PMG Comments Offer a Few Insights

As is typical of a meeting of the Postal Service’s Board of Governors, the public session is a series of scripted formalities devoid of the candid remarks and discussion that likely were part of the preceding closed session.  So, during the open session on November 13, the chairman and postal executives read their prepared remarks that, as would be expected, said the right things but offered little of substance.

The closest anyone’s statement came to providing a look at where the agency’s leadership was taking it might be the remarks by Postmaster General Louis DeJoy.

High fives

As would be expected in the PMG’s first statement to the Board following the election, DeJoy took pains to thank everyone for their roles in successfully delivering election mail and ballots, and recounted the scope of the work.

“In the general election, we delivered more than 135 million ballots to and from voters.  In the 2020 election cycle, we delivered approximately 610 million pieces of election mail and 4 billion pieces of political mail.  97.9% of ballots were delivered from voters to election officials within three days, and 99.7% of ballots were delivered from voters to election officials within five days.  Overall, on average, we delivered ballots to voters in 2.1 days.  Most importantly, on average, we delivered ballots from voters to election officials in just 1.6 days. ...

“I would like to thank the 644,000 women and men of the Postal Service for their dedication, commitment and performance in delivering the nation’s political and election mail. ... I would like to recognize the Board’s election mail committee. ... Our election mail task force was chaired by our General Counsel Tom Marshall and our Chief Logistics and Processing Operations Officer Dave Williams.  Along with our Chief Retail and Delivery Officer Kristin Seaver, they directed all election mail efforts across the enterprise. ...

“We invited the leaders of our postal unions and management associations to join our task force, to ensure that all efforts and communications were unified from top to bottom. ... We also worked closely with the National Association of Secretaries of State, the National Association of State Election Directors, and state and local election officials across the country. ...

Despite a narrative that arose in certain circles, we never wavered in our commitment to fulfill our sacred duty to deliver Election Mail, and ballots in particular.  The laundry list of extraordinary measures and individual efforts is quite long.

“We added extra transportation; we added extra staff and overtime; we arranged special trips and coordinated deliveries in thousands of locations; we prioritized ballots in our processing operations; e conducted sweeps in our facilities to look for ballots; we visited every mailbox on every street to check for ballots in the days before the election; we worked with thousands of election officials; and we educated the American public about planning ahead and voting early.

“To meet deadlines on election day, our postmasters and letter carriers’ hand-delivered thousands of ballots to boards of election across the country. ...”

Substance

With all the required acknowledgments and congratulations out of the way, the PMG moved on to comments that provided the first glimpses of his vision for the USPS and some broad-brush thoughts on how that may be implemented.

“Of course, we all know that there is much work to do going forward, not only with regard to Election Mail, but also in order to ensure the long-term health of the Postal Service.  Just as I was fully committed to our role in the nation’s electoral process, I am equally committed to securing the long-term viability of the Postal Service as an essential part of the country’s critical infrastructure.

In that regard, I will be proposing and executing on change.  To believe that we can operate as we have before and continue to meet our service mission to the Nation is not realistic.  It’s time to put away the harsh rhetoric, lower the temperature, and collaborate on new solutions.

“Working with the Board of Governors, we intend to propose a strategic plan within the next several months that will outline a bright future for the Postal Service, our employees, and our customers.  It will acknowledge the Postal Service as an essential part of the federal government, preserve six-day delivery and our universal service obligation, and it will also ensure that we are self-sustaining.  I look forward to working with all of our interested stakeholders to chart a positive and prosperous path so the Postal Service can thrive for many years to come. ...

“Today, we are releasing our financial results for fiscal year 2020, and those financial results reveal that we recorded a net loss of $9.2 billion.  Clearly, we have an unsustainable business model.  Our problems can be solved, but we need to get on now with the difficult business of solving them. ...

“The Postal Service has had a systemic imbalance between revenues and costs for more than a decade.  Absent major management actions and legislative and regulatory reform, this gap will only get wider.  We could easily see consistent losses of greater than $10 billion annually in the coming years – unless there is strong collaboration to change the Postal Service business model. ... While we can have an impact on some of our variable costs; the costs of maintaining our current network are mostly fixed and will only rise over time. ... In this financial context, we will soon need to advance changes in our business model and gain relief from COVID and other economic impacts, or we have to lower future expectations of the organization. ...

“We need to invest to modernize our retail and processing operations, to purchase a new vehicle fleet, and to provide better training, technology and tools for our employees.  We need to improve the postal workplace and the employee experience.  We also need to address the instability of our non-career workforce.  We need to address operational inefficiencies. ... And, we must also invest in a faster pace of innovation to diversify and grow our revenues. ...

“But there is also much we do not control.  If we are to be financially self-sustaining our business model must be reformed to change how we are required to operate and restructure the demands of our legislative and regulatory mandates.  The Board and I look forward over the coming weeks and months to working with the Congress and our regulator to effectuate the changes that are necessary to enable the long-term success of the Postal Service for many years to come. ...”

The PMG’s comments may not have presented concrete steps to achieve any of his goals, but they do signal a focus on action and a realization that decisions have to be made – by Congress as well as other stakeholders.

The USPS has been promising a long-term plan for years but, despite a Congressional directive, has yet to produce one.  Even if it had, of course, the business disruption caused by the ongoing pandemic likely would have disabled achievement of the plan and required a complete revision of whatever the agency might have forecast.  With an opportunity to compose a plan based on significantly different conditions than existed even a year ago, DeJoy may have a degree of latitude that was not available to his predecessor.

One point on which he will have difficulty, however, is reconciling his call for a new business model with his acceptance of the existing and costly burdens represented by the Universal Service Obligation, notably retention of six-day delivery (presumably, of letters and flats).  Despite the clear logic of his comment about adjusting the business model or else having “to lower future expectations of the organization,” it’s doubtful that the postal unions and their Congressional allies will accept anything that may reduce costs if it also adversely impacts their self-interest.  Therefore, as welcome as DeJoy’s intentions may be, it’s one thing to outline a plan, or define a future state, but it’s another to win the support necessary to make it a reality.

And, reflecting on last summer, his actions should start with better communication: Instead of letting reports leak out, or letting others tell his agency’s story, he should inform, fully and persuasively, employees, their unions, Congress, and the mailing industry, about why each element of his plan is proposed, the value it represents, and how it is essential to producing the revised business model he wants for the USPS.

 

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