra 30 days, you
think that would be unacceptable?
Mr. Small. I believe that the rules as they are currently
applied are adequate.
Mr. Chaffetz. Mr. Herr, is there anything that you could
add to what I was asking about previously, about the
elimination of some of these facilities? Are the any cost
estimates? There are several proposals that are floating around
the Postal Service; 5 day delivery, consolidation of routes,
those types of things. Has the GAO looked at what is realistic
in terms of actual cost savings?
Mr. Herr. We have seen the two estimates that have been
provided. The other thing that we have called for in prior
testimony before this committee is that a study should be done
and it should be made public so people can see and understand
what those assumptions are. I know the PRC has one estimate for
what 5 day delivery would result in, about $2 billion, John, is
that correct, or $1.9, and the estimate from the Postal Service
was significantly higher, about $3.5 billion. So once that
comes out, we are very interested in taking a hard look at that
and we would be happy to work with the committee on that if
that would be of help.
Mr. Chaffetz. OK.
Mr. Herr. Your other question, we also asked about and one
thing that has been a bit of a source of frustration is getting
estimates about what savings might be achieved. We have noted
in prior reports on the retail network that there are a lot of
places that are in disrepair, so there is real maintenance
backlog. So we think there could be cost savings there as well.
It is not just moving folks, but some of these places have
really fallen in derelict.
Mr. Chaffetz. Mr. Waller, it looked like you wanted to
comment on that.
Mr. Waller. Yes. This issue is one that already we are
starting to push on in the docket, is what are the exact
savings and can you bound it in some way. If you look at the
way costs are accounted for in the Postal Service, retail
clerks, which is what we are talking about here, and then if
you add on all the extra costs, the space they take up and
stuff like that, you are talking about $4.1 billion for all
post offices, all stations and branches.
This is not a big cost item. So if you narrow it down just
to station and branches, which I think is very important to
come out in this hearing that the Commission has underway, to
narrow it down, what is really the even potential savings.
Mr. Chaffetz. Thank you, Mr. Chairman. My time is up. I
would just say that while we continue to talk about cuts and
elimination, we also obviously need to look at relevancy and
marketing and how we make the Post Office more relevant in the
services; and I think one of the things that we need to spend
more time on is the cross functionality that can happen. I was
very pleased that you co-signed with me the potential of the
Postal Service helping to conduct and do the enumeration
portion of the census.
I think there are other creative ideas that we can do that
can inject some cash sooner, rather than later, and make the
Postal Service, again, increasingly relevant in people's lives.
We have such great real estate facilities, people, all these
assets are in place, and yet I don't believe our other elements
within our own Federal Government are paying attention to
those. It is so frustrating when you have the Federal
Government utilizing services outside when we have these
services internally. So I think we need to continue to explore
that, and particularly the timing with the census, which I
think would be a great asset.
I will yield back the remainder of my excess time. Thank
you.
Mr. Lynch. I recognize myself for 5 minutes.
Let me ask Mr. Small a hypothetical situation. We talked
earlier about this desire to look at going from 6 to 5 day
delivery. As you know, the Appropriations Committee, the
subcommittee has again mandated that we retain 6 day delivery,
but let's just entertain it hypothetically. Suppose I had a
brother-in-law that delivered mail on Saturdays right now, a
letter carrier. What happens to the letter carrier, he and
others, when we shift to a 5-day delivery cycle?
Mr. Small. We certainly understand that change is difficult
and are aware of changes that would occur with our employees.
That assignment would basically be eliminated. The way carriers
are structured, we deliver for 6 days a week. You have a
regular carrier on a route for 5 of the 6-days and then you
have a carrier who performs the regular carrier's duties on
their day off.
We have a negotiated agreement with the National
Association of Letter Carriers for a supplemental work force of
15,000 transitional employees, plus an annual attrition rate of
approximately 11,000 carriers a year. We are very proud of the
fact that we have never had to lay employees off and that we
will continue to try to place any employee that is affected.
But there is cushion available through the temporary work force
and attrition to try to ensure that there is not a dramatic
effect on our employees.
Mr. Lynch. So you are saying that there are no layoffs or
what are you saying here?
Mr. Small. I can't say or guarantee that there wouldn't be
layoffs. If we look at it or the timeframe by which we would
have to get this done, there is a possibility that we will be
able to assume some of the affected employees through the
attrition of 11,000 carriers and also the 15,000 that are
temporary employees.
Mr. Lynch. Is there a hiring freeze right now?
Mr. Small. Yes.
Mr. Lynch. OK, let me ask you, going back to the
consolidation of facilities. I know that the Postal Service
owns some buildings and then, in other cases, we actually rent
or we have long-term leases and options and what-not.
When you are looking at a potential closure--and I know,
representing a city with fairly high rental space downtown,
those expenses, to maintain facilities like that of any
considerable size, it is a pretty expensive option. Do you have
a way of balancing whether or not you close a facility based
upon whether it is Post Office owned or leased?
Mr. Small. I think it would be determined by which facility
can absorb the gaining facility. We have to weigh the balance
of customer input and affect assets and services provided. I
could think about--and I know you mentioned it on Fox News
yesterday--offices that are close, a block away from each
other.
In my former district, I can think of three examples right
now where we had stations, three groupings of stations within a
block of each other. Those are the types of facilities we would
look at, and we would have to determine, if two facilities were
consolidated into one, which facility had the adequate space,
which facility had the adequate parking, and then make the
determination based on whether it is a leased or an owned
facility.
Mr. Lynch. OK. Looking ahead, I think there is a system in
Finland or Sweden. It is actually being replicated here in the
United States. I think they call them Zumboxes or something
like that, where a person can go online and see their mail, and
they see what potentially could be delivered, and if they want
to toss it, they can--if they want it delivered, they can click
on it, and if they don't want it, if it is junk mail, they can
get rid of it by clicking on it and putting it in the trash
can. That will greatly reduce the volume of mail because people
won't have to get their junk mail.
I know it doesn't make the mailers happy, but have you
looked at anything like that for the Postal Service going
forward? Is that the new model? Should we be preparing for
that?
Mr. Small. I particularly do not have much knowledge of
Zumbox, but I know there are folks who are studying it within
the Postal Service. We are always looking for new products to
bring out to the market. I think on the panel we heard earlier
about the summer sale. We have also introduced the flat rate
box and an advertising campaign around the flat rate box, which
has been a huge success so far this summer. So we are always
looking at new products to be able to go to market with to
enhance our situation.
Mr. Lynch. Thank you. My time has expired.
I am going to recognize the gentleman from Illinois, Mr.
Davis.
Mr. Davis. Thank you very much, Mr. Chairman. I only have
two brief questions.
