PrintREMARKS BY POSTMASTER GENERAL JOHN E. POTTER
NATIONAL POSTAL FORUM
SEPTEMBER 20, 2004
How about what the people of Florida and the Southeast have endured the last six weeks? It's been incredible.
When I visited Punta Gorda after Hurricane Charley, I met Sharon Whineset. Sharon told me folks have been calling her the muffin-lady. She said she didn't mind giving up the muffins, it was her peanut butter and jelly sandwich she really missed that she gave too.
Also, in Punta Gorda, one of the first communities struck by the hurricane, I met Rural Carrier Carlotta Hayes who came to the aid of a woman, who was a quadriplegic, and her husband, who were cut off from outside contact by fallen trees. They lived on the end of a cul-de-sac, along a dirt road hidden by the fallen trees. No one thought anyone was there, but Carlotta found them, got back into her truck and brought them water then alerted the National Guard and Red Cross.
There were dozens of great stories I heard from the employees I met. I came away with a sense of pride and respect for what they did. If the true measure of an organization is how employees respond in times of adversity and tragedy, then ours is truly one of the greatest organizations in America.
Maybe that's why Eveready batteries paid us such a high compliment in a recent "energizer bunny" commercial. The TV spot makes a great point - just like that pink bunny that keeps going . . . and going . . . and going, so do we. Take a look. It says a lot about us.
That's a great spot. And I'll tell you, they have a great weather forecaster at Eveready! And it demonstrates that the mail must get through - and does get through - just as it has since the days when the United Stated Flag had only 13 stars.
Our people, 700,000 strong, are at the core of our brand. They are out there to serve you, day in and day out. They help make a difference for your business.
But they do more than that. They are also valued members of thousands of communities - communities just like yours. They're the letter carriers who support local food drives. They look after the elderly. They're the clerks and mail handlers who find the time to help build awareness of illnesses like breast cancer. They're the postmasters and supervisors who join to build a potential pool of donors for marrow transplants.
I am extremely proud of the men and women of the United States Postal Service. For these very special people, service means far more than simply the mail. They are an integral part of the communities they serve. And they play an important role in our partnership with the American people and the mailing industry.
And what a great partnership it's been. The National Postal Forum has been a key element in making that partnership work. So thanks for coming to Washington, DC. This is an important time in the history of the Postal Service and the mailing industry.
Let me begin by thanking Chairman David Fineman for bringing everyone up-to-date on where we stand legislatively. The bills before the House and Senate are of interest to everyone in this room and everyone in the country. What happens on Capitol Hill will impact the mailing industry for many years to come. Whatever happens on the Hill, I will stick to the promise I made 2 1/2 years ago. The Postal Service will hold rates stable until 2006.
Back in July of 2002 - when we last raised rates - there were some who thought we'd raise rates again in 2004. And we would have, had it not been for two things: aggressive management and legislative relief. From a cost standpoint, it has not been business as usual over the past three years: cumulatively we trimmed $8.3 billion out of our costs.
That's a credit to people like: Deputy Postmaster General John Nolan, Chief Operating Officer Pat Donahoe, Operations Senior Vice President John Rapp, Chief Financial Officer Dick Strasser, Chief Marketing Officer Anita Bizzotto, Senior Vice President for Government Relations Ralph Moden, Senior Vice President for Human Resources, Suzanne Medvidovich, and General Counsel Mary Ann Gibbons. And I can go on to name all 700,000 employees of the Postal Service.
And with the help of many in this room - and with the support of the Administration and Congress -- we had some welcome legislative relief last year that temporarily corrected our Civil Service Retirement System payments to avoid future over funding.
Some may say we've been lucky. But, you know, it was New York Yankee pitcher Lefty Gomez who in the 1930s wise-cracked after a tight game, "I'd rather be lucky than good."
I don't know if that's what got him into the Hall of Fame, but I think Lefty would agree that sometimes you make your own luck. Lefty Gomez was surrounded by a great team. All-that-talent counts for something.
And look around this room today: we're a great team. From industry leaders to industry innovators, from postal leaders to postal innovators, together we've taken the industry to new heights and, yes, we've even made a little luck of our own. That's given us a lot to celebrate. But, as another famous Yankee said, "It ain't over until it's over."
That was Yogi Berra - another hall of famer. Another guy who spent some quality time in my home town - the Bronx!
We need to work together as hard as ever to make our own luck - to determine our own destiny - when it comes to legislation. Remember, it ain't over.
