Neither Rain, Nor Sleet, Nor 29-cent Stamps

By Gisela Bolte/Washington

Q. The price of a first-class stamp has gone up again, to 29 cents. Should we resign ourselves to these continuous increases in postal rates?

A. Why would the Postal Service be the only company in the U.S. that's unaffected by inflation? People fly into a paroxysm when their postage goes up, and they see it as a sign of inefficiency. I guess a quarter to 29 cents is a lot easier to understand than a $500 billion savings and loan bailout. I am just amazed. Everything else goes up. Postal rates will go up. But people have every right to expect that they ((the rates)) should go up at less than the rate of inflation and relatively infrequently. Certainly this increase in February doesn't reflect that philosophy. It's an 18% increase in a time when inflation was less than that, mainly accounted for by 1988, in which our costs went up at twice the rate of inflation because of congressional actions, lack of productivity and a slowdown in the growth of volume after a postal-rate increase. Yet in 1990 we operated at half the rate of inflation. So this enormous entity can be moved, and it is being moved.

Q. How large a deficit is the Postal Service running?

A. The projected loss for 1990 was $1.6 billion. We ended the year losing about $730 million less than that, mainly because of productivity. The productivity manifested itself in the fact that we have 35,000 fewer employees now than we did 18 months ago. We do not use tax dollars. We're required to break even. We're not allowed to accumulate reserves. This year revenues will be over $50 billion, but we are not allowed to set our own prices. That makes it pretty difficult.

Q. What did last year's budget deficit reduction agreement do to you?

A. It's a bitter body blow. When you end up $730 million better than budget and then get hit with $4.7 billion over five years in additional costs imposed on you by legislation, that makes it hard.

You take a step forward and take a step back. We are concerned because eventually the American people will pay that. It's just a stamp tax. And when we raise postage rates to accommodate that, people say, "Oh, this idiotic, inefficient, unfeeling, bureaucratic Postal Service!" We can't go out and teach civics to 250 million people. In 1991 our budget was to make $1.2 billion. Now with this legislation we lose $1 billion. For the next rate increase it means more, sooner.

Q. Is labor your largest cost?

A. We are the biggest civilian employer: 740,000 people. One out of every 160 employed Americans works at the Postal Service. People are 83% of our costs. Up to 14 different hands handle each piece of mail. We make a house call on every home and every business six days a week. We do it for 29 cents. Plumbers charge 58 bucks.

Q. Labor negotiations with your major unions for new contracts broke down. Why?

A. Three days before the end of the negotiation period the unions came in with a package that we priced at $50 billion over the three years of the contract. That would have raised the cost of postage by about 50%. Since the rate now is at 29 cents, that cost would have to go to 43 cents. That's not in anybody's interest. We know that the cost of postage affects our volume, and we know that jobs are dependent on volume. If we are off by one-half of 1% in volume, that can affect the results by $250 million. It's the difference between a good year and a poor year. I just can't understand why the union leaders can't understand it. They didn't want to face their responsibilities and instead have an arbitrator do their job.

Q. How much does a letter carrier make?

A. On average, a letter carrier makes $30,000 a year plus $8,500 in benefits. Our people make 21% to 28% over the private sector. No rational person is going to say that they are underpaid.

Q. There is a public perception that the quality of service is going down, and a recent Price Waterhouse study seemed to confirm that.

A. When I came here there had never been external measurement of the mail -- in 213 years. We hired Price Waterhouse. I believed that this organization, once measured, would improve itself. We released the first survey, warts and all. It showed that we have some mail that arrives up to five days late. That's impossible! Some 80% of it now arrives on the day that it's supposed to. Obviously, I'd like to get that up in the 90s, and the remainder I want not to be more than one day late. We want to deliver excellence. In order to deliver excellence you have got to measure it.

Q. Is automation the answer to controlling costs?

A. We have 20% of our automation equipment deployed, and our productivity in 1990 was 10 times what our annual average was for the preceding 19 years. Automation is the best hope for the future to keep postal rates below inflation. We will be fully automated by 1995. This is a major changeover. Our standard of manual sortation is exactly equal to what Benjamin Franklin could do. He could do about 11 pieces of mail a minute, and our standard still is 700 per hour. Our automated sorting machines can do 35,000 pieces per hour, 50 times that.

Q. In the computer age, shouldn't there be less paper mail in the future?

A. The Postal Service in 1975 said that volume was going to go down because of electronics. Since then, there have been 14 consecutive years of up volume, each year higher than the next. The Postal Service seems to continue to be doubling about every 20 years in volume. We don't see any interruption. We bind this country together much more than anything else. There are many more letters delivered than long-distance telephone calls made.

Q. Do we actually need a Postal Service? Couldn't private operators like Federal Express do a better job?

A. They wouldn't take it if you offered it to them. The average revenue per piece for Federal Express is $17. Ours is 28.4 cents. Federal Express has 12% of our number of employees. Their employees deliver two-tenths of 1% of our volume. We deliver in any morning what they deliver in a year. They're a different business. The Postal Service is not a business. It's a businesslike public service. I could cut out $5 billion in one day. But our charter is to provide universal, uniform service to the American people, which means everybody gets the same service at the same rate. Compared to almost any other country, we are certainly the cheapest postal service and probably the best and getting better. People don't seem to understand. Would companies compete for Manhattan? Yes. Would they compete for the Bronx? I don't think so.

Q. How different is running the Postal Service from running a private company?

A. There are more differences than you have room to write about. In a corporation you seek to maximize your profit. In the Postal Service you seek to minimize your profit. You've got to break even. You have a lot of bosses. You have 250 million people who judge how you do every single day, and they, in turn, talk to 535 members of Congress. Everything you do is subject to criticism, lawsuit. Not only do you have to be fair, you have to demonstrate that you're fair.

Q. Why did you take the job in 1988?

A. This is the biggest management challenge in the U.S. And so I aspired to it. Plus I wasn't born in this country, and I thought I could pay back a little of what I owe it.