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plant consolidations

PRC Chairman Goldway offers a separate view on USPS service cutbacks

PRC Chairman Ruth Goldway expressed her concerns about the USPS’s network changes and service cutbacks in a “separate view” published along with the PRC’s advisory opinion:

Separate Views of Chairman Goldway

The Postal Accountability and Enhancement Act (PAEA) established a complex balance of responsibilities between the monopoly postal operator and the independent government regulator. This Advisory Opinion meets our obligations and recommends to the Postal Service how it should address its obligations. Read the rest of this entry »

PRC Issues Advisory Opinion Analyzing USPS Plan to Change Service Standards

Washington, DC –The Postal Regulatory Commission today issued its analysis of the Postal Service’s Mail Processing Network Rationalization (MPNR) initiative, a plan to capture net savings of $2.1 billion (later revised to $1.6 billion) by closing and consolidating 229 of its 461 processing plants to better match declining mail volume. The Commission’s range of potential net savings estimates is lower than that projected by the Postal Service. The Commission’s Advisory Opinion concludes that the Postal Service could significantly reduce its network and realize substantial cost savings while preserving most current service levels.

The Postal Service plan would modify existing service standards for First-Class Mail, Standard Mail, Periodicals and Package Services. Overnight delivery service for single-piece First-Class Mail would be eliminated and much of current First-Class Mail 2-day delivery would be delayed to 3-day delivery. Eighty percent of all First Class Mail would be delayed by at least one day. In July 2012, the Postal Service proceeded with a phased implementation plan that included interim services standards until January 31, 2014, preserving overnight First-Class Mail service (with the exception of First-Class Mail that is handled by more than one processing facility) and consolidating 140 plants.

“The Commission believes that the phased implementation of MPNR provides an excellent opportunity for the Postal Service to study the effects of service standard changes; to inform its decisions on how to preserve as much of the current services as possible; and to make adjustments before full implementation,” says Ruth Y. Goldway, Chairman of the PRC.

The Commission’s analysis focuses on network modeling, cost savings estimates, and estimates of potential volume loss.

  • The Commission’s Opinion includes alternative rationalization options that would preserve most current service levels and result in significant savings. The Commission expands upon the Postal Service’s model and demonstrates the benefits of a more robust modeling effort. The Postal Service uses modeling to develop an initial list of facilities to be consolidated given the decision to reduce service levels. The Postal Service rejected much of the model results; more than half of the plants identified using modeling tools were replaced based on management insight before local studies were performed.
  • The Commission recommends starting with a baseline model that is validated against known conditions, including actual plant productivities. The Postal Service’s model uses workhours per square foot as a measurement of productivity; however, productivity is best measured by comparing workhours to the volume of mail processed. Empirical evidence demonstrates that it is generally more expensive to process mail in larger plants than smaller ones.
  • The Commission concludes that in order to capture the anticipated cost savings upon full implementation of MPNR, the Postal Service would have to improve average system-wide productivity by over 20 percent. Improvements of this magnitude are ambitious and involve some risk.
  • The Commission estimates that MPNR cost savings may be as low as $46 million annually assuming mail processing productivities remain at current levels, or as high as $2 billion annually if all proposed assumptions prove correct.
  • These cost savings may be offset by volume losses and resulting contribution losses from mailers who believe the service levels no longer meet their postal needs. The Postal Service initially estimated lost contribution as $500 million upon full implementation of MPNR. The Commission is unable to replicate the Postal Service’s analysis, and the Postal Service now concedes that there are problems with the estimate. In order to balance the risk of achieving projected savings with the risk of possible volume and revenue loss, the Commission encourages the Postal Service to better measure potential volume losses associated with its multiple recent proposals for altering service.
  • The Commission advises the Postal Service to develop a plan to better inform all customers of the service they can expect to receive.
  • The Commission advises that a transportation hub plan be developed and made known to mailers.

“I want to give special recognition to the economists and statisticians in our Office of Accountability and Compliance for their rigorous analysis of the testimony presented in the case. I urge the Postal Service and the mailing community to study each chapter and the appendices so that we can work together to improve the Postal Service,” Chairman Goldway concluded.