Let me ask you, Mr. Small, does this plan, that is, the
facilities postal station reorganization, will it necessitate
or cause any layoffs?
Mr. Small. This effort by itself, no.
Mr. Davis. So attrition would basically take care of those
individuals who would have to go, and then there would be an
opportunity to shift other employees to other facilities?
Mr. Small. The employees would be moved in compliance with
our collective bargaining agreements.
Mr. Davis. The other question that I have is actually for
Mr. Cerasale. Mr. Cerasale, I know that we are always trying to
make sure that we take into consideration the needs of as many
stakeholders as we possibly can, and it seems as though, if we
get backed up against the wall, you don't have any choice, you
have to decide something. If your members and associates were
to decide what hurt them the most, would it be 5 day delivery
or would it be reorganization of stations?
Mr. Cerasale. Five day delivery. Of those two, 5 day
delivery would hurt more of my members than the reorganization
of the stations.
Mr. Davis. All right. Thank you very much.
Thank you, Mr. Chairman.
Mr. Lynch. Thank you, Mr. Davis.
The Chair recognizes the gentleman from Ohio, Mr. Kucinich,
for 5 minutes.
Mr. Kucinich. To Mr. Small, welcome. We have had the
opportunity to work together in Cleveland years ago, and I
appreciated that and I appreciate your commitment to the Postal
Service. So don't take personally any questions I am about to
ask you. [Laughter.]
How does the Postal Service ensure community participation
in the decisionmaking process?
Mr. Small. For the station and branch consolidation effort,
we have basically three different means with which we
communicate with the public, depending on the size of the
community. We either send a questionnaire seeking their input
to their residence or we post at the local office, local
station for a period of time seeking their input. All P.O. box
holders get a hard copy form within their P.O. box soliciting
their feedback. And we also will post community notices within
newspapers for 5 days to seek the community input. Part of the
process that we encourage is community meetings.
Mr. Kucinich. Well, let's talk about the community
meetings. Do you have any knowledge of how many community
meetings you may have held in, let's say, 44111?
Mr. Small. No, I don't have that information. I can surely
provide it to you.
Mr. Kucinich. I haven't heard of any, and I know there is
talk of consolidation there. So I think it is important to have
community meetings. Would you be able to let this committee
know what kind of community meetings you are talking about? I
mean, do you actually send a letter to everybody in a certain
zip code saying we are going to have a meeting at the Gallagher
Post Office to talk about postal consolidation, and here is
what it could mean to the community and we want your input;
here is the time and the place? I am not aware of meetings like
that. And I think that considering the gravity of this, you owe
it to your customers to do something that would be no less than
that.
Mr. Small. Again, I would be happy to provide the committee
with a copy of the template that we send to the local districts
for dissemination to the community. Of course, each community
is different and the makeup is different, so we ask the local
offices to just use that as a template and tailor the feedback,
the surveys, and the way they conduct the community meetings to
their own community's needs.
Mr. Kucinich. Thank you, Mr. Small, but that is
theoretical. You haven't really given me a practical
explication or explanation of how this works in reality. I
would like to have that with respect to Cleveland Cuyahoga
County so we can get into the nitty gritty about what you have
sought in terms of public input.
I look at this. Mr. Chairman and members of the committee,
here is my concern. My concern is that you are actually
dismantling a service infrastructure, thousands and thousands
of mailboxes out. No one asked me about that. I am a member of
this committee. I don't know how many other Members were asked
about that. Just take mailboxes out of communities; gone.
Now, if you are in marketing, it seems like you want to
show the flag somewhere. How does taking mailboxes out help a
service delivery? And then you are talking about closing
branches. So how does that help with service delivery if we are
talking about universal service? And even in main post offices
there are services that are being switched off.
So what I see happening here--make your economic
justification, fine. But what I see happening is the
dismantling, a slow and steady dismantling of the
infrastructure of the U.S. Postal Service, starting with
mailboxes in neighborhoods, postal branches, changes at branch
offices, changes at airport post offices, post offices across
this country.
And you are actually doing that piecemeal and right under
the nose of Congress because you wave the dollar bill, we don't
have enough money. Oh, is that right? That passed for anything
over here; that is a shortcut to debate here.
I don't think you are going to be able to answer this
question, but I will just conclude, Mr. Chairman, by saying
that there is a stench of privatization about this whole thing,
and I am not going to diminish the service of you, Mr. Small,
or anybody else in the U.S. Postal Service, but there is
another game going on here that really is about taking this
public wealth of universal Postal Service and carving it up and
handing it out to special interest, and I see the slow and
steady dismantling of the postal infrastructure as being an
inexorable move in that direction.
That's all I have to say. Thank you.
Mr. Lynch. I thank the gentleman.
The Chair now recognizes the gentlelady from the District
of Columbia for 5 minutes.
Ms. Norton. Mr. Chairman, I have just one more question,
and I thank you for getting this list to me. And I am not
objecting to the list, as I said before. Indeed, I think I have
some understanding, but I am not sure I do. Remember, my
concern is the slow walk to collapse.
I certainly appreciate the need for study. I do think one
has to be careful to look at all the factors. I am having a
hard time understanding why we are just studying some of these
matters, such as the station branches identified ``for full
study.''
Going back to what I said to Mr. Herr, they got taken off
the high-risk list, I don't think that was of service to them,
frankly. I think they need to see the handwriting on the wall
before their eyes as much as possible, and as tough as the GAO
normally is, I can't imagine the fact that there have been some
tiny baby steps taken here that should have removed them.
But, Mr. Small, I need to know now--I know from your
testimony at page 5 what you will be looking at considering
such factors as customer access, service standards, cost
savings, impact on employees, environmental impact, real estate
values. All of this makes sense. What I don't know from your
testimony is how you chose the particular stations or branches
to look at for those factors in the first place.
Mr. Small. OK, I would be happy to explain. As mentioned in
Mr. Waller's testimony, he talked about EAS-24 and above
offices, so let me explain what an EAS-24 and above office is.
An EAS-24 is the lowest level potential office we are
looking at. Typically, EAS-24 has a post office where a
postmaster is resident and the chief administrator for postal
services, as well as subordinate stations, generally at 24
there may be three or four stations. As you get larger, through
26 and then to PCs, what we call PC post offices, such as
Miami, where you have 50 stations.
So we are looking at large groups of stations where you
have offices that are in close proximity to each other that
mailers' habits and consumers' habits have told us that they no
longer go to the retail unit, that there has been a decline in
retail activity, and that there has been an increase----
Ms. Norton. So will these tend to be smaller stations or
branches?
Mr. Small. I am sorry?
Ms. Norton. Will these tend to be smaller stations or
branches?
