Donahoe Lays Out the Future of the USPS

May 09, 2013 2:00 PM  By

post-office-fleetPost Master General and CEO Patrick Donahoe of the U.S. Postal Service painted a grim picture during his State of the USPS presentation to attendees at the American Catalog Mailers Association’s  2013 National Catalog Forum on May 8.

According to Donahoe, in 2003 the USPS delivered 51 billion pieces of mail, this year they deliver 21 billion pieces.

“It’s almost a $14 billion loss,” said Donahoe.  “We have lost that much volume, when you are in the catch up mode like we are you never get ahead unless you put a business plan through.”

According to Donahoe, with the loss of money, either infrastructure goes or employees are forced to take lower wages and mailers are paying higher prices.

“We don’t want to do that,” Donahoe said.

The USPS, he said, is $15 billion in debt with another $16 billion in deferred payments for health benefits, so they are looking at over $30 billion dollars in debt.

Expenses exceed revenue and the gap is growing. The bottom-line is with pre-funding and once pre-funding ends there is a substantial gap the postal service needs to fill, according to Donahoe.

“The labor costs represent 78% of postal service costs, we’ll probably never get under 70%,” said Donahoe.

Plans are in place however to address the issues in front of the postal service. Plans begin with addressing health care, network consolidations and the postal service has eliminated 21 thousand delivery routes.

usps-delivery-truck-300There are essential elements in restoring the financial stability of the USPS. These elements include cost reform, revenue opportunities, general flexibility, and oversight, according to Donahoe’s presentation.

Within cost reform the plans include worker compensation reforms, reducing overhead relating to retail, delivery routes and Mail Processing Facilities.  Revenue opportunities include preventing rate increases, enabling wide innovation and new product development; demand mailers who require six day service pay six day cost.

General flexibility and oversight includes allowing management to outsource or contract out anytime it provides cost advantages, reduce or professionalize redundant oversight, according to the presentation.

Some key legislative goals to regain self-sufficiency, includes adjusting the delivery frequency with six-day package delivery and five-day mail delivery.  Other goals include requiring a USPS health care plan with a defined contribution system for future postal service employees and reform workers compensation, streamline a governance model, authority to expand products and services.

Donahoe said five-day delivery will save the postal service $2 billion. Growth initiatives include enhancing mail, package growth and digital products.

“We think that we probably can get profitable very quickly and pay the debt amount, we have made a dramatic change in the base force that works for us, we will continue to message the unions that we need more affordability and flexibility,” said Donahoe.

In April, the USPS delayed its implementation of five-day delivery schedule until legislation is passed that provides the USPS with the authority to implement a financially appropriate and responsible delivery schedule.

According to Donahoe, if legislation doesn’t pass, the postal service will have to do something to get revenue in the organization.

“We have not given up on mail at all, we know there is growth and we have not given up on packages,” said Donahoe.

  • ken

    this guy is a piece of garbage. how bout reducing the amount of useless supervisors, examiners, and other clipboard holders. they come in my office that had 3 aux routes and adjusted and abolished routes, know we have routes that make no sense with carriers crossing over each other and 2 new aux routes. f’ing brilliant.

    • richie

      The problem it the plant the Republicans put in there by the name of Donahoe Look at the salary chart and see what some of these managers make….makes you sick

  • http://www.facebook.com/joe.jones.906 Joe Jones

    how about the 80- 100 billion in pension overpayments to the govt..how can he not mention that? fire him already!!

  • tim

    we have fat lazy asses that show up at our office to see if our pennysavers are up by cutoff time. what a waste. they walk around go to the crapper for an hour and announce they are leaving and have a nice weekend. so glad I’m close to retirement.

  • tom

    That over payment belongs to the current retirees and workers close to retirement, not the usps to use as they wish. I you go from 51 billion to 21 billion pieces of mail then the work force should be cut in half. I have not seen that happen yet. To save your job the current workers are going to have to bite the bullet, forget the union and start working a little harder. And please don’t tell me that all empoyees now work at the top level of working hard, I have done the work and I know what is slow, normal and fast but safe. For the sake of your job, if you want a job, all workers are going to have to do more. And of course management will have to get their number of workers down and do more.

    • richie

      You my friend area management MORON and yes MORON the workforce HAS been cut in half

    • LiamSkye

      Don’t quit your day job. The number of delivery points has INCREASED, not decreased, and that means you need more employees to cover them, not less.

    • Sucka

      As soon as you go salary instead of hourly, no overtime premium, and management set the example by getting a 15% pay cut for standing around.

    • PMGS

      Tom, it’s not pieces of mail delivered, BUT delivery points, it does not matter if I have ONE piece or FIFTEEN pieces of mail for a delivery point, I still have to travel thru space and time to get that ONE piece of mail to that mail box, space that cannot be moved thru any faster…
      To simply think that I need half as many carriers because I have half as much mail is clueless to say the least…

      • tom

        You are correct that you do have to drive past that box, but there is a big diffference in time if you can drive past a lot of mailboxes and not stop or you only have to finger and put 1 or 2 pieces of mail in that box if they have mail verses the 4 to 8 pieces you had to finger and put in the box years ago.

