Postal Service needs flexibility to achieve financial stability
December 23, 2011
OPINION By KERRY WOLNY
As Congress considers legislation to reform the business model of the Postal Service, it must confront a basic choice: to permit the Postal Service to function more as a business does, or constrain it from doing so.
With greater business model flexibility, the Postal Service can return to profitability and financial stability. A flexible business model would speed product and pricing decisions, enable a five-day per week delivery schedule, and permit the realignment of mail processing, delivery and retail networks to meet lower mail volumes. It would also allow the Postal Service to more effectively manage its healthcare and retirement systems, and better leverage its workforce.
For an organization that generates all of its revenue from the sale of postage, products and services – and is contending with declining use of First-Class Mail for bill payment – having the ability to quickly adapt and react to the marketplace is vital. Our immediate goal is to reduce our annual costs by $20 billion by 2013, which would put the Postal Service in the black and ahead of the long-term cost curve.
The alternative is a business model that prohibits or delays cost reduction, perpetuates an inflexible structure, and constrains the Postal Service from being more responsive to the marketplace, which soon could result in long-term deficits in the range of $10 to 15 billion annually.
Within the limits of our current legal framework, we have responded aggressively to a changing marketplace – reducing the size of our workforce by 128,000 career employees and reducing annual operating costs by $12.5 billion in the past four years. However, to return to profitability we must move at an even faster pace. And to do so requires changes in the law.
In a digital world, businesses and individuals have choices in the way they communicate. Although the Postal Service facilitates trillions in commerce annually, and supports a $900 billion mailing industry that employs almost 8 million people, it must have the tools and the motivations to effectively compete for customers.
In the current debate about its future, some have argued the Postal Service should not operate like a business and be allowed to regress back into an unchanging, taxpayer-subsidized agency, and some have urged that it be privatized and completely separated from the government. The former is undesirable and the latter is unrealistic.
The answer resides in the middle – an organization that performs a vital national function and operates with the discipline and motivations of a business that competes for customers. If the Postal Service is to endure as a great American institution, provide the nation with a secure, reliable and affordable delivery platform, and serve as an engine of commerce, Congress should provide it with the speed and flexibility it needs to compete in an evolving marketplace.
The Postal Service is far too integral to the economic health of the nation to be handcuffed to the past and to an inflexible business model. To best serve taxpayers and postal customers, it’s time to remove the constraints.
Kerry Wolny is the district manage for the Sierra Coastal Postal District which includes San Luis Obispo County.