Mr. Small. They could be larger, depending on whether they
have adequate space to absorb a neighboring station which is in
close proximity. They could be two smaller stations, where one
has adequate workroom floor space to consolidate. We won't know
until a complete and thorough review is performed on all those
offices on the list we provided.
Ms. Norton. Now, you say, again on page 5, we do not
anticipate this review process to generate any changes this
fiscal year, which ends September 30th. When did this begin,
this study begin?
Mr. Small. It began in approximately May.
Ms. Norton. Well, Mr. Chairman, this is what I mean. I
really don't think this is rocket science. And the notion that
we are beginning in May to look at what offices are too close
to one another or may have to consolidate is what I mean by
slow walking the Postal Service to collapse and what I mean
about facing the right-sizing model earlier rather than later.
And, Mr. Herr, that is what I mean when I say you can take
them off the list all you want to, but I can't imagine why they
haven't been on the high-risk list for 10 years. To say that
something in the extreme position of the Postal Service that we
have seen now for years has not been at high risk makes me
wonder what in the world is at a high risk. I can think of no
major entity in the United States at higher risk than the U.S.
Postal Service.
Thank you, Mr. Chairman.
Mr. Lynch. Thank you.
Well, I think this panel has suffered enough. [Laughter.]
I want to thank you. Seriously, I want to thank you for
your willingness to come before the committee to help us with
our work. There are, as always, several hearings going on at
the same time, so I would just caution you that there may be
Members who would like to submit questions in writing, and, if
that is the case, I would ask you to respond within 7 days, if
you could. Thank you very much. Have a good day.
At this time, I would like to welcome our third panel. I
know we are expecting votes around 12:30, so we might be able
to get everyone seated and begin with introductions, at least.
Thank you.
Good afternoon. It is the custom of this committee to swear
all witnesses who are to offer testimony. Would you please rise
and raise your right hands?
[Witnesses sworn.]
Mr. Lynch. Let the record show that all the witnesses have
answered in the affirmative.
I think all of you are aware of the lighting system here.
Green means you are free to give your 5 minute address; yellow
light indicates you have to wrap up, you have about a minute
left; and then a red light indicates you should cease offering
testimony.
Let me offer some brief introductions, although many of the
members on this panel have been frequent witnesses. Let me
begin.
Mr. William Burrus is the president of the American Postal
Workers Union; Mr. John Hegarty is president of the National
Postal Mail Handlers Union; Mr. Louis Atkins is executive vice
president of the National Association of Postal Supervisors;
Mr. Fred Rolando is the new president of the National
Association of Letter Carriers. Welcome. Mr. Don Cantriel is
the president of the National Rural Letter Carriers'
Association; and Mr. Mark Strong is executive vice president of
the National League of Postmasters of the United States.
Welcome all.
Mr. Burrus, I welcome you to make an opening statement. You
have 5 minutes.
STATEMENTS OF WILLIAM BURRUS, PRESIDENT, AMERICAN POSTAL
WORKERS UNION, AFL-CIO; JOHN HEGARTY, PRESIDENT, NATIONAL
POSTAL MAIL HANDLERS UNION; LOUIS ATKINS, VICE PRESIDENT,
NATIONAL ASSOCIATION OF POSTAL SUPERVISORS; FRED ROLANDO,
NATIONAL PRESIDENT, THE NATIONAL ASSOCIATION OF LETTER
CARRIERS, AFL-CIO; DON CANTRIEL, PRESIDENT, NATIONAL RURAL
LETTER CARRIERS' ASSOCIATION; AND MARK STRONG, EXECUTIVE VICE
PRESIDENT, NATIONAL LEAGUE OF POSTMASTERS OF THE UNITED STATES
STATEMENT OF WILLIAM BURRUS
Mr. Burrus. Thank you, Mr. Chairman. Mr. Chairman and
members of the subcommittee, thank you for convening this
hearing and providing me the opportunity to testify on behalf
of the dedicated employees that the American Postal Workers
Union is privileged to represent.
In response to the dramatic reduction in mail volume, the
Postal Service has initiated many programs intended to reduce
costs. The station and branch initiative is the most recently
announced service reduction. Others include the elimination of
Saturday delivery, consolidation of mail processing facilities,
delivery route adjustments, and realignment of the bulk mail
network. These programs are based on a twofold management
analysis: that savings must be achieved and that mail volume
will never return to previous heights.
Until very recently, postal executives have asserted that
the decline in volume was caused by the conversion of hard copy
mail to electronic communications. I have long been skeptical
of that claim that individual consumers' increased use of email
and the Internet has placed the Postal Service in jeopardy.
It is imperative that postal decisionmakers correctly
identify the cause of the reduction in volume and the trends
that will drive future communications. Precious time has been
lost as attention was focused on an illusory cause. Even now
decisions are being made with scant appreciation of what will
cause volume to increase or decrease.
I have concluded that the decline in hard copy and
communications has been less affected by electronic conversion
than by the Nation's economic downturn.
The facts are it is important to note that our Nation's
mail volume was highest in 2006, when the use of electronic
communication was already widespread. We must also keep in mind
that the mail stream is and will continue to be dominated by
business-related communications, which is especially sensitive
to the economic environment.
Analysts generally separate mail into household mail and
non-household mail, and review the interactions between these
groups. In 2006, of the 213 billion mail pieces, 190 billion
involved non-household communications. Only 2.9 percent, or
19.4 billion pieces, constituted household-to-household mail.
The business community has explored other means of
communications and will continue to do so. But these marketing
decisions go far beyond the evolution of personal
communications.
To date, there is no general agreement among analysts about
the future of commercial messages. Television, radio,
newspaper, email, and online advertising are all receiving
mixed analyses of the prospect for growth; and there is no
conclusive evidence that the Postal Service will fail to be as
competitive in the future as it was in 2006. One respected
analyst, Magna, predicts that between now and 2014 mail will
grow 2 percent annually. Yet, postal management is betting that
mail will cease to be relevant. I disagree.
Mail has unique advantages over other commercial messaging,
including targeting, attention and retention. I predict that
hard copy mail will be competitive far into the future. I admit
I have no crystal ball, but neither does the Postmaster General
or the Board of Governors. If they are wrong and I am right,
the initiative presently underway will leave the Postal Service
ill equipped when mail volume does return.
Station and branch closings and 5 day delivery schemes will
unquestionably have a negative effect on the postal monopoly
and will impede the Postal Service's ability to compete. These
are acts of surrender, when the outcome of the battle is still
in doubt.
Nonetheless, the Postal Service must respond to the recent
declines in mail volume, and I commit the cooperation of my
union in sensible and effective efforts.
