APWU VP: “Last Mile Strategy” = “Contract Out Everything But Delivery”

Greg Bell
Executive Vice President

(The following article will appear in the March-April 2012 edition of The American Postal Worker.)

apwulogoIn January, a group of “postal industry thought leaders” published a paper that advocates contracting out all postal functions except delivery — a plan that is often referred to as “the last mile strategy.”

The paper, titled “Restructuring the U.S. Postal Service: The Case for a Hybrid Public-Private Partnership,” helps us understand what’s behind the current financial “crisis” at the Postal Service.

According to the model outlined in the proposal, “Today’s trusted letter carriers will deliver mail, packages, and products the ‘final mile’ to every address in the country while the private sector fulfills virtually all upstream mail processing, transportation and logistics functions.”

In coordination with the paper’s publication, the National Academy of Public Administration (NAPA), a congressionally chartered non-profit organization, announced that it is conducting an “independent” review of the proposal.  Lest there be any confusion about its independence, the NAPA press release helpfully points out that the review is being funded by a contribution from Pitney Bowes.

The End Game

With the publication of this proposal, the end game of those who want to privatize the Postal Service has been laid bare for all to see. The USPS generates more than $65 billion a year in revenue.  Privatization would redirect that revenue to private industry.

Who would benefit?

Pitney Bowes, the company that is funding the review, stands to be a major beneficiary. The company is widely known as a provider of mailing equipment, but it is also a major mail “pre-sorter.” The company takes advantage of generous pre-sort discounts offered by the Postal Service to provide outsourced services to high-volume mailers. In 2011, Pitney Bowes operated 41 mail processing facilities and generated $5.3 billion in revenue. Pitney Bowes would certainly snatch up a major portion of USPS revenue if it were given the chance.

A look at the paper’s authors reveals who else stands to gain from postal privatization. Among the authors are:

John Nolan, who served as Deputy Postmaster General of the USPS from 2000-2005. He is currently a board member for Streamlite, a business-to-consumer package delivery service. (Nolan is not the first former top-level USPS manager to go into the for-profit mail business.  Former PMG Marvin Runyon left the Postal Service in 1992 and became a founding member of the Board of Directors of Stamps.com in 1996.)

Ed Gleiman, who was Chairman of the Postal Rate Commission from 1994-2001. After leaving the Postal Regulatory Commission, former chairman Ed Gleiman went on to become a lobbyist for the Direct Marketing Association (DMA), a leading trade organization representing large mailers.

The other authors are George Gould, who served as Legislative and Political Director for the National Association of Letter Carriers from 1988 to 2006, and Ed Hudgins, who  is Director of Advocacy for the Atlas Society, a right-wing think tank.

Who Else Stands to Benefit?

FedEx and UPS also stand to benefit from any public-private model. FedEx is already the Postal Service’s number one private contractor, transporting Express Mail, Priority, and First Class Mail. In 2011 the company earned postal revenues of nearly $1.5 billion.

FedEx’s CEO, Frederick W. Smith, urged a congressional committee to consider postal privatization more than a decade ago. “Closing down the Postal Service,” he testified in 1999, “like any other government agency that has outlived its usefulness, is an option that ought to be considered seriously.”

Any postal study financed by those who stand to profit from privatization cannot be considered independent, neutral or credible.

The proposal doesn’t say what would happen to the Postal Service’s infrastructure of buildings and equipment, or to the 250,000 Clerks, Motor Vehicle Service employees, Maintenance Craft employees and Mail Handlers who currently process the nation’s mail.  But it is clear that the profit derived by the private sector would come at the expense of the unionized workforce.

A Convenient Crisis

As anyone who’s been following the USPS knows, the major cause of the Postal Service’s current financial crisis — which is cited as the justification for privatization — is the Postal Accountability and Enhancement Act (PAEA). The 2006 law requires the Postal Service to pre-fund future retiree health benefits for the next 75 years within a 10-year period.

Right-wing, anti-union politicians, with help from top postal executives, have been using the crisis caused by the PAEA to pursue “reforms” that would undermine the USPS — closing thousands of post offices, shutting hundreds of mail processing centers, and slashing service to the American people.  A bill introduced by Rep. Darrell Issa (R-CA) in the last session of Congress demanded $3 billion worth of cuts in postal retail and mail processing operations. It also would have created a “solvency authority” with the power to nullify postal employees’ collective bargaining agreements.

Privatization is the ultimate goal of those who are using the unsustainable mandates of the PAEA as an excuse to dismantle the USPS retail and mail processing network.

Public Bears the Costs

The public is already bearing the cost of the post office’s financial crisis.  As mail processing plants are consolidated and hours at retails outlets are reduced, service to the American people is deteriorating.

Privatization would make things worse — much worse. It would transfer the assets of our nation’s public postal service to private corporations. It would take the wealth that we, as a nation, control, and hand it over to Pitney Bowes, FedEx, UPS and others.

It would mean an end to “universal service at a uniform price.”  It would mean the death of inexpensive service to every neighborhood. It would mean more cutbacks in service and higher costs for postal customers.

This could be the disastrous outcome if Congress fails to fix the mess it made when it passed the PAEA.