WASHINGTON (CNNMoney) — The U.S. Postal Service unveiled new plans this Thursday to consolidate or close 223 mail processing plants, opening the door for as many as 35,000 employee positions to be eliminated beginning this May.
The Postal Service continues to drown in a sea of red ink as it explores various ways to save at least $20 billion over the next three years. The processing plant consolidations would save $2.1 billion but that isn’t nearly enough to keep one of America’s most cherished institutions solvent.
Officials of the agency point to two main contributing factors to its current debt problem: a congressional mandate to prefund retirement health care benefits and rapidly declining first-class mail volume.
The plant consolidation plan is just the latest in an array of controversial cost-cutting measures being studied by the Postal Service, including: delaying delivery of some first-class mail, raising the cost of a first-class stamp to 50 cents, ending Saturday service, and closing a number of post offices
“This is an important part of the network consolidation,” Postmaster General Patrick Donahoe said in an interview. “Some employees will retire. A mail clerk may want to become a letter carrier . . . We know how to move people and find landing spots.”
There is a moratorium on closures so the Postal Service can’t close anything until May 15. That moratorium was agreed on to allow legislators time to pass a bill to save the agency. Like much in Washington, those proceedings have bogged down.
Donahoe said he wants to complete the consolidations, including job cuts and changes to 30,000 full-time positions and 5,000 non-career employees, by October 1. Almost every state will be affected by the cuts, losing at least one mail processing plant.
The Postal Service employs 150,000 employees at 461 mail processing facility plants. Employees will be given 120 days notice before their jobs are cut or moved, said Donahoe. Employees eligible to retire may be offered incentive packages, but those have yet to be detailed.
“This is a disaster, not just for postal workers, it’s a disaster for the American people,” said Sally Davidow, spokeswoman for the American Postal Workers Union, whose members will be particularly impacted. “Cutting the postal service’s mail processing network is not the solution to its problems.”
To no one’s surprise the unions are vehemently opposing the cuts. Union leaders point out that most of the $3.3 billion dollars of debt for the last quarter was due to a move by Congress to require pre-funding future retiree health benefits. They contend such requirements for pre-funding of benefits should be dropped.
Most of the plants on its initial list of 264 plants up for closure were already scheduled to be shut down. The agency is always considering realignment of postal offices with some 3,700 postal offices up for closure before the current budget crisis.
The Postal Service faces problems from a number of sources: email and social media has radically changed the way the average citizen communicates and services like UPS and FedEx have made significant inroads into the Postal Service’s dominance in package delivery.
But perhaps the greatest challenge the agency faces is the culture of federal jobs and federally supported jobs. Federal employees already enjoy higher wages and better benefits than their private sector counterparts. Many are insulated by politicians unwilling or unable to make significant changes to the system.
Until agencies make real systemic changes, they will continue to flounder and sometimes fail.
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