We Can’T Go On This Way Indefinitely

If only Postmaster William J. Henderson would get a memo from a staff member that reads like this: Congratulations, you’ve presided over your first meeting of the U.S. Postal Service Board of Governors.

You were appointed the 71st postmaster general on May 12, one day after the Postal Rate Commission approved a postal rate increase of $1 billion, which conveniently came just in time for the contract talks with the postal unions this fall.

Did you know that Moe Biller, president of the American Postal Workers Union, put out a press release at the time that said, “Show Me the Money!”?

Recently, the board of governors formally declared the price hike would begin in January.

Point No. 1: Don’t let this happen again.

A business cannot raise prices when its core product line - in our case, first-class mail - is rapidly losing market share to competing technologies (faxes, e-mail and electronic bill-paying services) that cost much less and work much faster.

In the future, consider price cuts instead.

Point No. 2: Our labor costs are out of control. They account for 80 percent of the postal budget, or about $50 billion a year.

There is no way the Postal Service will survive in the future with 800,000 employees, highly restrictive work rules and a pathological aversion to contracting-out anything that can be done more expensively in-house.

Point No. 3: This is the big one. We should go back to our roots, stick to our knitting and proudly deliver the mail. Moving the mail is what the Postal Service is all about, and as long as people live on this Earth, they will need someone to deliver packages.

In our sophisticated economy, the more technology lets people do, the more mail they are going to need. It is no accident that even as the volume of electronic communication increases, the volume of mail has been increasing, too.

However, as the conventional first-class mail that has been our profit center diminishes, we must come up with new mail services that make sense in the modern world.

This will take some original thinking, but there are possibilities. Why not deliver mail three times a day to people who pay extra?

Point No. 4: Let’s not kid ourselves. Some people are embarrassed to deliver the mail. They also know that with our labor costs, we will never be able to hack it in the future if we preserve the status quo.

These people think we should be doing electronic funds transfer, maintaining the nation’s e-mail address book, verifying names and identities on the Internet, selling phone cards, selling fancy neckties and doing a host of other things we know nothing about.

This just won’t work. These are all lines of business rightly dominated by private companies that are much faster and nimbler. Let’s compete on the delivery business that we understand and have (for now) a legal monopoly on.

Point No. 5: I respectfully congratulate you on coming up through the ranks. Twenty-six years is a long time to spend in any employment. But the fact is, we need a whole generation’s worth of outside management to bring new thinking to this organization.

It is nice to have outside postmasters as we do much of the time, but we need more than visiting chief executives to change our hidebound culture.

If the Internal Revenue Service can open up more, so can we.

Point No. 6: We have a constitutional mission to deliver the mail. This implies a public trust to keep the Postal Service alive. We must adapt now while we still have some resilience.

Our $1 billion nominal surplus this year and our shiny new equipment mask the fact that the capital stock we got as a gift from the U.S. taxpayer has been sadly depleted by the losses we have run in so many years since then.

A private company couldn’t survive operating the way we do. We can’t either. We need a different kind of work force.

Sooner or later, the archaic cost structure we maintain will kill us if we don’t start cutting now.