USPS Productivity Has Declined This Year

Despite downsizing and other efficiency measures, the U.S. Postal Service’s productivity levels have decreased in the past year.

USPS delivered fewer than 139 mail pieces per work hour in July, a 3.7% decrease from the July 2011 level of 144 pieces, according to preliminary numbers the service released Tuesday. The agency’s net loss for the month was $1.327 billion, nearly $300 million more than planned and more than $500 million worse than last year.

The productivity trend for the full fiscal year (starting October 1) isn’t much better. USPS has delivered 143 pieces per work hour so far in FY2012, down 2.5% from the same 10 months of FY2011.

Mail volume declined more than 4% versus a year ago. But the number of employees has only dropped by about 2%, and they are working more overtime this year.

One key to the lower productivity is delivery costs: Personnel costs for both “city delivery” and “rural delivery” are slightly higher so far this year, despite the drop in mail volume. Delivery costs are more sensitive to the number of delivery points, which are increasing, than to total mail volume.

Many of the Postal Service's proposed efficiency improvements, such as eliminating Saturday delivery and reducing the number of post offices, have been stymied by Congressional inaction.

Related articles:

• Delayed Retirements, Rising Overtime Bedevil USPS Finances  
• Is the Postal Service Really Broke?  
• 7 More Reasons the GOP Might Be Starving USPS of Cash

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Lessons About the New World of Publishing from an Unlikely Source

My colleagues in the publishing industry could learn some valuable lessons by observing an unlikely source of publishing wisdom: Moonlighting postal workers. After all, when it comes to web traffic, these “amateur” publishers are kicking a lot of professionals’ butts.

I follow four web sites about postal issues that are published by current or former U.S. Postal Service employees – not the kind of folks we usually consider to be part of the “real” publishing industry. And I follow a variety of web sites covering the magazine, catalog, printing, and paper industries – all produced by publishing professionals and most affiliated with a magazine.

From the data I can glean, the four postal sites -- postalnews.com, PostalReporter.com, Postal Employee Network, and PostalMag.com – typically get at least three to five times more web traffic than any of those professional B2B sites I follow. Postalnews had a recent month with more than 100,000 unique visitors, truly a lofty number for a one-person web site, according to Compete.com. I have my own data as well: Even though most Dead Tree Edition articles are not about postal issues, only Google rivals any of the four as a source of visitors to my blog.

Frankly, they're better than we are
Frankly, part of these amateurs’ success is that they usually do a better job of meeting the needs of their target audience than we “professional” publishers do.

The Web has given such “talented amateurs” the tools to undermine the traditional publishing industry, as I explore in my new article for Publishing Executive magazine, The Seven Habits of Highly Inefficient Publishers. No longer does freedom of the press apply only to those who have access to a printing press.

But these outsiders also show us what publishing can be like without the seven deadly habits that keep us chained to mindsets and business models that no longer work. (One hint: Stop equating “publishing” with “writing articles.” Another: The future of publishing lies not in creating the content people want but in providing them a gateway to the content they want.)

Missed opportunity
There must be a million or more people who work for the U.S. Postal Service, retired from it, or are otherwise intimately involved in it. Why didn’t any mainstream publishers – like maybe the Washington Post or Government Executive -- think of launching a product aimed at this market?

The Post probably couldn’t conceive of running such a business without spending well into six figures for reporters, an editor, etc. The concept of creating such a product primarily by providing links to articles and reports in other media is simply not in the DNA of the Post, or, for that matter, anyone else in the MSM (mainstream-media). Which makes me wonder what other hungry, potentially profitable audiences we’re overlooking because of our hidebound ways.

And for you self-righteous MSMers who complain about aggregators ripping off real publishers, take note: I have seen unique content from this blog rewritten or cited in several daily newspapers and in other name-brand publications without any attribution or link. A noted B2B magazine once took most of a Dead Tree Edition article, rewrote it only slightly, and published it under the byline of one of its own reporters. And When Barry Diller recently talked about the prospect of Newsweek cutting back on print, several major media outlets published quotations that were lifted from SeekingAlpha.com, without attribution rather than from the webcast itself. (Including SeekingAlpha's misquotes gave them away.)

