{"id":4114,"date":"2012-04-17T15:41:39","date_gmt":"2012-04-17T20:41:39","guid":{"rendered":"http:\/\/postalemployeenetwork.com\/news\/?p=4114"},"modified":"2012-04-17T15:41:39","modified_gmt":"2012-04-17T20:41:39","slug":"nalc-releases-white-paper-on-usps-business-model-postal-reform","status":"publish","type":"post","link":"https:\/\/postalemployeenetwork.com\/news\/2012\/04\/17\/nalc-releases-white-paper-on-usps-business-model-postal-reform\/","title":{"rendered":"NALC releases white paper on USPS business model, postal reform"},"content":{"rendered":"<p><a class=\"highslide\" onclick=\"return vz.expand(this)\" href=\"https:\/\/postalemployeenetwork.com\/news\/wp-content\/uploads\/2012\/04\/NALC-News1.gif\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-thumbnail wp-image-4115\" title=\"NALC News\" src=\"https:\/\/postalemployeenetwork.com\/news\/wp-content\/uploads\/2012\/04\/NALC-News1-150x150.gif\" alt=\"\" width=\"150\" height=\"150\" \/><\/a><\/p>\n<p><em>White paper drafted by international financial advisory firm Lazard<\/em><\/p>\n<p>WASHINGTON, D.C., April 17, 2012 \u2014 Successful revitalization of the U.S. Postal Service requires a strategic business plan that leverages the unmatched reach of its network, legislative action to relieve it of obligations no other business bears and shared sacrifice from all stakeholders, says the renowned international financial advisory firm, Lazard.<\/p>\n<p>\u201cWhile the Postal Service clearly faces enormous challenges, we do believe that its revitalization is achievable,\u201d Lazard says in a white paper released on April 17. The paper, \u201c<a href=\"http:\/\/www.nalc.org\/whitepapers\/saving_the_united_states_postal_service.pdf\" target=\"_blank\">Delivering Change to Revitalize an American Icon<\/a>,\u201d results from a due diligence investigation of the USPS commissioned in October 2011 by the National Association of Letter Carriers and conducted by a Lazard team with extensive experience in restructuring strategy.<\/p>\n<p>Lazard outlined the basic elements of a reform plan that would aim to revitalize the Postal Service, rather than the approach being advocated by the Postal Service \u2014 an approach based on massive, and ultimately counterproductive, reductions in service. Lazard indicated that based on its analysis and experience, the Postal Service\u2019s \u201cshrink to survive\u201d strategy will simply facilitate the decline of this vital American institution.<\/p>\n<p>In addition, Lazard\u2019s analysis of pending legislation (S. 1789) determined that, while the bill does not go as far as the Postal Service in proposing service reductions, the legislation still amounts to a stop-gap \u2014 not real \u2014 solution, because it does not fundamentally address the need for change in the way the Postal Service does business. And it too reduces service to the public and to America\u2019s businesses.<\/p>\n<p>\u201cIn private sector restructurings, successful turnarounds are generally premised on (i) a strategic plan that aims for a sustainable and viable enterprise and (ii) a management team and governance structure that is capable of executing that plan. Those two elements are developed first and then the necessary capital is secured. Unfortunately, this legislation provides the Postal Service with capital without either of these two elements being in place. Even worse, by adopting the Postal Service \u2019s proposals to reduce the quality and value of the services it provides to American households, it may actually accelerate the Postal Service\u2019s decline,\u201d Lazard said.<\/p>\n<p>According to Lazard, a plan to revitalize the Postal Service should include:<\/p>\n<ul>\n<li>Better leveraging of the USPS delivery network to grow its parcel service business;<\/li>\n<li>Expansion of the kinds of products and services that the Postal Service is allowed to provide (this would require congressional action);<\/li>\n<li>Giving the Postal Service greater flexibility in pricing its products and services, some of which are notably underpriced compared to the cost of providing them (also requiring legislative action);<\/li>\n<li>Legislative action to address the burdensome \u2013 and unique \u2013 congressional mandate requiring USPS to pre-fund retiree health care for the next 75 years in just 10 years; and<\/li>\n<li>Shared sacrifice from of all postal stakeholders, rather than one-sided employee sacrifice.<\/li>\n<\/ul>\n<p>The Lazard paper acknowledges that the Postal Service faces a financial crisis and must adapt to rapid technological changes that have reshaped \u2014 and are still reshaping \u2014 the way Americans communicate with others, primarily because of the Internet and its impact on the use of First Class Mail. On the other hand, some of those changes can stimulate new business for the Postal Service, Lazard said, such as increased delivery of packages ordered on-line.<\/p>\n<p>\u201cThe Postal Service that results from these changes will have fewer employees, but will enhance (rather than degrade) the quality and value of the essential services it provides to millions of households and American businesses,\u201d Lazard said.