Regrettably, the alleged state of reform in 2006 has been a
major contributor to the Postal Service's current financial
predicament. Major mailer associations, management
associations, the Postmaster General, the Board of Governors,
some labor organizations, and some Members of Congress have,
through their support of the PAEA, forced the Postal Service to
make payments of $14 billion over the last 2 years for future
retiree health care liabilities. Those who supported the
legislation share in the responsibility for the Postal
Service's current financial debacle and the drastic actions
undertaken in response.
I have been consulted by postal management on the subject
affecting service and the impact on my members. On the closing
of stations and branches, I reminded postal management that the
APW-USPS collective bargaining agreement, which remains in
force through November 20th of next year, includes the
following: ``The parties agree that all existing retail
operations will remain within the installation of which they
are a part and all future retail operations established within
the jurisdiction of an installation shall become a part of that
installation.'' I personally negotiated that language and know
what its intent was at the time of negotiations.
I expect that postal management will fully comply with this
contractual agreement, and I thank you, Mr. Chairman. I would
be pleased to answer any questions you may have.
[The prepared statement of Mr. Burrus follows:]
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[GRAPHIC] [TIFF OMITTED] T2713.072
[GRAPHIC] [TIFF OMITTED] T2713.073
Mr. Lynch. Thank you very much, Mr. Burrus.
Mr. Hegarty, you are now recognized for 5 minutes.
STATEMENT OF JOHN HEGARTY
Mr. Hegarty. Good morning, and thank you, Chairman Lynch,
Ranking Member Chaffetz, and the other members of the
subcommittee, for inviting me to testify here today.
Let me take this opportunity to thank you and all members
of the subcommittee for your diligent efforts on H.R. 22. We
look forward to working with you as that legislation and the
recently introduced Senate bill S. 1507 work their way through
the legislative process.
As requested, my testimony today will focus on the current
realignment efforts of the Postal Service dealing with the
closing and consolidation of facilities and the realigning of
stations and branches. I will also discuss the impact of such
decisions on the flow of current and future mail, and the
resulting impact on mail handlers, postal customers, and
communities.
As you know, mail handlers work primarily at the large
processing facilities. At the same time, however, we represent
approximately 1,000 mail handlers who are situated at the
larger stations and branches. While they may be employed at
smaller facilities, some of these mail handlers actually are
assigned to a larger facility as part of their postal
installation.
As we have previously discussed, the Postal Service is
proceeding to realign its network of mail processing plants by
conducting Area Mail Processing studies. I will not repeat
prior testimony here, but I think I should note that, as I have
said in prior testimony, our concern is, a, that the process is
accomplished uniformly and within the established guidelines;
and, b, that the future postal network is not cut too severely
such that the Postal Service will not be prepared to provide
universal service and low cost service when mail volumes
recover.
Our solution to a rational closing and consolidation
approach is to review such changes on a case-by-case basis,
following a careful analysis of the facts presented in each
situation. Where the proposal makes economic and logistical
sense, where service standards will not be negatively affected,
where major mailers in the area will not be inconvenienced.
Where all negotiated requirements with the unions have been
complied with, then the Mail Handlers Union will not simply
oppose a closing or consolidation simply for the sake of
opposition. Conversely, the Postal Service should not be
closing and consolidating facilities just so the agency can say
that it is closing and consolidating.
The impact on mail handlers is varied, depending on the
circumstances, but some of the affected employees have had
their hours of work or work location drastically altered,
thereby severely disrupting their family life. Employees have
had to scramble to make alternate child care arrangements, to
get their kids to school, or their spouses have had to adjust
their work schedules to juggle the various responsibilities.
Many employees have been faced with the almost impossible
task of either moving their families hundreds of miles away to
remain employed by the Postal Service or to give up their
postal careers altogether, and I think you highlighted that in
your opening statement, Mr. Chairman, outlining the situation
that we talked about at the last hearing, where employees were
offered jobs, some of them, 400 miles away from their current
duty station.
The impact on the customers will also vary, depending on
the circumstances. Our concern is that we may end up losing
business because a major customer decides it is just as easy to
use a competitor, and they abandon the Postal Service
altogether. We also need to factor in the individual customers
who need and deserve access to postal services.
The impact on communities should also be factored into any
final decisions on consolidation. What will be the impact if a
large plant is closed and the employees then are moved to
another plant to work in some other community? How about local
businesses like restaurants and other retail establishments,
who used to cater to this large factory that employed so many
people?
Many of the other topics on which the subcommittee is
seeking input really need to be answered by the Postal Service
before we can weigh in on them, but, as always, I would be
happy to answer any questions that you might have, and, again,
thank you for inviting me to testify.
[The prepared statement of Mr. Hegarty follows:]
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Mr. Lynch. Thank you, President Hegarty.
Mr. Atkins, you are now recognized for 5 minutes.
STATEMENT OF LOUIS ATKINS
Mr. Atkins. Good morning, Chairman Lynch, Ranking Member
Chaffetz, and other distinguished members of the subcommittee.
My name is Louis M. Atkins. I serve as executive vice president
of the National Association of Postal Supervisors. We are
recognized by the U.S. Postal Service as representing over
35,000 current and retired management employees of the Postal
Service.
I am honored by your invitation to appear before you and to
provide our organization's feedback on the Postal Service's
plan to examine the potential closure or consolidation of many
postal stations and branches that comprise the national retail
network.
Over the years, the Postal Service has continually made
minor adjustments in the location of its retail operations to
improve the efficiency of the mail service and its service to
the American public. The scale of these changes have been
relatively small in comparison to what lies before us. But now
the efforts of consolidating up to 3,100 facilities across the
country, some in your own congressional districts, will
significantly impact our customers and your constituents.
We have concerns and reservations about the underlying
review process and its likely resulting consequences. I wish to
share those concerns with you right now.
The Postal Service's review of approximately 3,100 customer
service operations is focused on areas located primarily in
urban centers, large cities, or in highly developed suburban
communities. No matter where you go across the country, Postal
Service retail operations are a business anchored to the
communities they serve. Businesses that share the general
location with the Postal Service benefit from the Postal
Service retail presence in the community.
My organization's fundamental aim is to support the
efficient operation of the Postal Service. But the scope of the
Postal Service's review and potential consolidation could
impact nearly 10 percent of the facilities that serve urban and
highly developed communities. The repercussions of a move that
large could be modest in terms of dollar savings and
considerably negative from a customer service standpoint. Let
me explain why.
Since the targeted facilities and operations are in urban
areas and developed suburban communities, many residents rely
on their local post office as being within walking distance,
especially those who are elderly or without a car. Today, many
of our customers in urban areas enjoy the convenience of
walking to their local post office to conduct their postal-
related business. If the Postal Service's plans are
implemented, these customers will face a distance to the
nearest post office that will be greater than the current one,
a distance the would not likely be able to walk.