But I have never seen the four postal web sites come close to violating anyone’s copyright or doing anything even remotely unfair (though they occasionally give me a public scolding when they disagree with Dead Tree Edition or spot an error). I can’t imagine any publisher complaining about the brief excerpts that appear on these sites – or about the thousand or more, sometimes many more, visitors that typically follow the link from such excerpts back to the source.

Practicing what I preach
So why don’t I practice what I preach and aggregate content from other sources? In the web ecosystem, some are meant to be aggregators and some to be aggregatees. With a blog that serves multiple interests (publishers, print buyers, printers, postal workers, environmentalists, paper makers, etc.), Dead Tree Edition is better off feeding the aggregators than competing with them.

But I am practicing what I preach in another way: The Publishing Executive article (which editor Jim Sturdivant says that some might call "crazy") mentions that corporations’ reports to the Securities and Exchange Commission are often a better source of news than their press releases. Two Dead Tree Edition articles this month -- Soft Market, Digital Investments Drag Time Inc. Down and Sartell Shutdown Will Cost Verso Dearly -- came from 10-Q reports that the MSM overlooked while focusing on the companies’ press releases.

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7 More Reasons the GOP Might Be Starving USPS of Cash

Exactly why House Republican leaders chose not to act on any postal reform legislation before autumn is still a bit of a mystery. But last week’s Dead Tree Edition article on the subject (See 7 Reasons the GOP Might Be Starving USPS of Cash) stirred up plenty of theories and heated comments from all parts of the political spectrum.

Liberals seemed to think I was overly naïve in failing to see the obvious Republican plot to destroy the U.S. Postal Service and let the GOP's cronies loot what’s left. Several conservatives objected to Dead Tree Edition’s supposed liberal bias and questioned why links to this "partisan" article showed up in industry newsletters and LinkedIn groups.

I have a confession to make: Yes, I lean Democratic – whenever I hear Republican politicians yammering. And I start thinking Republican when the Dems start blowing their own hot air. As long as the two parties focus on name calling and sound bites rather than actual solutions, I have no qualms about ridiculing both sides of the aisle.

Anyway, amidst all the vitriol and conspiracy theories, seven additional interesting and sometimes insightful theories emerged to explain the GOP's inaction on the growing postal crisis:

1. Why bail out Obama?: If a real USPS crisis – like mail not getting delivered or people not getting paid – occurs before the election, who will get blamed? Sure, the thinking goes, House Republicans might take some heat for not bringing any bills to a vote. But the big issue would be the Obama Administration’s failure to provide leadership on a crisis that should have caught no one by surprise.


2. All pain, no gain: A vote for USPS cost cutting three months before re-election time? Forget about it. Many Congressmen probably had nightmares about their opponents holding media events at closed post offices or being cheered at rallies of laid-off postal workers. They know that those of us who to preserve the Postal Service by enabling it to balance its budget are poorly organized and will have little impact on this fall’s elections.


3. No consensus: The Republican majority in the House is pretty slim. With some members insisting on radical reform and others wanting not-in-my-district carve-outs (“You can’t close any rural post offices.”), getting any bill through the House would be challenging. And anything that did get through would probably die in the Democrat-controlled Senate.


4. Let it fail: Many conservatives view the Postal Service’s structure as fundamentally flawed, so why bother with Band-Aids when what’s needed are amputations? Compromise, in this view, only delays the inevitable; addressing USPS’s overpayments into pension and retiree-benefits funds (See Is the Postal Service Really Broke?) at this point would only give Congress more excuses not to wrestle with other cost issues. As USPS gets closer to running out of cash, interest in cost cutting seems to grow. But exactly what do these people hope will occur when USPS can no longer pay bills or cover payroll? Bankruptcy? Furloughs? Drastic cuts that Congress has not authorized?


5. The real GOP plan is privatization: This more extreme version of “Let it fail” was put forth by both conservatives and liberals, with different slants of course. Right-wingers tout the efficiencies that come with private ownership (and presumably the lack of Congressional micromanaging as well) as the answer to our nation’s mail-delivery system. Lefties claim Republicans are “evil bloodsuckers” who want to turn the Postal Service over to their cronies so they can raid its pension funds and sell off its valuabe real estate. (Anyone in the market for 100 or so vacant processing and distribution centers?) I missed the logic of both a liberal's claim that the GOP would sell USPS to Wal-Mart (as if Wal-Mart wants to get into the mail business) and a conservative's proposal to turn each post office into a standalone business (If each postal facility is a separate business, which one would get the revenue from a mail piece – the one where the mail is entered, the one where it’s sorted, or the one handling delivery?).