The Commission’s complete Advisory Opinion may be found on the PRC website:

PRC Dismisses APWU Complaint on Consolidations

The Postal Regulatory Commission (PRC) has dismissed a complaint [PDF] filed by the APWU alleging that the USPS violated federal law when it began implementing a plan to eliminate half of the nation’s mail processing plants before the PRC issued an Advisory Opinion on the plan.  Under federal law, the USPS must request an advisory opinion from the PRC when it makes nationwide changes in service.

The commission ruled that the USPS must request an advisory opinion, but must not wait for the panel to issue its opinion.

The APWU filed the complaint on June 12 [PDF] seeking to stop the Postal Service from implementing Phase 1 of its consolidation plan, which called for the USPS to consolidate more than 40 mail processing plants over the summer and to lower service standards effective July 1. The union asserted that the USPS was not permitted to implement the changes without first obtaining an advisory opinion from the commission.


Guffey contradicts Burrus- says USPS hasn’t offered retirement incentive

You may remember that earlier this month former APWU President Bill Burrus accused the current APWU leadership of holding up retirement incentives for APWU members:

The APWU National Executive Board has endorsed the decision to withhold agreement on a monetary incentive for retiree eligibles in response to management’s refusal to implement newly negotiated contractual provisions.

In a statement today, the APWU says that’s not true:

Incentives Updates

At pre-convention meetings, Guffey reported that the union has engaged in informal discussions with management on incentives to encourage employees to retire or resign. To date, the USPS has made no official offers to the APWU, but discussions are continuing, he said.

Guffey said he understands that there is great interest in incentives among some members, but it is not wise to negotiate in public. “Management will offer incentives when they believe it is in their best interest,” he said. “Right now, it seems they believe they can find spots for excess employees, so they haven’t offered any money” – even in areas affected by consolidation.

If the situation changes, “we will do everything we can to get the best terms for our members,” he said.

USPS offers early out to 3,300 EAS employees affected by organizational changes

From USPS News Link:

As part of its ongoing efforts to increase operational efficiencies and reduce costs, the Postal Service is proceeding with several organizational changes, effective Aug. 25. These changes include:

  • Continuing activities related to mail processing operations at Processing and Distribution Centers and Post Offices affected by Phase Iof the network consolidation plan.
  • Consolidating the Computerized Forwarding System.
  • Re-ranking and aligning Network Distribution Centers with Area offices.

With these changes — and as part of the Postal Service’s Reduction in Force avoidance plan — USPS is making a Voluntary Early Retirement (VER) offer to more than 3,300 EAS employees with a December 31, 2012 VER retirement date.

USPS notified impacted employees this week and has given them detailed information with a timeline of events to help them make decisions.

Senior leadership roles in the districts that are important in ensuring continuity of operations and managing change are not eligible for this VER offering.

Frequently asked questions related to the Reduction-in-Force (RIF) and the VER are available on the Organizational Change website or the Workforce Connection website on LiteBlue. Employees should check both sites often for updates.

PRC Issues Advisory Opinion on Post Office Structure Plan

Washington, DC – The Postal Regulatory Commission (Commission) today issued an Advisory Opinion on the Postal Service’s Post Office Structure Plan (POStPlan), an initiative to match post office retail hours with workload, Docket N2012-2.

The Postal Service is required to seek an Advisory Opinion if its actions constitute a nationwide change in service levels. The POSTPlan reflects a determination by the Postal Service to explore options to adjust its retail window hours without closing post offices. Retail window hours of operation at more than 13,000 post offices nationwide will be reduced to 6, 4, or 2 hours per weekday, and in approximately 73 locations, hours of operation will increase. Read the rest of this entry »

Contractor needed for Flats Sequencing System (FSS) relocations

Having installed a hundred massive Flats Sequencing Systems around the country, the US Postal Service is now looking for a contractor to move a dozen or more of them to new locations. Moving an FSS is no easy task- as the solicitation notes, “Each system accounts for approximately 50 semi-tractor loads of material”. The contractor would be responsible for tearing down the machines at their current locations, and reinstalling and testing them at their new homes.

The USPS had better hope that the relocations go better than the original installations did. A recent New York Times article on USPS delivery problems suggested that the FSS machines were partly to blame:

The post office says several factors have led to what it calls minor delivery delays: the breakdown of older sorting machines, and more time-consuming maintenance; the elimination or consolidation of delivery routes because of declining mail volume; and workers learning how to operate new equipment like a complicated machine the size of a football field that is built by Northrop Grumman to sort catalogs and magazines.