There is a range of possibilities in terms of the future, particularly when it comes to rates. With legislative relief from the escrow requirement - and no strings attached - we can make it until early 2006 without a rate increase. That increase would be a single-digit percentage, and there wouldn't be another increase before 2008.
And if it doesn't go that way - if we don't get legislative relief from the escrow requirement - then we're looking at a double-digit percent increase in 2006.
There are some who question why we did not schedule a number of sessions on postal legislation at this Forum. The reason is that the time for talking to one another is over. It's time to talk to the people making the decisions. So while you are here in Washington, get up to Capitol Hill. Share your thoughts. Share your concerns. Share your desires. It's time to act.
The sooner we know the outcome of the legislative process, the sooner we can be more definitive about future rates and how as an industry we can move forward. It is important to the entire industry that we bring closure to the legislative process.
Many times I think we discount the impact our industry has had on this nation and the nation's economy. But remember, the Postal Service and the U.S. Mail are embedded deep in the red, white, and blue that is America.
Perhaps that's why some people take us for granted. We're out there - every day - on every street - in every neighborhood. The American people just expect the mail will be there. And it is!
Together, we played a key role in building the mail order industry. Today's specialty and general catalogs are the direct descendents of Sears & Roebuck, Montgomery Ward, and J.C. Penney.
We helped build the nation's airline industry, providing the cargo that paid the freight. Our ZIP Codes created the means to target mailings and helped launch an entire direct marketing industry. And where would Meg Whitman and eBay be -- or Netflix's founder and CEO Reed Hastings - without access to local post offices?
We have been vital to their growth - and what growth it has been.
And we will continue to help American business grow. And by doing that, our entire industry will grow.
I believe our industry has a great future. But we won't get there by relying on what we've done in the past. Today's business environment demands a new approach.
That's why the overriding message I want to leave with you this morning is: think bold, take bold action, and let's build the business together.
We started down that path almost 3 years ago, when we implemented the Transformation Plan. We made a conscious decision that change was necessary to meet the demands of a changing marketplace.
We've made a lot of progress. The entire Postal Service is focused on improving service, on reducing costs, and growing the business. There's a brand new customer-centric attitude that will bring added mail value and keep it affordable.
In today's marketplace, reputation counts. It's all tied up in your brand, and your customer's experience with the brand. Our brand is service. As our name suggests, that's what we are all about. That's where it all begins.
If you interpret service as speed, then we're better than ever. We've hit record levels of service in all measured categories of First-Class Mail. For example, First-Class overnight performance hit an all-time high of 96 percent last quarter.
We know we're doing well in non-measured categories as well. How? Because that's what you're telling us.
Another way to judge service is from the standpoint of access and convenience. We built on our national foundation of 38,000 retail outlets and our 40,000 consignment stores by offering stamps by phone, stamps by mail, stamps online, and you can even print a shipping label and pay for package services with Click-N-Ship. Small and mid-sized businesses have convenience and access right at their doors.
They now have a host of new online services to conduct postal business without leaving their offices or small home-based businesses. Customers notify us over the Internet that they have a package to be picked up the next day by their letter carrier. They can also put temporary holds on their mail, even permanent changes of address - all online.
We're also expanding our online services to provide new conveniences. Today, I'm proud to announce that - because of suggestions from mailers - you can now purchase insurance for your packages and receive return
receipts online.
How do you spell convenience? The easy way, USPS.com!
We are continuing to innovate. The Governors approved the filing for a prepaid flat rate Priority Box. The filing asks for flat price of $7.70. So with the flat-rate Priority box, you can ship anything, any weight, any distance, domestically - provided it fits, of course.
We're working with the Postal Rate Commission to reach an early settlement so we'll have those boxes on sale in time for this holiday mailing season.
And we're adding more access. Already, we've rolled out 1,500 Automated Postal Centers. Customers can complete most retail transactions without standing in line. We'll have 2,500 Automated Postal Centers in place by the busy holiday season. These machines will enable more customers to access our expanded holiday window hours.
And I am looking forward to a strong holiday season. I am optimistic that strong consumer confidence will lead to strong sales for you - and strong revenue for us. From a service standpoint, we'll be ready to deliver America's greeting cards and holiday packages.
Folks, it's our goal to build on this record of success in the future. We will improve the reliability and transparency of the mail as it moves through our system. The key, however, is quality - quality addressing and quality barcodes. Right now, we're sorting about 80 percent of letter mail to delivery sequence.
We need to get that number to 100 percent. And we need your help to get us there. The only way to do that is by improving the quality of addresses and affixing the 11-digit barcode on all mail.
