USPS says piecemeal approach to cost-savings plan won't do

Friday - 2/24/2012, 8:38pm EST

Joe Corbett, chief financial officer, Postal Service

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The Postal Service's revamped five-year business plan, which is aimed at putting the troubled agency on firmer financial ground, is made up of a number of elements.

Lawmakers have championed some of them, such as allowing USPS to move employees from the federal health-insurance plan to an independent program. But the Postal Service says the most effective way to stave off a further downward financial spiral is not through a piecemeal approach to its measures.

Joe Corbett, the chief financial officer of the Postal Service, told In Depth with Francis Rose that without making all of the changes, USPS faces a projected loss of more than $20 billion in annual losses in 2016. "So we need to make all the changes in our plan in order to return that $20 billion projected to a modest profit," he added.

Majority of costs stem from workforce

Corbett said 80 percent of the agency's costs are tied up in paying employee salaries and benefits, thus many of the cost-saving proposals are dependent on changes to the Postal Service's workforce — either directly or indirectly.

"By its nature, it's a very personal thing in terms of reducing costs," Corbett said.

For example, ending Saturday mail delivery, which the Postal Service estimates would save about $2.5 billion, would lead to 30,000 fewer positions. Similarly, closing and consolidating half of its mail-processing facilities would also cut 30,000 positions and save about $4 billion.

Overall, the five-year plan projects about 150,000 positions to be cut. "Luckily, we're poised to do this in a way that hopefully would bring a soft landing for our employees," Corbett said. That's because 280,000 employees will be retirement-eligible or eligible for early retirement over the same period.

Many of these Postal Service's proposals have also been separately introduced by lawmakers and the administration. "We really appreciate all of them focusing on this. They realize how important it is and how important a healthy Postal Service is to the overall economy," Corbett said.

"Unfortunately, no one of the proposals includes all of the elements," Corbett said. "So we're hoping that we can get everybody on the same page after they have studied our plan and realized that we really need to make all the changes in order to return the Postal Service to financial stability."

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