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Postal Service to begin closing plants this summer

A customer places first class stamps on envelopes at a U.S. Post Office in San Jose, Calif., Monday, Dec. 5, 2011.

A customer places first class stamps on envelopes at a U.S. Post Office in San Jose, Calif., Monday, Dec. 5, 2011.

WASHINGTON (AP) -- The nearly bankrupt U.S. Postal Service is moving ahead with plans to close dozens of mail processing centers, saying on Thursday it can no longer wait as Congress remains deadlocked over how to help.

At a news briefing, Postmaster General Patrick Donahoe said the agency's mail processing network had simply become too big, given declining mail volume and its mounting debt. It will now consolidate nearly 250 plants as originally planned, including 48 this summer, but will stretch out the remainder over a longer time frame in 2013 and 2014.

Earlier this month, nearly half the Senate had written letters to Donahoe asking that he hold off on closing any mail facility until Congress could pass final postal overhaul legislation. The Senate last month passed a bill that would halt many of the closings; the House remains stalled over a measure allowing for more aggressive cuts.

"To return to long-term profitability and financial stability while keeping mail affordable, we must match our network to the anticipated workload," Donahoe said. Failure to do so, he stressed, would "create a fiscal hole that the Postal Service will not be able to climb out of."

Under the modified approach, up to 140 mail processing centers will be consolidated by next February; roughly 48 in August and about 90 next January and February, with closings suspended during the Postal Service's busy election and holiday mail season. Another 89 closings would occur in 2014.

The consolidations are expected to reduce postal staff by 13,000 and save the struggling mail agency roughly $1.2 billion annually once they are fully implemented.

The latest postal move comes after vociferous protests from communities across the U.S., particularly those in rural areas, over the mail agency's initial multibillion dollar cost-cutting plan to close up to 3,700 post offices and 252 mail processing centers. The Postal Service last week backed off the closing of post offices, saying it would cut costs instead by reducing operating hours.

Thursday's announcement seeks to allay some rural concerns about immediate, broad-scale cuts to mail processing centers that would have slowed first-class mail delivery of prescription drugs, newspapers and other services beginning this summer and would have virtually eliminated the chance for a stamped letter to arrive the next day.

Under the new plan, about 80 percent of the U.S. areas that currently enjoy overnight first-class mail delivery will continue to do so through the end of next year. After that, barring congressional action, the Postal Service will proceed with additional steps that could slow first-class mail and reduce overnight delivery even further, said Megan Brennan, chief operating officer of the Postal Service.

The Postal Service has been grappling with losses as first-class mail volume declines and more people switch to the Internet to communicate and pay bills. The agency has forecast a record $14.1 billion loss by the end of this year. Without changes, it said, annual losses would exceed $21 billion by 2016.

Donahoe stressed that even with its latest moves, the agency still faces mounting losses without congressional action that would give it more leeway to eliminate Saturday mail delivery and reduce health and labor costs.

If the House fails to act soon, postal officials say they will face a cash crunch in August and September, when the agency must pay more than $11 billion to the Treasury for future retiree health benefits. Already $13 billion in debt, the health payment obligation will force the agency to run up against its $15 billion debt ceiling, causing it to default on the payments.

Comments

Don 2 years, 4 months ago

The postal service must be able to operate like a business. When demand drops people need to be laid off and hours adjusted.

The issue with the postal service is the unions that have iron clad contracts that do not allow for termination when business drops.

We should go to four or three day per week delivery. Cut staff and reduce the hours of operation at all post offices. Maybe a split shift 7-11am and 4-8pm.

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