6. If you can’t retire them, scare them off: Any serious cost cutting at the Postal Service means reducing the workforce, which accounts for nearly 80% of the agency’s costs. But no-layoff clauses, poor job prospects on the outside, and a fouled-up pension-payments process (See USPS Retirement Mess: A Major Barrier To Downsizing.) have led to extremely low turnover. Perhaps some Republicans hope USPS's outlook will get bad enough to scare employees into bailing out before their retirement benefits get swallowed up.


7. Who cares? A knowledgeable Beltway insider chided me for thinking that Congress members care as much about fixing the Postal Service as do us folks in mail-dependent industries: “From the broader standpoint of Congress, this simply … isn’t important enough to get worked up about.” I fear he is correct.

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Sartell Shutdown Will Cost Verso Dearly

Shutting down the Sartell, Minnesota paper mill will cost Verso Paper Corp. more than the entire company is worth, Verso revealed yesterday.

The Memorial Day fire and explosion at the mill, which has already cost one employee his life and 265 others their jobs, will result in shutdown costs of approximately $114 million, Verso stated in its quarterly earnings report to the Securities and Exchange Commission. (See excerpt below.) The company’s stock, beaten down by concern about the company’s long-term viability, was worth just over $75 million at the end of the day.

Most of the cost will be for “non-cash” charges to write down the value of Sartell’s plant and equipment. But Verso, North America’s second largest maker of coated paper, estimates it will need cash outlays of about $33 million, most in the current quarter, for severance and other shutdown costs.

“Settlement negotiations regarding this loss claim with our insurance carrier are continuing and we expect resolution in the coming months,” the Verso report said.

Verso has $117.7 million available for future borrowing, down from $160 million three months ago, which will keep it solvent for at least 12 months, the company wrote.

The company’s stock price rose about 6% yesterday, with traders apparently pleased that it is still interested in merging with rival NewPage and that its quarterly loss was less than the year-ago period.

Related articles:

• Did Verso Come To Purchase NewPage Or To Bury It? 
• A Major Print-Media Bankruptcy Is Likely in 2012, Voters Say 
• Under Siege: The Outlook for Print Media Is Even Worse Than We Thought, Expert Says -- But Publishers May Prosper

Relevant passages from Verso' "10-Q" report filed yesterday with the SEC:

On August 2, 2012, we announced that having completed a comprehensive assessment of the damage resulting from the fire and explosion at our paper mill in Sartell, Minnesota, we have determined that we will permanently close the mill. The permanent closure of the Sartell Mill will reduce our annual coated groundwood capacity by 180,000 tons, or approximately 20%, and will eliminate approximately 35,000 tons annually of supercalendered paper capacity. The Sartell Mill currently employs approximately 265 employees.

The mill closure will result in an aggregate pre-tax charge to earnings of approximately $114 million, which is expected to occur primarily in the third quarter of 2012. This includes approximately $19 million for severance and benefit costs; approximately $81 million in non-cash charges primarily related to the impairment of property, plant and equipment; and approximately $14 million related to other costs. The severance and other shutdown costs require the outlay of cash, which is expected to occur primarily in the third quarter of 2012. Settlement negotiations regarding this loss claim with our insurance carrier are continuing and we expect resolution in the coming months.

-----------------------

We rely primarily upon cash flow from operations and borrowings under our revolving credit facilities to finance operations, capital expenditures, and fluctuations in debt service requirements. As of June 30, 2012, $117.7 million was available for future borrowing under our revolving credit facilities. We believe that our ability to manage cash flow and working capital levels, particularly inventory and accounts payable, will allow us to meet our current and future obligations, pay scheduled principal and interest payments, and provide funds for working capital, capital expenditures, and other needs of the business for at least the next twelve months. However, no assurance can be given that we will be able to generate sufficient cash flows from operations or that future borrowings will be available under our revolving credit facilities in amounts sufficient to fund our liquidity needs. As we focus on managing our expenses and cash flows, we continue to assess and implement, as appropriate, various earnings and expense reduction initiatives. Management has developed a company-wide cost reduction program and expects this program to yield an additional $47 million in cost reductions and continues to search for and develop additional cost savings measures.  

