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USPS turns to buyouts to cut 28,000 jobs

May. 20, 2012 - 11:44AM   |  
By SEAN REILLY   |   Comments

The U.S. Postal Service will trim 5,000 jobs by closing or consolidating 48 mail-processing plants over the next three months.

The closures, scheduled for July and August, will be the first of three waves of cutbacks intended to slash 28,000 jobs and reduce the mail-processing network from 461 plants to 232 by 2014. When fully in place, the downsizing is expected to save $2.1 billion per year.

This summer’s reductions will mainly involve the transfer of work from smaller to larger processing facilities; notices will start going out this week to affected workers.

The agency will pause further plant closings from September through December, so as not to influence the elections or interfere with the holiday mailing season. But starting early next year, the Postal Service will shutter 92 plants, cutting another 8,000 jobs.

The final round is set for 2014, with another 89 plants and 15,000 jobs on the chopping block.

Postal officials expect to handle all 28,000 job cuts through attrition. To encourage workers to leave, “it is our intention to provide an incentive,” Megan Brennan, the Postal Service’s chief operating officer, told reporters in a webinar last week.

The sweeteners include both voluntary early retirement incentives, as well as $15,000 buyouts payable in two installments this year and next year, according to Postal Service information released by the office of Rep. Elijah Cummings of Maryland, the top Democrat on the House committee that oversees the Postal Service.

In a statement, Cummings said he is encouraged postal officials are considering such tactics.

“The Postal Service workforce must be right-sized in a fair and compassionate way, and offering buyout incentives is just such an approach.”

USPS spokesman Mark Saunders would not confirm that number, saying “we have nothing to announce at this time.”

At the American Postal Workers Union, which represents many processing-plant employees, spokeswoman Sally Davidow said the Postal Service had so far not broached any formal offer. She criticized the scale of the planned cutbacks and the job losses that will go with them.

“This is a bad deal for America,” she said.

But the proposed plant downsizings are needed to confront the steady decline in first-class mail volume, down 25 percent since 2006, Postmaster General Patrick Donahoe told reporters in the webinar.

The Postal Service had laid out the scope of the processing plant closures in February. At that time, the agency originally wanted to complete them within 18 months. The new timetable unveiled last week would stretch out that schedule by roughly another year, a step that Brennan said would allow customers more time to plan for accompanying changes in first-class delivery standards.

“We believe that this is a responsible balancing of our obligations to reduce costs and to ensure an orderly transition to a much more efficient mail-processing network,” she said.

The May 17 announcement came two days after the expiration of the Postal Service’s self-imposed freeze on plant closings expired.

Dozens of members of Congress had petitioned Donahoe to continue the freeze until a comprehensive fix for the Postal Service’s finances wins final legislative approval.

But many experts don’t expect that to happen until after November at the earliest. The mail carrier, which lost $3.2 billion in the three-month period from January through March, can’t wait, Donahoe said.

“Infrastructure costs have to be addressed, and that’s what we’re doing,” he said.

But the Postal Service’s revamped strategy also ensures that most of the pain will occur after the elections. The new approach appears to dovetail with Senate-passed legislation that would give a three-year reprieve to approximately 100 plants by requiring the Postal Service to maintain overnight delivery of first-class mail sent and delivered within the same local area.

For USPS officials, ending the overnight delivery benchmark is key to the downsizing initiative because it would allow the Postal Service to run the surviving plants more efficiently. Brennan said overnight delivery of most first-class mail will continue through 2013.

“I appreciate that [Donahoe] is listening and adopting a common-sense approach to processing plants and overnight delivery,” said Sen. Susan Collins of Maine, the top Republican on the Senate Homeland Security and Governmental Affairs Committee, which oversees the Postal Service. She welcomed the news that a processing plant in eastern Maine will stay open for now.

In a joint letter to Donahoe, two prominent House Republicans labeled the proposed closings a positive step.

But slowing the pace of downsizing exacerbates the need “to achieve savings elsewhere,” wrote Reps. Darrell Issa, R-Calif. and Dennis Ross, R-Fla., who are sponsoring a bill that would create a special control board to put the Postal Service’s finances in order.

The bill, which won approval from a House committee last fall, is still awaiting a vote by the full House.

An almost 8 percent drop in March mail volume is added proof that “the status quo is unsustainable,” they told Donahoe.

Tony Conway, a former USPS executive who now heads the Alliance of Nonprofit Mailers, questioned whether the revamped plan will do enough for the Postal Service’s battered bottom line.

“If indeed the magnitude of the problem is as they’ve been saying, it appears that this might not get them all the way they want to go,” Conway said.

Last month, for example, a USPS spokeswoman said the proposed plant closings would ultimately save $4.1 billion annually.

Last week, other postal representatives could not readily explain why the agency now pegs the projected return at $2.1 billion.

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