        • http://www.facebook.com/people/Mike-Shaw/1218661073 Mike Shaw

          Funny, when I say I need OT those stops “don’t take any extra time”, but when there is undertime suddenly every stop I skip saves me 5 mintues apiece. My walking route has 3 businesses closed on Sat. and somehow warrants a 30 minute pivot on another route (according to DOIS).

  • Sucka

    Want to cut cost? Set the example and have all management take a 15% cut, no overtime premium, and make pay for management salary not hourly.

    • LiamSkye

      They made those changes for most EAS around 20 years ago when they took away their COLA and step increases too. Let that be a lesson to anyone who thinks they would be better off without a union.

    • guest

      How about giving up your COLA?? Pay more into your health care like a real Federal employee

      • JY

        A “real” federal employee gets territorial cost adjustment added to their salary.

  • http://www.facebook.com/steven.ellis.9022 Steven Ellis

    Tom, you are clueless! I work harder now than at any time in my 35 years. There is simply NO WAY to work any harder or faster and still be safe. All of you are living in “la la” land if you think these problems can be solved by having the employees “work a little harder”, get real, wake up, and smell what your shoveling.as far as getting the “number of workers down” , again, you don’t know what you’re talking about. you CANNOT lessen the number of deliveries that HAVE to be made every day, All routes in my office have been “adjusted” several times in the last 2 years and are now very much over 8 hours, ALL of them. Where are you going to cut? Get a clue.

    • rjnicks

      The guy TOm is not only a moron but a idiot…go and quit and go to Walmart where you belong

  • Name

    PO must be 100% privatization to get rid of all problems.

    • LiamSkye

      But that wouldn’t get rid of the problem that the private sector competitors charge around $7 to deliver a letter that USPS delivers for $.46.

  • tom

    Richie, you cannot see the writing on the wall and that is why the post office will fail and all will be out of a job. I have over 40 years at the post office and I have done every job in the post office. You are so blinded by blaming everyone but yourself. As you will notice I said that management will have to make a lot of cuts to their ranks also. Also the rolls have not been reduced by 300,000 employees. I am not in management so I do not favor them over craft employees. There are many times over in craft than management so the number of craft jobs to be cut will be more. Carrying mail use to be the easyist job in the post office, now the clerks have the easyist job. Before you start accusing me, I have carried mail in tempertures above 100 degrees on a walking route, I have walked and drove on ice and snow to deliver mail. Steven, if you have maxed out on your work level I thank you. But I still see carriers stand around talking, going to the bathroom to do a job that they should do on their time at home, I see them at the fast food places other than for lunch, breaks and bathroom breaks. I see them take twice as long to load their mail trucks as it should take. I seen them on their cell phones several times in the office. And yes the delivery stops are there every day, but as I look at my personal street mailbox on the average I only get mail about 3 days out of 6, so yes he still goes by my box but he does not stop much which saves a lot of time in delivery. I have seen him stop at maybe 1 house on my block to deliver mail. While some have given 100% or more most have not. And I could speak just as bad about the clerks also. You all need to look at the big picture not just yourself. But you know, I am retireing this summer so I don’t care if the post office falis and everyone loses their job or not, I will be gone and won’t have to worry about benefits or having a job.

    • http://www.facebook.com/people/Mike-Shaw/1218661073 Mike Shaw

      Typical management excuses.. how dare an employee use the bathroom on the clock. How long is it suppose to take to load the truck??

      If you have time to see carriers doing all these “time wasting practices” you must not have much to do yourself.
      You say you’ve carried mail.. but was it with DPS, FSS and MSP? Bad scanner? Del Conf on all the parcels? COR thats says you should be able to drive 5 miles to you route in 1 1/2 minutes or cross 8 lanes of traffic on foot in zero seconds?

    • Tom

      ….not to mention, I have 40 years of sucking managements cock a doodle doooo. Just remember, I’m watching you and I will report back to management with my findings.

      • tom

        Nice try mike shaw to use my name for your post trying to make me look bad. That is a perfect example of why everything is someones fault and not yours. You are not even man enough to make a nasty post under your own name. You can’t even carry on a civil discussion without getting nasty with it. You can’t darn to hear another side of the story. Your side is right and everyone else’s view is wrong. If your attidute is like this on a discussion board, I can just guess how your attidute is at work. But you know, I don’t really care because when the post office fails because of people like you, I will be retired and you will be unemployed. Also you do know that it is a crime to make a statement using the name of someone other than yourself.

