Postal Service copes with excess capacity

U.S. Postal Service: The Service's Strategy for Realigning Its Mail Processing Infrastructure

The U.S. Postal Service's nationwide mail processing and distribution system has too much capacity because technology has replaced human work, but USPS leaders have no clear strategy for closing facilities or cutting unnecessary jobs, according to the Government Accountability Office.

USPS has excess capacity largely because of its success at automation. GAO auditors also cited sharp declines in first-class mail volumes and work-sharing arrangements with mailers, who do the work that USPS employees previously handled.

The Postal Service is struggling to find ways to eliminate the unnecessary overhead. They had hoped that a sophisticated modeling tool would help them create a "least-cost" processing and distribution network. By entering workforce and facilities data into the so-called Network Integration and Alignment tool, officials expected to get output that would show where the system was inefficient.

But USPS managers found that the data entered into the model changed too frequently or was simply inaccurate, which meant they couldn't trust the tool's assumptions and recommendations for plant closings and workforce reductions. USPS officials are now saying little about their nationwide infrastructure plans, according to the report.

A desire to avoid controversy is another reason for secrecy about future plant closings and job losses. USPS officials told GAO auditors they are frequently blocked when they try to realign their infrastructure capacity with current needs. USPS "believes that it will meet with resistance from employees, communities and government representatives if it tells them what it is planning on doing too far in advance," the auditors wrote.

Nevertheless, the GAO report cites figures that show that the agency, despite resistance from lawmakers and union employees, is reducing its workforce. During the past four years, the Postal Service has eliminated more than 170 million work hours and taken 80,000 career employees off the payroll. About 700,000 employees remain.

USPS officials responded to GAO by acknowledging the excess capacity outlined in the report. Because of problems associated with using the modeling tool, USPS officials said their new strategy will be an evolutionary one. They plan to take advantage of opportunities as they arise to close unneeded facilities and reduce the workforce.