Saturday, March 21, 2009

WASHINGTON (AP) - The U.S. Postal Service has already suggested dropping a day of mail delivery to save money. Now, with economic gloom everywhere, it’s turning to early retirements, management cutbacks and office closings.

Not so long ago, the picture was far different. The USPS finished fiscal 2005 with a $1.4 billion surplus.

Postal officials were already struggling with a sharp decline in first-class mail as letters and many bills moved to the Internet. Then the flagging economy devastated advertising mail, which had become the agency’s largest volume. At the same time, the number of delivery points _ homes and offices where it must bring mail, was continuing to increase.

The Postal Service lost $2.8 billion last year and is facing even larger losses this year, despite a rate increase _ to 44 cents for first-class mail _ scheduled to take effect May 11.

The service said Friday it will offer early retirement to 150,000 workers across the country. In addition the agency said it will eliminate 1,400 management jobs and close six of its 80 district offices.

Postmaster General John Potter has even asked Congress to consider allowing the agency to cut mail delivery back to five days a week to save money.

“We are in uncharted waters,” Potter told a Senate subcommittee in January. “But we do know that mail volume and revenue _ and with them the health of the mail system _ are dependent on the length and depth of the current economic recession.”

“It is possible that the cost of six-day delivery may simply prove to be unaffordable,” he said.

In its announcement Friday, the post office said it will cut management staff nationwide by 15 percent, eliminating more than 1,400 processing, supervisor and management posts at 400 facilities. And another 150,000 postal workers will be offered early retirement.

The agency also made early retirement offers last year but unions discouraged their members from accepting the offers and they were not widely used. The post office did not say if the new proposal would include financial incentives.

The American Postal Workers Union issued a statement Friday saying: “Retirement is a personal matter, and the union defers to the decisions of employees who meet the qualifications.”

However, the union said it continues to challenge the Postal Service’s authority to offer voluntary early retirement without including severance pay.

The district offices being closed are in Lake Mary, Fla.; North Reading, Mass.; Manchester, N.H.; Edison, N.J.; Erie, Pa.; and Spokane, Wash.

District offices handle administrative functions and officials said the closing should not affect local mail delivery. The closings were expected to take about five months.

The first quarter of the fiscal year _ October through December _ is usually the post office’s busiest, but it still posted a loss of $384 million for the period.

Officials said the economic recession contributed to a 5.2 billion piece mail volume decline compared to the same period last year. If there is no economic recovery, the USPS projects volume for the year will be down by 12 billion to 15 billion pieces of mail.

The post office said that over the past year it had cut 50 million work hours, stopped construction of new postal facilities; froze salaries for postal executives, began selling unused facilities and cut post office hours.

In addition, it is negotiating an agreement with the National Association of Letter Carriers to adjust carrier routes to reflect diminished volume.

Last year’s high fuel prices also sucked funds away from the post office, which operates more than 200,000 vehicles. Every one-cent increase in the price of fuel costs the post office $8 million.

The post office’s annual report for 2008 lists 765,088 employees.

Changes in the law also are forcing the agency to pre-fund retiree medical benefits. A bill currently in Congress would reduce cost.

The USPS does not receive a taxpayer subsidy for its operations.


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