The elderly, who are less likely to connect to the
Internet, rely more heavily on their local post office retail
unit and will feel a greater loss of convenience and connection
to their post office. When packages cannot be delivered by the
letter carriers and the customers need to go to their local
post office, customers will have a further distance to travel
to retrieve their mail.
These are some of the impacts that will be felt by
customers who lose their local post office.
In addition, the financial savings from consolidation may
not be as large as first appears. In a facility that serves
both delivery and retail, the relocation of a carrier unit to
another facility will mean that the portion of the building
devoted to carrier floor space will become vacant and only the
curbside potion of the building devoted to retail operations
will continue to be used.
Should the post office determine that it is best to
separate the retail and carrier operations in their present
location, keeping only the retail operation in place will not
necessarily present savings if the post office is leasing the
facility and obliged to continue to pay a long-term lease for
the entire space.
Due to the requirements of Postal Service operations, the
empty space may not lend itself to subleasing to another
business entity. In facilities owned by the Postal Service, the
same problem will occur in attempting to lease out the empty
space resulting from movement of the carrier operations to
another location. This dilemma will ultimately result in a move
by the Postal Service to eliminate the retail operation in the
location, and this would negatively impact customers, as I
explained earlier.
The Postal Service leases nearly 85 percent of the
facilities that house processing, delivery, and retail
operations, so the cost of leasing facilities presents a
tremendous burden on the Postal Service. Considering the high
percentage of the leased facilities operated by the Postal
Service, and the underlying and substantial long-term financial
obligations they represent, it would be difficult for the
Postal Service to achieve significant savings through the
consolidation or closing of its leased properties.
Where the Postal Service owns the real estate that houses
its carriers and retail operations, the consolidation or
closure of delivery or retail operations at those properties
may also be problematic when the sale of that property is
attempted, given today's depressed commercial real estate
values. The closing of a local post office will also result in
an additional vacant storefront in an already depressed local
economy.
Our organization supports the efforts of the Postal Service
to maintain its viability in these trying times. The Postmaster
General deserves credit for his efforts to reduce costs and
improve efficiency. Our greatest concern is that, in a rush to
consolidate and close as many as 3,100 retail or delivery
units, significant savings may turn out to be a mirage and that
customers may suffer. We cannot continue to disenfranchise
customers of the Postal Service who live in urban areas and not
burden those who are least able to bear the cost.
This concludes my testimony, and I am prepared to respond
to any questions you may have.
[The prepared statement of Mr. Atkins follows:]
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Mr. Lynch. Thank you, Mr. Atkins.
Mr. Rolando, you are now recognized for 5 minutes.
STATEMENT OF FRED ROLANDO
Mr. Rolando. Thank you. Good morning, Chairman Lynch,
Ranking Member Chaffetz, and other distinguished members of the
subcommittee, Ms. Norton. My name is Fred Rolando. I am the
president of the National Association of Letter Carriers, which
represents more than 300,000 active and retired letter carriers
nationwide. Thank you for inviting me to testify.
I have seen the Postal Service thrive and I have seen it
struggle through some very difficult times, but I have never
seen a crisis like the one we are facing now. Volume is
expected to drop by 30 billion pieces this year, the worst
decline since the 1930's. When you couple the economic crisis
with the grossly unfair policy advanced by the previous
administration to require the Postal Service to pre-fund a
massive 75-year liability for future retiree health benefits
over just a 10-year period, it should come as no surprise that
the Postal Service faces a crisis of its own.
The Postal Service is responding with service cuts and
downsizing. Its branch and station optimization program and the
5-day delivery study are part of that response. As Congress
reviews these developments, it should ensure that the Postal
Service does not make structural decisions that will do more
harm than good over the long run. Downsizing to meet
depression-level demand without considering the long-term
impacts on the ability of the Postal Service to meet new
demands when the economy recovers would be shortsighted. Short-
term savings that undermine the Postal Service's capacity to
offer new services and to take advantage of future growth
opportunities would be self-defeating.
NALC has a long history of working with the Postal Service
to improve efficiency and to adjust to change, and we have
continued that tradition in this crisis. We developed a special
expedited route adjustment process to help the Postal Service
adjust to the fluctuating mail volume. These adjustments, along
with the initiatives for flat sequencing systems, have reduced
the number of city carriers by more than 11,000 during the past
year and will save the Postal Service billions of dollars over
time.
Looking ahead, it will be just as important to boost postal
revenues as it will be to reduce costs. We believe the uses of
our unmatched delivery network could be expanded to provide a
whole range of valuable services, like the one proposed by the
leaders on this subcommittee to use letter carriers to conduct
the next census. That is why we must be careful with branch and
station consolidations and reject drastic proposals like the
elimination of Saturday delivery. The cost of lost
opportunities from service cuts and other operational changes
must be recognized.
The Postal Service and its employees are doing all that
they can to respond to this crisis, but Congress can also help
to both minimize the short-term pain of the recession for the
Postal Service, its employees, and customers, and to maximize
the long-term potential of the Postal Service. It can do so by
reforming the retiree health pre-funding provisions in the law.
The current schedule of pre-funding payments is unaffordable
and unreasonable. Moreover, the actuarial methods adopted by
OPM to implement the pre-funding policy discriminate against
the Postal Service and significantly increase its costs.
While both H.R. 22 and the legislation developed by the
Office of Management and Budget offer similar short-term relief
for the Postal Service, and while we have given our support to
both proposals, they simply do not provide a long-term
solution. Comprehensive reform is needed to address the Postal
Service's financial situation and future viability. Overhauling
the pre-funding policy and reforming OPM's policies with
respect to the Postal Service must be a part of this reform if
the Postal Service is to continue to provide affordable,
universal postal service.
The Postal Service is the Nation's oldest and most trusted
government agency. It would be a tragedy to sacrifice its
future viability because of unfair and questionable policy
decisions made by OPM that are fossilized into current law
because CBO scoring rules prevent their reconsideration. My
members hope that this subcommittee and the full House of
Representatives will not let this happen.
I want to thank you for this opportunity to testify--it is
my first time; I hope it is not my last time--and I would be
happy to answer any questions.
[The prepared statement of Mr. Rolando follows:]
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Mr. Lynch. I don't think you have to worry about this being
your last time testifying. [Laughter.]
You will be a frequent flyer here. Thank you, Mr. Rolando.
Mr. Cantriel, would you please take 5 minutes for an
opening statement?
STATEMENT OF DON CANTRIEL
Mr. Cantriel. Thank you. I would like to ask that my full
testimony be submitted for the record.
Mr. Lynch. Without objection.
