J.P Morgan Indicates that USPS Service Standard Changes Will Reduce Business Working Capital

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In a note to clients, J.P Morgan notes that the coming changes in Postal Service Service Standards could have a negative impact on the financial health of American businesses. With the reduction in locations and mail carriers, invoices may take one to two days longer to reach your customers, while, simultaneously, customer payments will also take longer to collect. The result: an increase on Days Sales Outstanding (DSO) — and a potential increase in your company’s working capital. Specifically, the receivables cycle and DSO may increase by two to four days, while the volume of delinquent customer payments may also increase.  Current estimates of the financial impact of these changes [...] Read more »

Funding of Early Retirement Incentives

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In yesterday’s post, I stated that “The Postal Service has been coy about whether it will offer retirement incentives partially because if Congress passes a bill that includes the incentives included in the S.1789, the Postal Service can offer larger incentives than it can under current law and the Postal Service needs the refund of FERS over-payments to cover early retirement incentives.”  This statement raised some questions from readers that are worth responding to in a full post.  See: Impact of USPS Consolidations on Employees Tom wrote: Alan, how do you reconcile this post with what you said a month ago, (http://cepobserver.com/2012/01/cbo-report-on-s-1789-could-kill-postal-) that we all had better prepare for a [...] Read more »

Impact of the USPS Consolidation on the Mailing Industry

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Now that consolidation of the Postal Service’s operation network is public, mailers can now shift their attention from the impact of consolidation on service standards and a generic understanding of the USPS operation plan to how they change how print and prepare, and receive their mail to take advantage of the Postal Service’s new network.   Based on presentations made at various public meetings concerning individual plants and public presentations made by the Postal Service, these are the questions that mailers need to think about as they make decisions about how they print and prepare their mail after consolidation goes into effect. Does printing and preparing mail in house still make sense?  If [...] Read more »

Chairman Darell Issa Says USPS is Committee’s Priority; USPS Should Cut 260,000 Employees

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In a broadcast interview on CNBC’s Squawkbox, Chairman Darell Issa, Ranking Majority Member Elijah Cummings and Representative John Tierney discussed the need for reform legislation in the second session of the 112th Congress.   The headline that CNBC reported is Chairman Issa’s claim that the Postal Service has 260,000 too many employees, a claim that I am sure Chairman Issa would have to admit is based on an overstatement of the Postal Service’s current head count.  Even if you adjust the employee count reduction to reflect current head counts, Chairman Issa still suggests that the Postal Service needs to cut 174,000 employees. [A conversation with a member of the House Oversight and [...] Read more »

Measuring the Impact of Network Optimization

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The Connecticut Record-Journal has reported the concerns of businesses affected by the closure of the Wallingford, CT processing facility. The article focuses on the impact on Connecticut Color, a company that generates about 6 million advertising pieces of mail a month for national clients, including Home Depot and BJ’s Wholesale Club. Rick Herr, the company’s president, focused on how the plant closure and service standard changes will affect the viability of mail as an advertising mode, due to difficulties of meeting advertiser’s ability of the print and delivery cycle to continue to meet advertiser need for specific in-home delivery dates. What he missed was that printers seeing local processing plants [...] Read more »

Capital Constraints Should Worry USPS Employees, Unions, and Management Associations

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Most of the news about the Postal Service focuses on service changes that it wants to make to reduce its workforce. These include initiatives to: downsize the retail and mail processing networks, eliminate Saturday delivery, cut First Class Service standards, and intensify route optimization of city carriers. The impact of these changes on employees is clear and most employees understand that if these actions are implemented, the reduction in the workforce will happen relatively quickly. Even with all of the proposed changes, the majority of people currently working at the Postal Service today will still be working there in 2015. Most probably plan to continue to work well past then, [...] Read more »

Delays in Restructuring Operating and Retail Networks Will Increase Red Ink; Delay Possible Early Retirements

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The Associated Press reports today that the Postal Service has agreed to delay closing “252 mail processing centers and 3,700 local post offices until mid-May.”  The public announcement is expected to come later today. (The full press release from the Postal Service is included at the bottom of this post.  The press release adds may 15 as the date.) The delay is likely related to the Postal Service’s request for another extension in its deadline for making its retiree health benefit payment.    The May time frame is designed to allow Congress to 1) review the Postal Service’s request to change First Class service standards and make adjustments to the closures that the Postal Service has [...] Read more »