Every time the average person glues a stamp onto an envelop, it costs money. But on a much larger scale, magazine publishers face the brunt of postal hikes ten-fold. Recently, Magazine Publishers of America (MPA), an organization dedicated to proactive education and industry activism, proposed a plan to eliminate U.S. Postal Service (USPS) hikes. MPA claims the USPS could save between $3.1 and $4.1 billion without a proposed rate hike by implementing a hiring freeze and consolidating "under-utilized" mail-processing plants.
"The Postal Service does not need another rate increase," says Nina Link, MPA president and CEO. Link theorizes that the USPS should operate more succinctly as a business, rather than as a governmental agency. She says, "They can operate in the black without laying off employees simply by freezing hiring and without a reduction in service by consolidating facilities."
Last year, USPS expenses totaled nearly $65 billion. Approximately $50 billion were attributed to labor costs. Three percent attrition would decrease the Postal Service's annual expenses by about $2.5 billion.
MPA is not alone in criticizing USPS budget practices. Dialogue has been flooding air waves concerning the alleged inefficiencies of the governmental agency. In any other operation, price hikes and over-indulgent expensing would come under fire. And in the publishing industry most recently, companies are taking a closer look at not only how they spend money, but also how to conserve rather than go belly-up.
In Q4 1998, the bottom third of Postal Service mail processing plants performed, on average, 135 million piece sorts. The average number of sorts across the mail processing plants during that same period was approximately 425 million pieces. MPA believes that if the USPS consolidated plants so that each facility performed 425 million sorts, two-thirds of 100 of these small plants could be closed. Economically, the closings would bolster the market, says the MPA, rather than put more emphasis on rate increases during a period in which investments and brokerage is already suffering. In contrast, postal hikes could mean the difference between more lay-offs and even folding for magazine publishers under a financial gun.