STATE OF THE BUSINESS
EFFICIENCY, PRODUCTIVITY KEY TO USPS SUCCESS
The state of the American economy has changed drastically in the last year. And the outlook for financial recovery anytime soon dwindles as the recession that began in late 2007 continues.
Outlining trends that led to the current economic crisis, Deputy Postmaster General Patrick Donahoe and Budget and Financial Analysis Manager Tony Morrow on Friday presented a “Budget Overview” webinar to explain how the Postal Service will meet the challenge.
Donahoe praised all postal employees for their efforts to improve efficiencies and reduce costs over the past several years, adding that without their hard work, the economic situation facing USPS would be even worse.
He also urged employees to continue their efforts. “We cannot count on growing our way out of the crisis when the economy isn’t growing,” he said. “We have to look inward, making changes to become leaner and control costs. The more we improve productivity, the better we will be positioned when the economy improves.”
According to Donahoe, a financially healthy Postal Service is dependent upon a healthy U.S. economy, but the various crises among the retail, banking, credit and housing markets continue to deepen. Companies are scaling back their operations to weather the storm, and consumer spending — the driver of advertising mail volume — has dropped to a 30-year low. And mail-volume trends paint a gloomy picture.
The 9.3-percent drop in mail volume during the first quarter of FY 2009 marked the eighth consecutive quarter of accelerating volume declines. First-Class Mail volume decreased by 1.8 billion pieces and Standard Mail volume was down 3 billion pieces — a trend that began to gather speed three years ago.
After peaking at 213 billion pieces in 2006, total mail volume dropped to 203 billion in 2008, and preliminary projections show it could drop a further 12 billion to 15 billion pieces in 2009 — unprecedented in postal history. This 22 billion piece drop in mail volume would hit levels last recorded in 1996, according to Morrow.
“Not only that, but — if current trends continue — revenue this fiscal year will be lower than in FY 2008,” said Morrow. “If that occurs, it will mark the first year-over-year decline in revenue since 1946.”
While legislative changes adjusting the Postal Service’s current payment schedule to fund retiree health benefits would offer some short-term financial relief, it would not by itself be enough, according to Donahoe.
“In the near term, a continued focus on efficient service and customer value will strengthen our ability to meet the challenges we face,” said Donahoe.