In its latest attempt to shore up a more than $8 billion budget shortfall, the U.S. Postal Service announced today that it is looking to close 252 mail processing centers, about half of all such facilities, in the next two years.
Postmaster General Patrick Donahoe said the “very ambitious operational plan” would eliminate 35,000 jobs, saving the Postal Service an estimated $3 billion annually. It would also result in slower “snail mail,” increasing standard delivery for first-class mail to two days from one.
“These are significant changes that will lay the foundation for the way the Postal Service processes mail for decades to come,” said Megan Brennan, USPS chief operating officer. “It will put us ahead of the cost curve for the remainder of the decade.”
By ending overnight delivery time for most first-class mail such as letters, magazines and post cards, the government-owned corporation will be able to run its processing plants 20 hours per day instead of just six hours overnight.
“Our entire network was designed based on the requirement that we maintain the capability to deliver first-class mail the next business day and this requirement limits our ability to sort mail until all the mail to be sequenced for the local letter carrier has arrived at the facility,” Brennan said. “It’s why we currently maintain so many mail processing facilities.”
But some argue the cut backs are the wrong approach to solving the Postal Service’s financial problems.
“The mail-processing network is a major asset. Destroying it is misguided and counterproductive,” Cliff Guffey, president of the American Postal Workers Union, said in a statement. “The Postal Service should be urging Congress to address the cause of its problems — not slashing service and demolishing its network.”
Brennan said the closures will not result in any layoffs. Instead, America’s largest employer will eliminate the 35,000 positions through forced retirements because 150,000 of USPS’s 559,000 employees — about one-quarter — are already eligible for retirement.
“Every mail processing employee will be touched by these changes. And we know the change is unsettling,” Brennan said. “We will make every effort to accommodate employees to the extent practical. We have never laid anyone off.”
But as more people turn to email and online bill pay, the Postal Service revenues have plummeted in the past five years. Since 2006, Americans have sent 43 billion fewer pieces of mail. This 17 percent decline in mail volume has stripped $16 billion from postal service revenues, according to a March 2010 USPS report.
The report predicted mail volume would plunge another 37 percent in the next decade.
Postal Service spokesman Dave Partenheimer told ABC News last week that the USPS will have reached its $15 billion borrowing limit by Sept. 30, the end of the fiscal year and will be unable to make its congressionally mandated $5.5 billion yearly contribution to its employee retirement health care fund.
“We do have cash flow issues. We can’t make this $5.5 billion payment. I won’t make that,” Postmaster General Donahoe said today. “It’s physically impossible.”
Donahoe said the processing plant closures are just one step to fixing USPS’s budget crisis. He has also asked Congress to approve ending Saturday delivery, which he said would save an additional $3 billion. The service is also looking at cutting 3,700 post offices before 2015.
“The Postal Service is still a critical part of the American economy. We are not going out of business,” Donahoe said. “What we are trying to do is get our finances in order so we can stay out there in business and provide excellent service for a long. long time to come.”