Postal service to close or consolidate 140 sites

By Reuters

WASHINGTON - The U.S. Postal Service will move ahead with a plan to shut or consolidate mail-processing facilities as part of its cost-cutting effort but will spread out the closings to maintain overnight delivery of local mail.

The agency said on Thursday it would consolidate processing at 140 of its 461 facilities by February 2013 and shrink the area where customers can expect mail to be delivered the next day.

A second round of closings, which would begin in February 2014, would involve consolidating an additional 89 processing sites, USPS Chief Operating Officer Megan Brennan said.

The agency previously had said it would close or consolidate about 220 processing sites and eliminate next-day delivery to reduce overnight work.

"This two-phased approach essentially stretches our time-frame to implement the consolidation. It does so in a way that gives our customers and employees the time to plan and adapt to the changes we are making," Brennan said.

"To be efficient and profitable, we have to aggressively reduce capacity ahead of volume declines," she said.

The Postal Service, which does not rely on taxpayer funding, has been losing billions each year as rising Internet use erodes mail volumes and annual payments drain its cash. Postmaster General Patrick Donahoe has said the agency needs to reduce annual costs by $20 billion by 2015 to be profitable.

The mail agency has asked lawmakers to allow it to end Saturday mail delivery, tap into a surplus in a retirement account and other changes. The U.S. Senate passed a postal bill, but the House of Representatives has not yet voted on its plan.

USPS officials say mail volumes are too low to justify the current number of postal facilities. The agency last fall proposed to close hundreds of mail processing sites and more than 3,500 money-losing post offices to reign in costs.

After pressure from lawmakers, businesses and customers, the USPS last week scrapped its plans to close post offices, instead announcing it would reduce hours at 13,000 small offices.

The processing consolidations will begin this summer and are expected to save about $2.1 billion per year when fully implemented in late 2014, USPS said.

About 80 percent of the savings would come from reducing the workforce by 28,000 employees during that time, and the rest would come from cutting transportation and facilities costs. Brennan said some 5,000 postal employees will be notified of coming consolidations next week.

No facilities will be closed from September to December 2012 to avoid mail delays leading up to the November 6 election and during the high-volume holiday season, the USPS said.

The plan would maintain next-day delivery for most local mail through 2013, Donahoe told reporters.

For instance, mail sent from Washington, D.C., to Gaithersburg, Md., would still be delivered the next day. But mail sent to Baltimore, Md., would now take two days, Donahoe said. The delivery times would likely change again once the plan is fully in place in late 2014.

"We're modifying our overnight delivery area, but customers who mail in a local service area will continue to retain that overnight service," Brennan said.

Businesses that rely on the mail, such as magazines and advertising mailers, have protested delivery changes they say could cost them money and customers.

Lawmakers also criticized the proposed closings, which would eliminate middle-class jobs in their states. A bill passed by the Senate last month would have restricted the number of processing facilities the agency could close for three years.

The Postal Service also said in a statement that it was working with its unions on an employee retirement incentive aimed at further reducing the size of its workforce.

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