        • http://www.facebook.com/people/Mike-Shaw/1218661073 Mike Shaw

          First of all, I did not post under you name. There are only 2 posts here from me and they both have my name on them.
          Second, your post is doing exactly what you are saying we are doing, that is blaming someone else. If you feel that carriers are wasting too much time on the clock all I can say is,” We will stop if you stop!” I know of no management that does not use the bathroom, talk on their cell phone, or do other personal things on the clock. As the saying goes, ” When you point a finger at someone there are 3 pointing back at you.”

  • Guest

    Really! Labor costs are the problem? The Postal Service does not make a product. They offer a service hence the name Postal SERVICE. Of course labor cost are the majority of costs. Why don’t we look at the cost of management to worker ratio and see the real problem.

  • Bruno

    If they are trying to save money, why get rid of their TRCs who are the lowest in pay with no benefits. No Saturday delivery is a good idea. The mail volume is way down and items can be mailed out accordingly to be delivered on Friday or earlier if needed.

  • http://www.facebook.com/ryan.walston.5 Ryan Walston

    We have about 60 routes where I deliver mail! Including rural. Our office has to have 8 or 9 routes “open” everyday to make up for all the under time that dois says we need. Along with all the cca’s we have taking our routes. We have 4 routes that that haven’t been posted this year because our new p.m. Says it can wait and he s not allowed to yet. It’s like talking to a brick wall when we tell our bosses that we can’t make it back safely in 8 hrs! But when we go over , they want to discipline us for not making 8 hrs even though we told them in the a.m. That we couldn’t ! Wth!!!! We also have upper eshalon people with clipboards coming in wasting our time and money to tell us stuff that we already know and have known for years! We can basically run our office without sups. Now I feel better.lol

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  • RogerDodger

    Mgt definitely overpaid, most offices don’t need to keep these pencil pushers around because all production numbers on the mail processing machines can be accessed thru MPI, I could look at machine numbers in Seattle from my office, so why have anyone count the mail when you can do it remotely-get rid out people you don’t need! I’m sure the PMG would like to see useless leave!

  • PMGS

    Only the “new Hires,” FROM SEVEN YEARS AGO, TE’s to CCA’s, and new CCA’s, MHA’s, PSE’s, etc., are having lower pay as the PM said in this article. All the other PM’s, Managers, Supervisors, and REGULAR work force are still making the same, and have had NO reduction in pay… so when the PM talks about postal employee’s now receiving less money, (AND no benefits, also saving the PO money), it is a select group he is talking about, and NOT the whole Post Office as the article alludes too…

  • Ted4591

    Lets start at the top by cutting the cost of Donahoe.

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  • http://www.facebook.com/people/Painter-Barry/1838541274 Painter Barry

    I volunteer to take a wage and benefit cut! I will take the same wage and benefit cut that Congress has taken. They are only $15 trillion dollars in debt. :)

  • Rotbart59

    Donahoe will go down in history as the worst PMG ever. The man is a consummate liar and snake oil salesman. When I retired last year I sent my retirement certificate to him in DC and politely told him what to do with it. The USPS can’t do anything right and now they want to get into the health care business. I spent thirty years there with the promise of decent health coverage. Now he wants to take that. I have nothing but utter disdain for this charlatan.

  • TheRealFed

    The sky is falling yet again.

  • Slug 1

    Is donawhore willing to take a pay cut. I think not.

  • Heywood Joblome

    Pat Donahoe never considers the bloated Management and Supervisor costs as Payroll expenses. They are always factored in as fixed costs (overhead) like utilities, rent,water/sewer bills, etc, including their ridiculous “Pay for (non) Performance Bonus`s they distribute amongst themselves every December as Santa`s Christmas Gifts that they have rightly earned.

  • disqus_oCLMiBNmQB

    Reform is easy!! Businesses have had to do it!
    Here is how much money we took in;this is how much we can pay.
    This is how much benefits can afford.
    End of story!

  • Blake

    Why don’t UPS and FedEx have to pre fund their retirement benefits? Oh yeah because they have lobbyists and congressmen in their pocket.

    Without the USPS our (e-commerce) company would go out of business. We lose 30-40% on every package sent UPS because we just can’t pass on the real charges and rural fees to customers.

    We break even on USPS. Customers are just as happy with USPS service, <.01% of packages are lost or damaged, and we don't lose money. Apparently this part of the USPS business is profitable as well.

    Everyone wins if they get to compete like any other company. Fire Donahue and hire someone who will stand up for the service

  • Vonpeedler

    PMG Donahoe does not know the first thing about running YOUR local post office. I guarantee it! I retired early, seeing the downfall over 10 years ago. Just like all of his overpaid puppets, the same thing goes on in most local PO’s.Way too many so – called managers that don’t know the first thing about mail delivery or how to treat the public with respect and dignity that they deserve. I wish so badly, the public could see what really goes on in there local PO’s. Next time your carrier tries to explain why your mail is screwed up (when it didn’t use to be), chances are he or she has to make something up on the spot just to cover their own butts. Get rid of 80% of local management and while things won’t change overnight, moral will come way up while saving the post office billions.