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7 Reasons the GOP Might Be Starving USPS of Cash

Congressional Republicans seem intent on letting the U.S. Postal Service run out of cash, but even the pundits can't figure out exactly why.

The GOP-controlled House left for summer recess last week after failing to vote on two postal-reform bills that have been languishing for months -- a bipartisan Senate measure and a more conservative alternative developed by a Republican-controlled House committee. Republican leaders in the House refused to say why they have failed to bring either bill up for votes, but here are a few of the choicest theories:

• Fear: House Speaker John Boehner is perhaps "afraid voters would blame his members for the closing of underused post offices," wrote Gail Collins, an op-ed columnist for The New York Times. "There is nothing Congress cares more about than post offices, 38 of which the House has passed bills to rename over the past 18 months."
• Avoiding embarrassment: "Most likely, there's not enough support in the House to pass any bill, so holding a vote would be an embarrassing setback for the GOP leadership," speculates Rick Newman of U.S. News & World Report.
• Let's get closer to the cliff before we hit the brakes: Citing Republican sources, Bernie Becker of The Hill provided this amazing, and truly disgusting, reason: "Lawmakers don't know exactly when the Postal Service might hit a doomsday date when they wouldn't be able to deliver the mail.” Some Congressmen have criticized USPS for not stating exactly when it will go belly up, he wrote. They want to know whether a real crisis can be avoided in the next few months, which "could give the House even less incentive to bring the bill to the floor before their members face voters in November." 
• Stoking incumbent disgust: GOP leaders may be planning to capitalize this fall on voters' disillusionment with Washington gridlock, claiming that the only way to get things moving is to put them in charge of the White House and Senate along with the House. Doing anything meaningful to avert a USPS crisis would ruin the story line.
• Privatize, or something: Newman writes of "Tea Party types who would prefer to privatize the agency, or who seemingly want to starve it of cash, so that … well, it's not clear what purpose that would serve." Note to the naive: FedEx and UPS have no interest in, or ability, to take over USPS's duties.
• The October Surprise: Perhaps GOP leaders are setting up Mitt Romney to be the hero who, a week before the election, announces a plan to save the Postal Service.
• Fatigue: Going month after month without passing any meaningful legislation is hard work. Your Congressional representatives really, really needed their six-week summer break to rest. Oh, and to campaign for re-election.

Two things are clear: 1) People in my industry (magazine publishing), and in many others, are doing everything they can to become less dependent upon a U.S. Postal Service that is treated in such a cavalier manner by its dysfunctional 535-member board of directors. 2) Perhaps the only way to fix the Postal Service is to require that Congressmen receive their paychecks and all campaign contributions by mail.

Related articles:

• Wanted: New Postmaster General; Must Be Able To Kiss 535 Backsides Simultaneously
• Postal Relief? How About No More Congressional Thievery? 
• How USPS Could Bypass Congress on Saturday Delivery 
• Newsweek Takes a Stand: Profits Are for Wimps: I'm including this to show I can also give liberals a kick in the donkey when it's called for. I'm not anti-conservative, just anti-stupidity.

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Soft Market, Digital Investments Drag Time Inc. Down

Time Inc.'s magazines are facing such "soft market conditions" that their estimated value may decline significantly this year, the company revealed in a financial statement yesterday.

The country's largest magazine publisher began 2012 with an estimated fair market value 19% higher than its book value, parent Time Warner stated in its quarterly 10-Q financial report.

"During 2012, the Publishing segment has experienced soft market conditions that have negatively impacted its operating results. If those market conditions worsen, it is possible that the book values of the Time Inc. reporting unit and certain of its tradenames will exceed their respective fair values, which may result in the Company recognizing a noncash impairment that could be material."

Decreased sales of both ad pages and newsstand copies dragged the publishing unit's first-half operating income down 60% from last year.
Lower print volumes enabled Time Inc. to decrease its production costs. But those savings were swallowed up by "higher editorial costs associated with investments in websites and tablet editions of magazines."

Time "expects that the soft market conditions associated with the Publishing segment’s worldwide newsstand sales and domestic magazine advertising revenues will continue through at least the third quarter of 2012."

Related articles:

• Printed Magazines or Digital Magazines: Do We Have To Choose?
• Is There Life After Print? Yeah, Maybe at a Community College
• I Got "mine", But I Don't Get It 
• Battleships or Motorboats: Which Publishing Model Will Thrive?

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