Postal Service Said Ready to Shut Plants to Cut $1.2 Billion

Thursday, 17 May 2012 10:40 AM

The U.S. Postal Service, which last week backed off plans to close hundreds of rural post offices, will stick with its proposal to cut costs by shutting mail-processing plants, saving $1.2 billion annually.

The service, after a loss of $3.2 billion in the quarter ended March 31 and predicting it will temporarily run out of cash in October, intends to close about 120 plants in the next year, two people familiar with the plan said. They wouldn’t be named because the announcement hasn’t been made public.

The service has forecast a $9.1 billion loss for the fiscal year ending Sept. 30 and had said it might shut as many as 223 of its 461 processing plants to consolidate operations in fewer places as mail volume declines. Lawmakers including U.S. Sen. Bernie Sanders, a Vermont independent who caucuses with Democrats, have asked the service to keep the plants open, including one that employs 250 people in his state.

“It would severely degrade service to the American people,” said Sally Davidow, a spokeswoman for the American Postal Workers Union, who hasn’t been briefed on specifics of the plan. “It also would disregard requests by numerous members of Congress that the USPS extend the moratorium on plant and post office closures until postal reform is enacted.”

The service agreed last week to cut hours at its smallest post offices rather than close them amid congressional pressure to retain the facilities. Postmaster General Patrick Donahoe is urging the U.S. House to consider legislation that would relieve the service of some financial obligations.

David Partenheimer, a Postal Service spokesman, declined to comment before the announcement, which is scheduled for 11:30 a.m. New York time.

The closings will be suspended from September through December for the U.S. November elections and the peak mailing period in December, the service said in a memorandum faxed yesterday to postal unions.

To close plants, the service needs to relax its internal mail-delivery standards that require it to deliver some first-class mail overnight.

As the service tries to cut $20 billion in annual operating costs by 2015, the U.S. General Services Administration instructed government agencies this month to reduce their mail spending.

The GSA, in a May 2 memo to executive branch agencies that became effective immediately, told them to reduce hard-copy mailings between agencies, to pre-sort mail by ZIP code and consolidate mailings to get postage discounts and to save money by using flat-rate boxes and envelopes provided by the Postal Service.

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Thursday, 17 May 2012 10:40 AM
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