Press Release No. 00-2

For Immediate Release

Contact: Robert E. McLean

Release No. 00-2

703-418-0390

March 09, 2000

bmclean@mailers.org

Mailers Council Study Urges Postal Service to Improve Productivity to Keep Postage Costs Down

WASHINGTON, March 9, 2000—The Mailers Council, a coalition of the nation's largest mailers, today released a report showing that since 1991 the US Postal Service’s productivity has not kept pace with any significant productivity measure of comparable private sector industries and has contributed to higher postage costs. The report demonstrates that if the Postal Service had achieved the productivity gains experienced by comparable private sector industries in recent years, implementation of the next rate increase could have been delayed, and the size of the increase tempered.

The report “Postal Service Productivity: Real Improvements Needed Now,” acknowledges that there are many factors that threaten the Postal Service’s future success, including increasing competition, operating and cost management constraints, and the consequences of management decisions. As a result of these factors, at a time when every competing technology is becoming less expensive, the cost of using the nation’s mail system is becoming more expensive.

The report urges the Postal Service to focus its considerable resources on those factors it can control to improve productivity, and to develop an aggressive, public implementation timetable of programs that will achieve this goal—including new management incentives for improving productivity.

Between 1972 and 1998, the Postal Service experienced only a 9.1% growth in productivity. Despite investing millions of dollars in automation equipment, the Postal Service actually experienced a productivity decline since 1991. The Postal Service’s automation program has helped limit increases to the postal workforce, but labor productivity has not substantially improved because of a larger workforce and higher salaries.

In a March 8 letter to Postmaster General Bill Henderson, Mailers Council Executive Director Bob McLean says the Mailers Council “believes it is important to sustain the US Postal Service as an integral part of the nation’s communications and logistics network.” Improving productivity is necessary to achieve this goal, McLean says, but “consistent productivity improvements remain an unrealized goal.”

A 1999 GAO study predicts that the Postal Service could experience an unprecedented decline in mail volume beginning in FY 2003, placing billions of dollars of revenue at risk. According to the Council’s study, “competitive pressures from the Internet, domestic carriers and foreign postal administrations will make the Postal Service’s mission more difficult in the very near future. The Mailers Council sees no better way for the USPS to face these challenges than by renewing its commitment to improving postal productivity.”

The study’s author, Alan Robinson, has 15 years experience as a consultant to postal administrations, mailers and suppliers to the mailing industry. Robinson has assisted A.T. Kearney, Andersen Consulting, KPMG Peat Marwick, Ernst & Young and Arthur D. Little in serving postal industry clients.

The Council represents over 50 corporations, nonprofit organizations and major mailing associations. Council members use the United States Postal Service to deliver correspondence, publications, parcels, greeting cards and payments. Collectively the Council accounts for as much as 70 percent of the nation's mail volume.