<\/p>\n<p>The Lazard paper stresses that cuts in the number of employees and reductions in services alone can neither save the Postal Service nor enable it to adapt to the evolving needs of the American public and postal customers, both business and residential. On the contrary, they could destroy it by driving customers away and further reducing revenue.<\/p>\n<p>\u201cSimilar to any successful private sector restructuring, the Postal Service requires a business plan based on a fundamental rethinking of the institution, top-to-bottom changes in its operations and culture and a first-rate management team and corporate governance structure to ensure that the plan is effectively executed,\u201d Lazard advised.<\/p>\n<p>In particular, Lazard noted, \u201ca successful restructuring of the Postal Service must start with a plan to better leverage its unrivaled last-mile delivery network \u2014 a retail network that touches every city, town and neighborhood in America. Instead of focusing on shrinking its network and capabilities, thereby yielding its competitive advantage, the Postal Service needs an ambitious rethinking of its business model.\u201d<\/p>\n<p>\u201cThis analysis clearly shows it would be a terrible mistake for Congress or the Postal Service to rely on massive cuts in service to deal with the Service\u2019s financial difficulties, which are real,\u201d said Fredric V. Rolando, president of NALC. \u201cYet that\u2019s exactly what they are doing. The Postal Service does need basic rethinking, but not heavy-handed, ill-considered slashes in employees, facilities and delivery services.\u201d<\/p>\n<p>Lazard based its conclusions on a review of publicly available data, including public testimony of the Postal Service&#8217;s leadership and the Postal Service\u2019s own \u201cPlan to Profitability,&#8221; and Lazard&#8217;s meetings with outside postal experts and users of Postal Service products and services.<\/p>\n<p>Lazard\u2019s findings reflected a full examination of the Postal Service\u2019s \u201cPlan to Profitability.\u201d That plan has some reasonable assumptions and proposals, Lazard concluded, including repeal of a Congressional mandate that, since instituted, has led to a massive diversion of $21 billion of Postal Service revenues into a fund for future retirees\u2019 health benefits.<\/p>\n<p>But ultimately the Postal Service\u2019s own plan is too focused on shrinking service to allow the agency to survive and therefore is unlikely to succeed \u2014 and will instead quite possibly worsen its business situation, Lazard said.<\/p>\n<p>\u201cThe Postal Service\u2019s proposed modifications \u2014 termination of Saturday delivery, a significant curtailment of \u2018to the door\u2019 delivery, and other reductions in service standards \u2014 could easily reduce demand by an amount equal to the alleged cost savings being discussed,\u201d Lazard warned. Lazard noted that a Postal Service witness recently acknowledged at a Postal Regulatory Commission hearing that the combined effect of all the proposed cuts could reduce mail volume by 10 percent, offsetting almost all of the intended savings from the cuts.<\/p>\n<p><strong>Additional Information on Lazard<\/strong>:<\/p>\n<p>Lazard is a preeminent international financial advisory firm that has long specialized in crafting solutions to address the complex financial and strategic challenges of its clients. It serves a diverse set of clients around the world, including corporations, partnerships, institutions, governments and individuals.<\/p>\n<p>Lazard and its senior professionals have extensive experience in the reorganization and restructuring of troubled companies and have advised debtors, creditors, equity constituencies and government agencies in numerous complex financial reorganizations. Since 1990, Lazard\u2019s professionals have been involved in over 250 restructurings, representing over $1 trillion in debtor assets. Lazard also has over 35 years of government advisory experience involving over 40 sovereign assignments.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>White paper drafted by international financial advisory firm Lazard WASHINGTON, D.C., April 17, 2012 \u2014 Successful revitalization of the U.S. Postal Service requires a strategic business plan that leverages the unmatched reach of its network, legislative action to relieve it of obligations no other business bears and shared sacrifice from all stakeholders, says the renowned [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[],"class_list":["post-4114","post","type-post","status-publish","format-standard","hentry","category-nalc-news","last_archivepost"],"_links":{"self":[{"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/posts\/4114","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/comments?post=4114"}],"version-history":[{"count":1,"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/posts\/4114\/revisions"}],"predecessor-version":[{"id":4116,"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/posts\/4114\/revisions\/4116"}],"wp:attachment":[{"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/media?parent=4114"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/categories?post=4114"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/postalemployeenetwork.com\/news\/wp-json\/wp\/v2\/tags?post=4114"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}