Mr. Cantriel. Chairman Lynch, Ranking Member Chaffetz,
members of the subcommittee, my name is Dan Cantriel, and I am
president of the National Rural Letter Carriers Association,
which represents 123,000 bargaining unit letter carriers. Our
members work in rural, suburban, and urban areas throughout the
United States and function as a post office on wheels because
rural letter carriers offer postal customers all of the
services performed over the counter at a post office.
Mr. Chairman, first and foremost, I would like to thank you
and Representatives John McHugh and Danny Davis for your
leadership on H.R. 22. I would also like to thank the chairman
of the full committee, Representative Ed Towns, for his
dedication in getting this important legislation passed at the
full committee level. While H.R. 22 will not solve all the
Postal Service's problems during this financial crisis, it is a
step in the right direction.
We are living in a challenging time. Our country is in a
deep recession and the Postal Service is a bellwether of the
Nation's economic well-being. Mail volume is down 11.9 percent
in the first half of this year and the Postal Service is
expecting to lose approximately $7 billion.
The decline in mail volume has hit the rural carrier craft
extremely hard. Rural carrier pay is based on the evaluated
compensation system, which is unique not just to the Postal
Service, but to American industry in general. In our evaluated
compensation system, each rural carrier is paid an annual
salary based upon the estimated amount of time it will take to
deliver the mail on his or her individual route. This
evaluation of the individual route is based upon an annual mail
count whereby over 30 separate elements are counted, timed, or
measured.
The most recent mail count earlier this year was
devastating to our members. For the second straight year, our
members have been hit hard in the pocketbook. The average rural
route lost just over 2 hours of valuation per route, which
equates to more than $3,400 a year in annual salary.
As a result of this year's mail count, rural routes were
reevaluated and adjusted. Prior to the 2009 mail count, over
42,000 rural carriers delivered on routes 10 out of the 12 days
each pay period. After the mail count, the number of rural
carriers who delivered this kind of route dropped to just over
27,000.
Meanwhile, the number of carriers who delivered 11 out of
the 12 days each pay period and still others who delivered 12
out of the 12 days each pay period increased significantly. In
order to avoid significant salary reductions, thousands of
rural carriers opted to work an extra day just to keep the same
salary they were making prior to the mail count.
The annual mail count directly affects rural carrier
salaries and schedules, but there are other concerns we have
about our very livelihood. If the Postal Service were to
consolidate the operation of retail stations and branches into
nearby postal facilities, that would only compound what has,
for rural carriers over the last several years, become a
serious problem.
If post offices begin to disappear, our carriers will have
to travel greater distances to work and our customers will
increasingly feel isolated from the Postal Service. During
these economic times, paying close attention to customer
service is a key, and we would expect a public outcry if post
office stations and branches across the country are closed.
Customers, especially in rural areas, will be particularly
inconvenienced and some will unfortunately decide it is simply
not worth doing business with the Postal Service. We will be
sending the wrong message if offices across the country begin
to close their doors. Our customers and communities need to
know that the Postal Service is here to stay.
I would like to say a few words about the Postal Service's
interest in reducing Postal Service delivery days. Instituting
5 day delivery would likely mean further salary decreases for
thousands of carriers, not to mention massive job losses. It
could mean salary cuts and layoffs for workers employed by
businesses in the mailing community. If 5 day delivery were
implemented, our evaluated compensation system, which is often
praised by the Postal Service for its efficiencies, would need
to be re-engineered and the rural craft could lose 50,000 rural
carrier associate jobs.
Mr. Chairman, that is 50,000 jobs added to the national
unemployment rate of almost 10 percent, and that is just from
one of the four postal unions.
Mr. Chairman, I know that times and finances are tough
right now, but, in my opinion, moving from 6 to 5 day delivery
would not save the Postal Service, it would only hurt the
business model and make other delivery operations more
attractive to our customers it so desperately needs to attract
and retain. This would be a terrible course to chart and, as
many observers have noted, could very well do much more harm
than good.
Thank you for allowing me the opportunity to testify before
the subcommittee today. I would be happy to answer any
questions you or your fellow Members may have.
[The prepared statement of Mr. Cantriel follows:]
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Mr. Lynch. Thank you, Mr. Cantriel.
Mr. Strong, you are now recognized for 5 minutes.
STATEMENT OF MARK STRONG
Mr. Strong. Thank you. Chairman Lynch, Ranking Member
Chaffetz, members of the subcommittee, thank you for inviting
the National League of Postmasters to testify before you today.
Founded in 1887, the League is a management association
representing the interests of tens of thousands of postmasters
throughout the United States. My name is Mark Strong and I am
the executive vice president of the League. More importantly, I
am a level 24 postmaster in Sun City, AZ, an unincorporated
area in the Phoenix metropolitan area. I have served in that
capacity since 1992.
The League would like to thank the subcommittee and the
full committee for reporting H.R. 22 without amendment. The
action has operated as a catalyst and started the legislative
ball rolling.
With your permission, Mr. Chairman, I would like to request
that my written testimony be entered into the record and
proceed to briefly summarize my testimony.
Mr. Lynch. Without objection.
Mr. Strong. A post office, and its station and branches,
has a primary responsibility in a given geographic area for
collection, delivery, and some processing. In addition, post
offices and their stations, branches, and finance units serve a
vital function as a network to access points, retail sales
points, and final delivery points for post office box holders,
a key element of our customer base.
The League strongly supports consolidation of collection,
delivery, and processing functions where appropriate. We are
quite concerned, however, that panicked consolidations could
lead to consolidating functions in a way that would cost,
rather than save, the Postal Service money, or negatively
affect service. There is often a good reason why carriers are
disbursed throughout a community at stations and branches, and
this reason has to do with urban congestion and traffic, rather
than mail volume.
Looking at my communities, if the carriers from one of my
branches were consolidated to another branch or my main post
office, the heavy traffic in the Phoenix metropolitan area
would add almost an hour additional time per day to each
carrier route. I would have to compensate for that time or
service would suffer; and to compensate for that is expensive.
This has to be taken into account.
There are also questions of sufficient space in a given
facility to take new carriers into that facility. In my case, I
don't have any to spare. In terms of space, I have been adding
in my post office almost 800 deliveries per month for years,
which means I have been adding carriers. That number has
decreased significantly over the past few years and it is now
at about 80 new delivery points per month. However, last month
there were more building permits issued in my area than were
issued in the prior 12 months put together. Thus, I anticipate
that my 80 new delivery points per month will start to grow
quite rapidly in the not too distant future. I have to start
thinking about that now, which puts me in an expansion mode,
not a contraction mode.
While the League supports the notion of consolidating
carrier function, it has more fundamental concerns about
consolidating retail functions. Service has to be our prime
consideration when looking to the future. Without good service,
we have nothing to offer. Having many retail outlets in the
communities allows us to provide better service, and closing
any significant number of them will hurt service, and we can't
do that.
