USPS In Financial Crisis, PMG Potter Tells Congress

January 28, 2009 by
Filed under: Congress, postal, usps 

PMG Jack Potter today told a U.S. Senate subcommittee that worsening conditions in the economy now point to a further 12-15 billion mailpiece decline and a net financial loss of $6 billion or more in FY 2009. 

Potter also proposed changes in current law to give the USPS Board of Governors the flexibility to reduce the number of mail delivery days each week. Click here to read Potter’s formal statement to the Senate subcommittee.

“We have stretched the limits of our system as they have never been stretched before,” Potter said in his formal statement to the Senate panel. He pointed to a cumulative $20 billion in cost reductions since 2002 and the elimination of 120,000 jobs through attrition. He noted, however, that volume is outpacing the speed at which the Postal Service can adjust operations. “No one knows at what point mail volume will bottom out,” he said.

Among further cost-cutting actions already taken or under way, Potter cited:

An indefinite suspension in the facilities construction.
 
Salary freezes for officers and executives at 2008 levels.

A reduction in staffing at Headquarters.
 
Reductions in staffing at the nine Area Offices.
 
Early retirements — USPS has accepted more than 14,000 to date.

Reduced travel budgets.

Consolidation of duplicative mail processing operations.
 

Potter also noted that USPS continues to pursue revenue growth by vigorously enhancing its shipping service, delivering record on-time performance with its mailing services and investing in modern technology and web services. Nevertheless, he said structural changes in customer mailing behavior, robust competition in all markets and the worsening economy have placed USPS in a grave financial situation. “If current trends continue,” Potter said, “USPS could experience a net loss of $6 billion or more this fiscal year.” The maximum loss the Postal Service can absorb under current law is $5 billion.

Potter said it was now time to consider options that have not been on the table up to now. He said he would work with union leadership to “create needed levels of workforce flexibility” to ensure USPS viability and to protect jobs. He also said worsening economic conditions may make it necessary to “temporarily reduce mail delivery to only five days a week.” 
Potter called for legislative change to reduce the crippling cost burden imposed by the Postal Act of 2006 that requires USPS to prefund future retiree health benefits in addition to paying for current benefits. Last year, the combined $7.4 billion cost accounted for nearly 10 percent of the USPS operating budget. Without this requirement, USPS would have posted positive net income in 2008 instead of a $2.8 billion loss.
Potter said the intent of the law is sound, but that the aggressive payment schedule was unsustainable in light of the growing deterioration in the U.S. economy and the mail. He noted that the change would not diminish USPS responsibility for funding employee health benefits, and it would not increase health benefit premiums for current and future retirees. He also said the change would not affect benefits. 
 
 source: USPS

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No Comments on USPS In Financial Crisis, PMG Potter Tells Congress

  1. mzfaye on Wed, 28th Jan 2009 11:12 pm

    2. the real problem and you folks won’t admit to it you still want to call a bad management fault, is the pay by phone and online billing. Ads on the internet for credit cards, online banking, on line reading (no need for newspapers or magazines), text messaging, email, gift cards no need to send a package for 20 bucks to the grandkids when you can send them a gift card for the cost of the card and 59 cent postage. It appears that the only mail is mail that tells people you owe us money (although we just got a 50 billion dollar bailout from you). You are protectionist when it comes to Saturday delivery making up all kind of doomsday senarios. Why is it every other business is failing but the Post Office shouldn’t be included in the failing economy. I need my job just like everyone else, but greedy bankers, ceo’s, investors, and stock market games caused all this and it appears everyone will be paying for it. The post office has always had bad management but this economic problem is shocking even the most educated economist so our management were just simply to stupid to see the tidal wave coming in until it was too late and kept hiring when they didn’t need all those people and now they are going to have to let them go that is the tragedy of this mess.

  2. Chris M on Thu, 29th Jan 2009 3:08 am

    3. Someone needs to question why the postal service continues to waste $ on trying to eliminate jobs. The Postal Service continues to waste money trying to produce flat sorting machines for years and they still cant get it right. The postal Service needed new trucks 10 years ago but cant afford them because they spend money trying useless new concepts that never work.

