USPS begins union negotiations

The United States Postal Service kicked off negotiations with the National Rural Letter Carriers Association this week. The current contract for the NRLCA expires at midnight on November 20.

The NRLCA is comprised of 67,000 career employees and 48,000 non-career employees; these employees deliver mail in rural and suburban areas.

Earlier this month, the USPS kicked off negotiations with the American Postal Workers Union, AFL-CIO (APWU). The APWU is the largest of the Postal Service’s four unions and represents 211,000 employees, including clerks, mechanics, vehicle drivers, custodians and some administrative positions. The APWU’s contract is also set to expire on November 20, according to the USPS.

“The Postal Service needs flexibility to adjust to the nation’s changing mailing trends,” said Anthony Vegliante, USPS chief human resources officer and executive vice president, in a statement. “Our dedicated employees are committed to their mission to deliver for America. We have a good working relationship with our unions and know they want to keep us strong in this changing environment. Our goal is to negotiate a contract that’s fair to our customers and employees and meets our financial and operational needs.”

Jerry Hempstead, president of parcel consultancy Hempstead Consulting, said in an interview USPS has many challenges when it comes to getting relief from its rank and file union members.

“USPS has more employees than it has work at the moment, and management has a contract…but you really don’t hear about layoffs at the USPS,” he said. “You hear more about voluntary and early retirement. There is not much the USPS can do short of making sure overtime is in check and not replacing anybody who resigns or retires to right-size the business. But considering their numbers they have done a yeoman’s job of bringing down man-hours to coincide with the decline in business.”

Hempstead added that if the USPS can get some relief from the unions in terms of the way business is managed to better align staff hours to the amount of work coming through, it would be a great win for USPS management.

And another issue coming up is the pending USPS rate case based on a July proposal to have Standard Mail Parcels reclassified as competitive probably by October. The objective of this is to reflect the fact that customers use these parcels for different purposes, as well as to establish the Postal Service as a profitable provider of parcel services in the marketplace.

But if rates do rise at the USPS, Hempstead said more customers may be inclined to lean on electronic delivery for things like periodicals, and that could drive more business away.

Meeting future financial needs is imperative for the USPS, considering that during the fiscal third quarter it incurred a net loss of $3.5 billion compared to $2.4 billion for the same timeframe last year, with operating revenue at $16 billion, a $294 million annual decline. Operating expenses—at $19.5 billion—were up $789 million year-over-year.
This is the 14th net loss in the last 16 quarters for the USPS, with its fiscal 2010 year-to-date net loss at $5.4 billion compared to $4.7 billion at this point in 2009.
USPS officials said the increase in operating expenses was mainly due to higher workers’ compensation expenses because of a non-cash fair value adjustment and higher retiree health benefits expenses.

Mail volume for the quarter—at 40.9 billion pieces—was down roughly 700 million pieces of 1.7 percent.  Due largely to an ongoing diversion to electronic alternatives, including e-mailing business documents and online purchasing orders, as well as other electronic mailing processes, the USPS has been under difficult circumstances for more than three years. What’s more, it is faced with the possibility of a projected $7 billion shortfall for Fiscal Year 2011.

A March 2010 report by the Government Accountability Office (GAO) indicated that the USPS needs to consider various restructuring steps to stem its significant revenue and volume declines it has incurred in recent years. The report also noted how USPS mail volume has declined by 35 billion pieces-or 17 percent-from fiscal years 2007-2009, losing $12 billion during that span. It also mentioned how the USPS does not expect total mail volume to return to its previous level when the economy recovers, forecasting that total mail volume will decline to 167 billion pieces in fiscal year 2010-its lowest level since fiscal year 1992 and 22 percent off its fiscal year 2006 peak.

USPS officials said that the contract for 207,000 employees represented by the National Association of Letter Carriers (NALC), who deliver in metropolitan areas, expires on November 20, 2011, which is the same date the contract expires for the 49,000 employees represented by the National Postal Mail Handlers Union (NPHMU) who work in mail processing plants and Post Offices. Contract negotiations for these two unions will commence roughly 90 days prior the contracts’ expiration date.