The strongest argument for caution in consolidating retail
facilities lies in the area of post office boxes. Today, the
reality of carrier delivery is that businesses tend to get
their mail very late in the day, far too late to process and
deposit checks the day they are received. As businesses have
complained about this for years, we have told them that the
answer to their problem is to rent post office boxes, where
mail is available no later than 11 a.m. By renting a post
office box, small businesses can pick up their mail, process
their checks, and deposit them the very same day at the local
bank with a minimum of hassle.
This is a widespread practice and the quick access to
checks that post office boxes provide plays a central role in
the financial health to hundreds of thousands of small
businesses across the country. Removing quick access could have
a devastating effect on our business customers and their float.
Time means money for our customers and it is up to us to serve
them, not to have them serve us.
There are also a fundamental question of how we can
consolidate one set of boxes from one post office into another.
Generally, there simply isn't sufficient room in the second
post office to accept the boxes from the first, unless more
boxes are built in the second office. Building more boxes would
tend to create traffic problems in the second post office,
since most of these post offices were constructed with a
formula for parking that took into account the number of
existing boxes. We are the Postal Service, and service does not
mean forcing a customer to drive 5 miles in urban traffic to
pick up one piece of mail, to encounter a 5-minute wait to
park, and then a 20 minute wait inside.
In conclusion, I do not want to suggest that no
consolidation of carrier and retail functions could occur.
Intelligent consolidation is also a good idea. However,
efficiency, service, and the needs of the local small business
and our customers must come first, and that determination
should be a local one.
Thank you for considering our views, and I would be pleased
to answer any questions that you may have.
[The prepared statement of Mr. Strong follows:]
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Mr. Lynch. Thank you very much.
By way of a procedural announcement, they have just
informed us that there will be votes beginning now, basically,
on the House floor. There are 15 votes, and it could involve
about an hour and half, at least of delay. The problem is that
what will happen is that our 2 o'clock hearings begin shortly
after that series of votes.
So what I am going to suggest is while the ranking member
and I have more than a few questions to ask you, what I would
suggest is that I could, rather than have you stay here for
several hours waiting for us to come back and get in another
hearing room, I could submit these questions to you in writing,
but I would have to have them back in 10 days in order to get
the questions and answers on the record. If there is not an
objection from you, then I would like to handle it that way.
The other opportunity would be to bifurcate the hearing and
call you in on another date and ask you questions orally on the
record. So I can do either way. The problem is that we are
running into the August recess, so any oral hearing would have
to wait until September. If it is all right with you, I could
submit the questions to you in writing. There are some
questions we would like to ask right now. Since no one seems to
be objecting, I am going to take that as a yes.
You want to get something on the record?
Mr. Chaffetz. Yes.
Thank you for your patience, and our apologies for this
schedule; I wish it wasn't the case, but we appreciate your
testimony and being here.
I just wanted to make sure, Mr. Chairman, that the
Congressional Research Service [CRS] Report, Post Office and
Retail Postal Facility Closures Overview and Issues for
Congress, dated July 23, 2009, was in the record. If it has not
already been included, I would ask unanimous consent to have it
included in the record.
Mr. Lynch. Without objection.
Let me ask, and I will try to leave enough time for the
ranking member to ask as well.
Mr. Rolando and Mr. Cantriel, you are presidents of letter
carrier unions, and what we are looking at right here is not
only the consolidation of postal facilities, stations and
branches, we are also trying to get a sense of what is involved
and what the impact of route consolidation is. I have less of a
grasp of that. I think everybody understands when a post office
is closed, what impact that has.
But I would like to ask you each just to take a minute and
describe, I guess in the urban sense and then in the rural
sense, what it means and how the route consolidation process
has gone, whether or not you have been actively approached by
the Postal Service to participate and to have your input. How
has that all gone? Mr. Rolando.
Mr. Rolando. Thank you. With respect to the consolidation,
we haven't been approached regarding the adjustment of routes,
but we have been involved in the joint process of adjusting the
routes, anyway, due to the fluctuating volume. We have been
working with the Postal Service for a couple of years to find a
more efficient way to jointly adjust our routes, which, of
course, has been necessitated by the drop in volume.
Traditionally, we have had volume growth. As we started our
studies from our collective bargaining agreement, we had to
pretty much stop in our tracks and find a way to adjust to the
falling volume. The idea, of course, is the efficiency and
having 8 hours work for 8 hours pay. So we have been working
together. We are in our second of third rounds to do that. To
adjust to the volume we are doing two this year.
I can tell you, with any consolidations that do occur, it
would just be an extension of what we are doing to adjust the
routes. Obviously, it would affect travel time to get to and
from the route if you are going from a different station, but
the idea would be to jointly get on top of it as it happens and
keep everything adjusted to the volume and the location and any
adjustments that have to be made.
Mr. Lynch. Let me ask you. I know there are, I think, about
350,000 letter carriers? That is probably both unions, is that
right? No?
Mr. Rolando. Between us.
Mr. Cantriel. Well, 400 and something. You have 300? We
have 123.
Mr. Rolando. We have just over 200,000 active letter
carriers.
Mr. Lynch. OK. And there is a hiring freeze on right now,
right?
Mr. Cantriel. Not for us.
Mr. Lynch. Not for the rural?
Mr. Rolando. How come they let you hire?
Mr. Cantriel. Because we have a contractual provision that
calls for one leave replacement for each route. Although we
made some concessions in the last contract that allowed for
TRCs, there is still the provision there, and we have some
others, carriers that sub for more than one route and had
career status, and that reduced the number. But, contractually,
we are entitled to a leave replacement for each route, which
makes it a little more difficult for them to put a freeze on
hiring.
Mr. Lynch. Well, let me ask you basically the same
question. I know, Mr. Cantriel, the rural post offices are
exempt, I think, from this closure process.
Mr. Cantriel. That is not entirely true, because we are
experiencing, especially in the Wisconsin-Minnesota areas and
up through Michigan, that we have seen carriers move from one
office to another, because we had several calls complaining. I
don't know if the office was necessarily closed, but the
delivery function was consolidated and they are driving
considerably longer just to get to work, and then to go back,
drive that same distance to go out and deliver their route. So
we are not completely immune to it, although we haven't seen,
or even been asked about, some of the more urban offices that
we have and what kind of effect we would have.
As far as adjustment, I want to address that just a little
bit.
Mr. Lynch. Sure.
Mr. Cantriel. We have been in that process since our
existence because we are evaluated, and when we are evaluated
each year, depending on the volume of mail, whether it is going
up or down, our routes are adjusted accordingly. We actually
have a cap on how large the routes can grow, which, when they
exceed that, they would be adjusted.