  3. Chris M on Thu, 29th Jan 2009 3:12 am

    4. The postal service need to realize their is a time and place for everything. The should have used their money replacing gas run trucks with electric running trucks or something along those lines BEFORE trying to use flat sorting machines that dont even fit in most of the facitlities that they are putting them into, thus requiring $ to be spent on making buildings large enough to fit these new machines. Mis-MGMT is the real reason the Postal Service is failing!

  4. Senator Widestance on Thu, 29th Jan 2009 3:32 am

    5. Anyone for some stall time?

  5. Chris M on Thu, 29th Jan 2009 3:36 am

    6. I think what he really is trying to say is we need to temporarily suspend mail delivery to our paying customers, so we can get the flat machines running since we ran out of money. How did they start these ambitious projects? They do require $, dont they??????

  6. T. Woods on Thu, 29th Jan 2009 4:19 am

    7. This is the end…my friends!- J. Morrison

  7. and on Thu, 29th Jan 2009 4:27 am

    8. don’t forget they still pay big money to our competitors to move mail, competition which has raised the operating costs and now they are gonna make fedex happy because people will have to pay fedex to deliver on saturdays!!!!!!!!

  8. Chris M on Thu, 29th Jan 2009 9:56 am

    9. Postal Service spends thousands on grievances files against employees in which they probably lose more than 75%. It is one of the few places you feel like the second you get hired they are trying to fire you??? This guy Potter should look to the example of the CEO of Starbucks that reduced his salary to 10,000 for the year. `

  9. Chris on Thu, 29th Jan 2009 1:00 pm

    10. Why spend millions on machines if they keep saying the volumes are decreasing lower each year? Very few customers complain about not getting their newsweek the day it is supposed to out. Customers want better service not flat sorting machines. Potter reminds me of the losers running the auto companies.

  10. Carrier on Thu, 29th Jan 2009 2:41 pm

    11. Where is the NALC in all this? I tried to talk to one of my stewards today and all he cared about was his vacation!

  11. APWU clerk on Thu, 29th Jan 2009 7:50 pm

    12. When is the Postal Service going to look at how much money is paid out year after year in grievance settlements. Managers continue to violate the same thing over and over and never held accountable. Some one needs to wake up and teach managers the contract or hold their feet to the fire when they cost the Postal service money.

  12. Chris on Fri, 30th Jan 2009 2:23 am

    13. I say bring Potter before Congress on natinal TV with the union and it’s members present for questions.

  13. Chris on Fri, 30th Jan 2009 2:33 am

    14. How much BOnus & did the postal Service payout in the last 5 years across the nation? I’m sure Potter got a BIG one and all at the expense of the people who keep having to pay more for stamp increases??

  14. Chris on Fri, 30th Jan 2009 2:33 am

    15. Bonus $ it should say!!!

  15. Capt. Dunsel on Fri, 30th Jan 2009 4:40 am

    16. Why can’t this A&&HOLE be SH%TCANNED? Potter needs to go.

  16. Capt. Dunsel on Fri, 30th Jan 2009 4:41 am

    17. And take his 108 vice presidents with him.

  17. Pete on Fri, 30th Jan 2009 7:51 am

    18. We would have made a profit last year if it wasn’t for the retiree benifit $$$. Think about that.

  18. Borat on Fri, 30th Jan 2009 12:40 pm

    19. Potter could not see this coming because he was to bust getting his country wide loan.

  19. Paula J. on Fri, 30th Jan 2009 6:32 pm

    20. Potter should give back his big “Incentive” he received for Fiscal year 2008. Financial hard times and the greedy man running the USPS cares nothing of the people underneathe him that are actually working the jobs. Get the lawyers to make sure that they protected their monies and they got their “incentives”. Sound like the Big Auto guys all in private jets begging for cash they need? What postal Hot shot will give up his big increase to help the USPS?????

