USPS Releases ‘Path to Financial Stability’ Plan; Mentions 50-Cent First-Class Stamp
Among the major legislative reforms recommended, the most significant include enabling the Postal Service to provide employee health benefits independent of federal programs ($7.1 billion annual cost reduction), and transitioning to a national five-day delivery schedule ($2.7 billion annual cost reduction).
The Postal Service also is aggressively pursuing the realignment of its mail processing, retail and delivery operations, which is expected to yield more than $8.1 billion in annual cost reduction. Additionally, the Postal Service is seeking other significant cost reductions and is continuing efforts to grow or retain revenues within its current business model.
The plan has been subjected to independent review and analysis by Evercore Partners, one of the nation’s leading independent investment banks and a prominent financial advisor on major corporate restructurings. Evercore Partners played an important role in analyzing Postal Service models and assumptions, and validating the approach taken by management to develop the plan. The plan also reflects prior business model analysis from McKinsey & Company and revenue projections from the Boston Consulting Group.
“We have set out a roadmap to put our current financial crisis behind us and we are highly confident that it is achievable,” said Donahoe. “However, our success depends on whether we can quickly implement our proposed changes, and that depends on whether we can gain the necessary legislative reforms we need to move ahead.”
The Postal Service is a vital part of the nation’s economic infrastructure, providing a reliable, secure, and affordable delivery platform that sustains a $900 billion mailing industry that employs 8 million people.
A self-supporting government enterprise, the U.S. Postal Service is the only delivery service that reaches every address in the nation, 151 million residences, businesses and Post Office Boxes. The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations. With 32,000 retail locations and the most frequently visited website in the federal government, usps.com, the Postal Service has annual revenue of more than $65 billion and delivers nearly 40 percent of the world’s mail.