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EVP, Marketing at Specialty Print Communications

Against the Grain

By Dustin LeFebvre

About Dustin

A third-generation printer, Dustin LeFebvre delivers his vision for Specialty Print Communications as EVP, Marketing through strategy, planning and new product development. With a rich background ranging from sales and marketing to operations, quality control and procurement, Dustin takes a wide-angle approach to SPC

 

NIARG EHT TSNIAGA

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Welcome to my everything-is-backward, “through-the-looking-glass,” what-are-we-coming-to, bizarro blog this week. Ever since the Senate passed the postal reform bill that delays elimination of Saturday delivery by two years and slows the shutdown of mail processing facilities, it seems like everything is the exact opposite of what I would think.

First, the USPS—that bureaucratic, drag-your-feet, labor-first, pseudo-governmental entity—came out with a statement strongly opposed to the bill as was passed. Its board of governors stressed the need to return to financial viability, objecting to the slowing down of facility shutdowns and movement to five-day delivery.

I spoke with multiple postal representatives who consistently called for the removal of the handcuffs that are preventing the Postal Service from taking these next steps and impairing its ability to operate as a private enterprise would. The representatives I spoke with couldn’t have been more clear about their commitment to returning the enterprise to its former vitality– if only we’d (read: our elected representatives) let it.

Next, I spoke with representatives from some of the print and direct marketing groups that have come out in support of the legislation. These are the groups that many of us, as printers, support with our membership fees. The mood of this group was much more bullish on the bill.

The people I spoke with were excited that a bill had passed. They saw it as better than a pragmatic compromise; it was described as a good bill that does some cutting now and forces the House to act on the topic.

So in this bizarro world, the entity that some think of as a slow-moving bureaucracy is advocating for market-driven reform and pushing for the ability to be nimbler, more responsive and responsible. And the private-sector trade groups that one would expect to be backing changes that clearly will benefit the most constituents over the long run, are settling for legislation that only postpones the day or reckoning, while ignoring the fundamental issues that bedevil the USPS. 

Everything IS backward in this drama. Trouble is, it’s not fiction. It’s the real world, and it will affect OUR world. Mightily.

As for the chances of passage of a House bill and reconciliation before May 15…prognosis: “Negative.” However, many believe there is a better than 50-percent probability of something passing by the end of the lame-duck session after the election.

Hence, come May 15, the USPS will begin to make some of the changes it is allowed to make in the absence of definitive legislation. Hopefully, this postpones its run-in with the $15 billion credit limit until later next year.

Of course, this begs the question of what happens when it hits that limit? The truth of the matter is that long-term solvency for the USPS does not depend on cutting underused office locations. And five-day delivery, while pragmatic and appropriate, isn’t the panacea that some people seem to think it is. Those are well-conceived, but insufficient, responses that belie a much larger issue—much of the postal service’s fiscal crisis comes from a provision in the 2006 Postal Accountability and Enhancement Act that requires the USPS to prefund its Retiree Health Benefits Fund at the rate of approximately $5.6 billion a year. In today’s postal market, the service just can’t make those kinds of payments without running up huge deficits.

Unfortunately in the United States, we’ve also dealt with myriad crisis within the past few years and we have some data points for reference. Creative destruction has been met with a wide-range of solutions, but in almost every case, it has involved a new authority, massive restructuring and, oftentimes, the imposition of artificial, non-market “props” that have forsaken long-term solutions in favor of short-term, politically palatable expediency. If Postal Service’s day of reckoning is postponed, and this turns into a far greater crisis, it WILL mean dramatic postage increases.

In the crisis case of dramatic postage increases, the movement along the demand curve will be momentous. Some say catastrophic, some say the death of our industry.

All the opinions and prescriptions offered are well meaning, and all groups identify and understand the existential threat posed by this crisis. In our arena, the associations believe they have our interest in mind, but they have a different calculation on the medium-term predicament that will ensue.

As for the national dialogue, Senators are fighting to keep jobs in their states and are listening to some of the underserved members of their community. These groups have a real need for the Postal Service, as many of them live in rural communities that lack high-speed Internet access today. And sure, the USPS has a genuine mandate to serve the public interest.

Unfortunately, the law of unintended consequences comes into play for this group. For if we push back the dramatic changes necessary for long-term financial viability of the USPS, a worse crisis will come into play just a couple of years from now. And the people we’re ostensibly trying to protect will be worse off than ever. Not only will those people not receive the same mail service in a few years, what will be left of the $1.1 trillion direct marketing industry, along with its 8.4 million jobs?

As a direct mail printer, the viability of our industry relies upon the distribution mechanism that delivers 99 percent of our product—the USPS. The Postal Service has a plan of attack, and it must be allowed to take the dramatic steps needed to ensure its long-term viability. It is a $63 billion business. Yes, demand for its service is real. We cannot let the unintended consequences of local politics destroy our industry.

We must push for the USPS to fully implement its plan without any watered down legislation. If we—as a nation and as an industry—want the USPS to maintain itself as a self-sustaining enterprise in the face of declining demand for its most lucrative monopoly—first-class mail—it must shed personnel, streamline infrastructure, cut outmoded services and create new products and services that respond to an increasingly connected and, yes, digital world.

I would not like to be in the shoes of the Postmaster General, for no matter what track he takes, he faces an uphill political battle. Let’s hope, like Kramer, he can “TCB.” What’s that? You know, taking care of business. Our businesses are riding on it.
 

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