  20. PMG Potter on Sat, 31st Jan 2009 5:28 am

    21. Thank you for your support. I’d like to say I’m on the job and looking out for you. My pay is frozen until I give myself another 39 percent raise in Feb.

  21. WTF on Sat, 31st Jan 2009 9:50 am

    22. Here’s the solution -

    1. Reincarnate Marvin Runyun – (If you don’t touch the mail you’re overhead)

    2. Fire Potter and the Republican BOG, and get people in who want to provide service to the people,

    3. Cut all Executive officer positions by 1/2

    4. Cut HQ’s staffing by 1/2

    5. Cut Area offices from 9 to 5 (Like we had in the past)

    6. Cut district offices from 80 to 50

    7. Let the people who actually do the work (i.e. deliver the mail) – DO THEIR JOB

  22. Allen on Sat, 31st Jan 2009 5:15 pm

    23. Heck, we can’t even get any rubber bands at our PO, and they’re saying we will get flat sorting machines in Oct. If the mail volume falls any more why do we need them?

  23. New CFO on Sun, 1st Feb 2009 1:34 am

    24. We don’t. But we already spent 100 billion on them. heehee

  24. cjcb on Thu, 12th Feb 2009 3:12 am

    25. The govt is trying to CREATE jobs but at the same time the govt is trying to destroy jobs? Make any sense. What business model is the post office trying to emulate. I never ever get complaints about my bulk mail magazines arriving late, but parcells being traced, different story. We have this loser hit team in my office now, what company cries we have no money but has people follow people doing their jobs for two weeks? Why not give them a bag and let them deliver the mail, they didn’t even go out when it was the coldest day the last two weeks? The mail volume got really heavy before they came and now their is none, i think they cant delay the bulk more than say a week or two so the volume should shoot up right after they leave??? I say start at the TOP not the BOTTOM, kinda like starting a sports team over it almost always starts at the TOP, but this is after all Postal logic we are dealing with??

  25. Bo on Mon, 16th Feb 2009 6:58 am

    26. Yep, this fish rots at the head!

  26. Vernon on Fri, 20th Feb 2009 10:14 am

    27. We just got a new time clock that cost 1000.00 and we only have 2 employes this one sends your rings right away no delay.

  27. cjcb on Tue, 17th Mar 2009 1:36 pm

    28. Postal service purchased an employees house for 1.2 million so that the employee would transfer to a different location? Anybody else hear about this ??

  28. concerned on Sat, 28th Mar 2009 3:54 pm

    29. Its typical Post Office to wait to the last minute to start reducing costs. If they were doing this all along maybe we wouldn’t be in such a financial crisis. Now I have to worry if I’m still going to have a job ,and I have 23yrs off loyal service.

  29. Debbie on Thu, 2nd Apr 2009 5:03 pm

    30. “Salary freezes for officers and executives at 2008 levels.”
    PMG Potter can now afford to put a freeze on there salaries because he received a $105,000. raise in his annual salary, $133,000. bonus, and his $ 800,000. compensation package! Yet he refuses to give any early out retirement incentive to the employees with 25+ years who have given outstanding service through out their career.

  30. cjcb on Wed, 22nd Apr 2009 2:49 am

    31. We have two carriers that 204b at our office one that has a college degree in business MGMT, has been doing the job for at least 5 years and is reguarded as the BEST MGMT in the office including the regular supervisors. We also have another which has been doing it for a couple of months and has no experience but has double D’s. We are in an office that is one of the “worst” according to DOIS. My postmasters boss comes in one night and two days latter the double d 204b is gone on a 204b detail at another office also reguarded as one of the “worst”? Make any sense to take from the worst and give to the worst, does this seem like the right choice to anyone? Does it make sense to take and create overtime for NO reason when you have regular mgmt running around following carriers? Doeas it make any sense to take the 204b that has NO experience just because she is blond and has double D’s? Does anybody wonder WHY the postal service is in the shape it is in today? Postal MGMT has created this problem and continues to prove that they have NO idea how to run a business.