USPS plans up to 140 plant consolidations through February

From USPS News Link:

USPS is moving ahead with a modified, phased plan to consolidate its network of 461 mail processing locations.

The first phase of activities will result in up to 140 consolidations through February of 2013. Unless the Postal Service’s circumstances change, a second and final phase of 89 consolidations currently is scheduled to begin in February 2014.

“We revised our network consolidation timeline to provide a longer planning schedule for our customers, employees and other stakeholders, and to enable a more methodical and measured implementation,” said PMG Pat Donahoe.

Donahoe said the Postal Service must match its network with its anticipated workload to return to long-term financial stability. “We simply do not have the mail volumes to justify the size and capacity of our current mail processing network,” he said. “This modified plan meets our cost reduction goals, ensures seamless and excellent service performance throughout the implementation period and provides adequate time for our customers to adapt to our network changes.”

USPS will begin consolidating operations this summer — mostly transferring mail processing operations from smaller to larger facilities. Beginning next week, approximately 5,000 employees will receive notifications related to consolidating and other efficiency-enhancing activities to be conducted this summer.

Due to the volume of high-priority mail expected during the election and holiday mailing seasons, there will be no consolidation activities from September through December, 2012. “We will be conducting consolidation activities this summer at only 48 locations,” said Chief Operating Officer Megan Brennan. “As a result, nearly all consolidating activities in 2012 will occur in August and then resume again the early part of next year.”

These consolidating activities will reduce the size of the USPS workforce by approximately 13,000 employees and when fully implemented, will generate cost reductions of approximately $1.2 billion annually.

“The Postal Service will communicate with our customers and employees about these changes in great detail,” said Brennan. “We’ll work closely with our customers to make sure there are no surprises as we move forward.”

The PMG is featured in a video explaining in further detail the network consolidation plan. The list of mail processing locations to be consolidated by February 2013 will be posted at approximately 3 p.m. Eastern Daylight Time on the Our Future Network website.

Service standards

USPS soon will issue a new regulation to modify its existing Service Standard for overnight delivery. A Final Rule will be published in the Federal Register that would initially shrink the geographic reach of overnight service to local areas and enable consolidation activity in 2013. The new rule would further tighten the overnight delivery standard in 2014 and enable more consolidation, unless the Postal Service’s circumstances change.

Brennan said USPS is essentially preserving overnight delivery for First-Class Mail through the end of 2013, adding USPS is “collapsing the distance that we can provide overnight service to the distribution area served by a particular mail processing facility.” She said under the new standard, approximately 80 percent of First-Class Mail still will be delivered overnight.

Unless its circumstances change, USPS expects to pursue consolidation activities for an additional 89 mail processing locations beginning in 2014. These consolidations would be based on long-term service standards that would significantly revise mail-entry times for customers seeking overnight delivery.

“Given that the Postal Service currently is projecting a $14 billion net loss in fiscal year 2012 and continuing annual losses of this magnitude, we simply cannot justify maintaining our current mail processing footprint,” said Donahoe.

When fully implemented in late 2014, the Postal Service expects its network consolidations will generate approximately $2.1 billion in annual cost reductions and lead to total workforce reductions of up to 28,000 employees.

Retirement incentive

USPS is working with its unions on an employee retirement incentive, although no final decision has been made. “The Postal Service has reduced the size of its workforce by 244,000 career employees since 2000 without resorting to layoffs,” said Brennan. “We are a responsible employer and we will work with our employees to ensure a smooth transition to a much leaner organization.”

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