U.S. Postmaster General Patrick Donahoe testifies Sept. 6 on U.S. Postal Service reform needed to implement budget cuts during a hearing before the Senate Homeland Security and Governmental Affairs Committee on Capitol Hill. (Saul Leob / AFP via Getty Images)
The U.S. Postal Service plans to close or consolidate as many as 313 of its 487 processing plants and slash 35,000 jobs by 2013.
"What remains will be the core of our network going forward," said Megan Brennan, the Postal Service's chief operating officer, at a news conference Thursday.
While the Postal Service is seeking a congressional green light to end contractual layoff protections for unionized employees, managers expect to handle the looming job cuts through attrition, she said. Some workers may, however, have to move to other plants if they want to keep their jobs.
The downsizing is estimated to save $3 billion a year.
With fewer plants, the Postal Service also proposes to relax first-class mail-delivery standards: Customers would generally no longer receive first-class mail the day after it is sent. That proposal will have to be run by the Postal Regulatory Commission, a five-member oversight body charged with issuing a nonbinding advisory opinion.
USPS officials originally signaled their intent to slash the number of processing plants last month at a mailing industry conference. The announcement on Thursday represents a slight backpedaling to what was said then by Dave Williams, the Postal Service's vice president of network operations. Williams had said the Postal Service aimed to close more than 300 plants by the end of next year. But postal officials Thursday left open the possibility that at least a few facilities on its study list could ultimately stay in business.
And while some plants could close by the end of next year, the goal now is the end of 2013, a USPS spokeswoman said.
With the Postal Service at risk of going broke within a year, the proposal is among a half-dozen major changes that USPS leaders are pursuing to cut costs as first-class mail volume plummets. About 60 percent of Americans now pay bills online, compared with 5 percent in 2000, Postmaster General Patrick Donahoe said at the news conference.
Donahoe again stressed the need for the Postal Service to end most Saturday delivery; he also reiterated a pitch for the agency to create its own employee health insurance plan in place of the Federal Employees Health Benefits Program. Not only would that approach be cheaper overall, Donahoe said, but it could allow the Postal Service to free itself from a requirement to "pre-fund" retiree health benefits each year. The Postal Service will be unable to make the $5.5 billion installment due at month's end, he again warned.
Despite Donahoe's optimism that Congress will act by December on a bill to keep the Postal Service viable, lawmakers so far appear deadlocked. On Monday, for example, House Democrats introduced legislation to delay this month's $5.5 billion payment by 90 days. But opposition from Rep. Darrell Issa, R-Calif., chairman of the committee that oversees the Postal Service, means the legislation likely has no chance of passage.
The administration will also offer its own rescue plan for the Postal Service as part of a broader deficit reduction package, Office of Personnel Management Director John Berry testified last week. That plan could be released as early as next week, but the White House has so far offered no details.