Several larger mailers, including Time, said they had talked with the Postal Service about the machine’s problems, which have resulted in late deliveries. In May, Northrop Grumman sued the Postal Service, accusing it of breaching an $874 million contract by improperly delaying and disrupting the company’s work to install 100 of the machines.

Here is the text of the solicitation:

The United States Postal Service (USPS) is seeking sources for upcoming FY 13 requirements to relocate Flats Sequencing Systems (FSS) from their current operating sites to new processing centers. The FSS is a large specialized mail processing platform which contains numerous components and subassemblies. Each system accounts for approximately 50 semi-tractor loads of material. This notice seeks information from potential sources of supply that have recent experience in relocating large and complex electro-mechanical systems. Suppliers must have the capability to perform a baseline inspection and test, teardown, move, re-install, calibrate and then retest the system to the pre-move performance levels. This is a request for information only and is not a solicitation to purchase equipment or services. The USPS intends to use the information gathered through this announcement to pre-qualify multiple sources for the opportunity to submit proposals for future solicitations issued. Performance under any resulting contract(s) is estimated to occur in calendar year 2013 and beyond.

Northrop Grumman Systems Corporation designed and installed, together with other subcontract sources, the current FSS and deployed a total of 100 systems at 47 sites throughout the United States. The system sorts flat mail into letter carrier Delivery Point Sequence. The USPS currently is planning to move 10 to 12 FSS machines to new sites to increase productivity of its flats operations, however the final number of moves will be determined by future mail volumes and operational needs. The relocations are anticipated to start early in calendar year 2013 and continue through 2014. Several machines may need to be moved at the same time.

As noted above, the FSS is a large and complex machine with a footprint of 15,000 sq. ft. and a total operational floor space of 30,000 sq. ft. The maximum height of the machine is 18 ft. The original deployment required almost 50 semi-tractor loads of material per system. The system is comprised of a Stand Alone Mail Prep (SAMP) system and the FSS Main system.

via Flats Sequencing System (FSS) Relocation – Federal Business Opportunities: Opportunities.

Mailhandlers Union Brief Challenges USPS Network Changes

(July 11, 2012)  As previously announced, in December 2011, the Postal Service filed a request with the Postal Regulatory Commission (PRC) seeking an Advisory Opinion regarding the Postal Service’s plan to consolidate its processing network and substantially lengthen service standards, including the elimination of overnight delivery for first-class mail.  Under the Postal Reorganization Act, the Postal Service must seek such an Advisory Opinion from the PRC before it implements any “change in the nature of postal services which will generally affect service on a nationwide or substantially nationwide basis.”

The NPMHU immediately intervened in the PRC proceedings Read the rest of this entry »

Durbin: PMG Should Prove Cost Savings Before Closing Plants

[WASHINGTON, D.C.] – U.S. Senator Dick Durbin (D-IL) sent a letter to Postmaster General Patrick Donahoe urging him to adhere to a provision – included in the Senate Financial Services and General Government Appropriations passed last month by the Senate Appropriations Committee – that would require the Postal Service to conduct a new audit that shows cost savings before moving forward with plans to close or consolidate facilities that were recently found to be efficient. The provision, originally included in the comprehensive postal reform legislation passed by the Senate in April of this year, would affect 11 mail processing facilities nationwide including the facilities in Quincy, Illinois and Rockford, Illinois. Read the rest of this entry »

APWU Files Complaint to Stop USPS From Implementing Consolidation Plan on July 1

The APWU filed a complaint with the Postal Regulatory Commission on June 12 seeking to stop the Postal Service from implementing Phase 1 of its consolidation plan, which calls for the USPS to consolidate 48 mail processing plants this summer and to lower service standards effective July 1. The USPS cannot implement the changes without first obtaining an advisory opinion from the commission, the complaint says.

Federal law requires the USPS to seek an advisory opinion from the PRC whenever it plans to make nationwide changes in service, but the commission doesn’t expect to issue a formal opinion on the plan until close to Labor Day.

Noting that “the Postal Service case is extremely lengthy, technical and complex,” the APWU complaint [PDF] alleges that the USPS failed to submit the plan to the PRC far enough in advance of the July 1 implementation date. Read the rest of this entry »