We don't have much of a bottom end, and that is why, in my
testimony, we have a lot of carriers now working all 12 days
during a pay period because their routes have dropped below 40
hours. We don't have a guarantee, it is by the actual volume
and what the count shows that the route would be, so we will
have some 36, 37 hour routes. And we have gone through those
adjustments for years and years, so it is really not anything
new for us.
What is new is, because of the drop in volume, we are
seeing more consolidation of routes even in the more rural
areas, where the routes have gone so small that it just makes,
when someone retires, to consolidate.
Mr. Lynch. OK. I think my time has expired.
Madam Chair, you are more than welcome.
Ms. Norton. I have to go too, because there are Committee
of the Whole votes, but if I could just ask a few questions
before I go.
Mr. Lynch. That will be fine.
Ms. Norton. I do get to vote on the floor on some things,
so you can imagine that I take those opportunities.
I want to take this opportunity to commend the employee
representatives of the unions before us, because it is clear
that you have done what you could and what you can to pitch in,
and I think it is a perfect example of why unionization is a
benefit to the public as well as to management; you have
orderly process going on here.
Could I ask if any of you have experienced layoffs,
straight out layoffs so far? So far this downsizing, or
whatever you want to call it, has occurred without notices of
layoff in the traditional sense.
Mr. Burrus. All of our contracts contain provisions
governing layoff of employees. In 1978, a national arbitrator,
when all the parties were negotiating jointly at the time,
imposed conditions that we all share equally regarding layoffs.
In our bargaining units, an employee that achieves 6 years of
continuous service is protected for a lifetime against layoff.
The only employees that are exposed to the possibility of
layoffs are employees that have less than 6 years of continuous
service.
Ms. Norton. Have any of those been----
Mr. Burrus. No. There are also other legal impediments to
layoff, because you must merge the RIF procedures with the
layoff procedures, because the employees with less than 6 years
of service who are veterans have a special process that must be
used in order to effectuate layoffs. So it would be a very
complicated process.
Ms. Norton. Well, that is very important to have on the
record. I am going to have to go in a moment.
Mr. Hegarty. I would like to jump in on that one, too, if I
could. We haven't had any mail handlers laid off, but we have
had de facto layoffs. What I mentioned earlier was a mail
handler in Memphis, TN who is offered a job in, say, Oklahoma
City, 400 miles away.
Ms. Norton. Oh, yes, we have heard about those. And that is
a de facto.
Mr. Hegarty. They have a choice, either quit their job with
the Postal Service or move, so in effect they may be laid off.
The second instance is with our part-time flexible employees
who have no fixed schedules and no guarantee of work hours. In
many areas of the country now, they are only working 4 hours a
pay period, which is 2 hours a week, so they are, in effect,
laid off.
Ms. Norton. See, the reason I am glad to have this on the
record is because I am most concerned about some kind of
orderly process. I expressed earlier the kind of surprise
notion, precipitous layoffs or, for that matter, precipitous
transfers. Same difference, as far as I am concerned. I have
looked closely at this 5 day week largely because it is one of
the few things I think the public is not going to throw their
hands up at.
You can bet if some of those post offices or branches in
the District of Columbia have to be closed, I am going to be
besieged with people saying, ``oh, please, whatever you do,
don't close that postal service.'' So I was interested that
people have already acclimated themselves to the possibility of
5 day week, which, after all, they are on as well, and they
have looked at what has happened to the post office.
But, Mr. Burrus, Mr. Rolando, Mr. Cantriel, you are pretty
clear you did not want to see that happen. I agree with Mr.
Burrus that watch out for calling the decline and fall
altogether of the Post Office. Constitutional Post Office,
nobody up here. The Post Office has an allegiance up here that
nothing else I know has. Nevertheless, just as you warn about
structural changes, there are structural changes occurring to
you and, yet, very little of what we have heard, at least until
today, involved structural responses right back.
Mr. Hegarty went through a list that interested me, because
he said case-by-case basis, facts in each situation, economic
and logistical sense, negatively affects employees, negotiated
requirements complied with. Now, remember, that is going to
take time, and should take time, and I just think the unions'
involvement in whatever happens early is going to be necessary.
And I have to ask you once again, the 5-day week, given the
fact that it is going to be hard just to lay people off. Some
of these people are leaving because they are aging out, because
they can retire, and the rest, and given Mr. Hegarty's list, or
a similar list, would you really think the 5-day week should be
off the table, when it is not off the table for the general
public?
Mr. Rolando. I would like to say that obviously it has an
effect on my members, but this isn't about my members or
anybody else's members; it is about the institution. It is
about the Public Service.
Ms. Norton. The public is going to be hurt one way or the
other, and the question is can there be some kind of a sense of
how to get hurt the least, Mr. Rolando. I am going to be
looking for advice from people on the ground. Those are the
people I respect most. When service went down in the District,
I then traveled with my postman, as he was. I saw amazing
things like people who saw no one everyday except the postman.
I saw the great allegiance they had. I saw how hard the work
was.
And when you have some hard choices here, I would rather
have employee buy-in than to have what we are seeing the post
office do now; they come each time with, ``oops, we have to do
this,'' as if they couldn't have seen that 3 years ago or 4 or
5 years ago. So that is what I am putting to you. If that one
is not something we can agree upon, it is going to be hard for
me to understand what it is that we can get some kind of
consensus on to happen in time to save what is the core and
route of the service.
Mr. Rolando. I believe, again, that is a shortsighted
response, the 5-day delivery. I think they are going down a
totally dark road to respond to the crisis. What we need to do
is expand the business. You can look at going from 6 to 5 days,
and if you need some money next year, you can go to 4 days to 3
days to 2 days. It is just dismantling the company is what it
is doing.
Ms. Norton. And I think that might happen, Mr. Rolando. I
think that could happen.
Just let me say this, as somebody who saw a whole city go
down, the longer you wait, the greater the damage and the more
management is empowered to make the decisions. I would like to
see the kind of collaboration that you have already begun to
try to save the Postal Service. I don't think it can be saved
except with employee collaboration. You have in place such a
strong collective bargaining system, they are going to have to
come to you. You can delay the thing, and the question is how
to preserve what you think is in the best interest of all of
you and of the Postal Service.
I have to go vote. Thank you very much for hearing me out.
The Service is now--I mean the hearing. Not the Service,
for God's sake. [Laughter.]
The hearing is now adjourned. Thank you all for attending.
[Whereupon, at 1:20 p.m., the subcommittee was adjourned.]
[The prepared statement of Hon. Elijah E. Cummings and
additional information submitted for the hearing record
follow:]
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