That's my challenge to you. I know you can do it. I know we can do it. Frankly, we can't afford not to do it. It means improved sorting accuracy; better service performance; and it means eliminating unnecessary costs.
But we can't stop there. We need to embrace the next generation of information-rich barcodes. They will give you the ability to track your mail, end-to-end, through our systems and allow us to increase the quality of sort on our equipment. The end product is improved service. Ultimately, though, everybody benefits - the mailers, the Postal Service and, most importantly, our customers.
There's another huge benefit to the next generation of barcodes. I envision a day when we can verify mail with the new barcode in distribution operations and not at a Bulk Mail Entry Unit. I envision a day when machine missents are things of the past, thanks to the next generation of barcodes. The benefits are seamless induction into the mailstream, reduced costs in mail verification, and reduced processing and transfer costs. Again, everybody benefits.
I firmly believe that high quality service and costs are not mutually exclusive. Over the past three years, we've cumulatively taken over $8.3 billion out of our base costs, including streamlining our career staffing by over 72,000 people. And for most customers and employees, it's been a seamless transition. In fact, today we're operating at essentially the same career staffing level -- just under 708,000 -- that we had 20 years ago - in 1984. And we're delivering 65 billion more pieces of mail to over 48 million more addresses - with the same staffing level.
We will remain focused on our operational productivity, which has continued to climb to unprecedented levels for a record five straight years. We will not back away from our aggressive posture on productivity gains: Productivity will climb again in 2005, in 2006, in 2007 and beyond.
How will we get there? We'll stay on plan - the Transformation Plan. We'll stay focused on technology and innovation. If we do that, we can drive growth.
We'll continue to tap engineering advances. I can see the day when we have fully-automated the letter and flats mail streams into walk sequence. That technology is in development today. And as industry partners, we need to do all we can to get there.
For 200-plus years the Postal Service has been about change, rarely radical change, more often incremental, evolutionary change. Look at our networks. They have been changing quietly and subtly for decades.
A couple of years ago there was a lot of fanfare and misunderstanding about a concept known as "NIA" - Network Integration and Alignment. Many saw it as the ultimate plan to consolidate and close facilities. Well, It's not.
Why? Because nobody can predict 5,10 or 15 years from now what mail volume will be, or what type of mail processing equipment we will be using to sort the mail. So we have decided, instead, to do what we've done for decades. That is, take the next step in evolving our networks, and that's our E-N-D game -- short for Evolutionary Network Development.
It's an END game that never ends, because rationalizing and optimizing security, facilities, processing systems, transportation, and staffing is something we have to continue to do to keep our networks efficient and our systems affordable.
To give you an example, over the past thee years we have closed more than 50 facilities and annexes. We've consolidated distribution operations for First-Class Mail, Priority Mail and periodicals in plants across the country. We will also open new post offices and facilities in high growth areas of the country, where the demand for postal services is increasing. We realigned and merged processing systems, optimized air and surface transportation. We've made these system changes because they made good business sense and because they save you money and improve the service you receive.
For example, there was a day when it was assumed that keeping classes of mail segregated in distribution operations was the only way to assure service reliability. Today, our thinking has changed. It makes no sense to ask you to take Periodicals to one facility, Standard Mail to another and First-Class Mail to another for the same customer. I want you to be able to take your mail to a single facility. That will be good for you and good for us!
We're taking the same approach to transportation. A truck is a truck. A plane is a plane. We need to load all we can on every truck and plane, regardless of class. Today, we have independent transportation and transfer networks for classes of mail. We have bulk mail centers, air mail facilities, hub and spoke facilities, Priority Mail Processing Centers, and annexes.
Over the next three years we will be looking at redundancies in this network. This will lead to consolidations and further efficiencies. What does it mean to you? A more cost-efficient network, for one thing. And it will likely change where you enter your mail.
I am asking you to change with us. Remember, the aim is to have your mail drop-shipped as deep into our system as possible, avoiding transfer at postal facilities.
Our ultimate goal is to get the mail as close to delivery as possible - at the point of greatest efficiency. This is all part of the END game. It will be flexible and adaptable to meet your mailing needs, as well as the next generation of processing equipment.
You have my commitment that you will be part of the process and the solution, and you will be rewarded for your efforts to help us be successful. Remember, this is a partnership. I fully intend to keep our partnership strong.
We've touched on some very important issues this morning. We talked about Transformation. About reform. We talked about the importance of the mail - and the mailing industry - to the nation. And we've talked about change and how you can help us do that.
But there's still one point we need to focus on. We have to talk about growth. That's our biggest challenge.
The reasons are clear. We are not the monopoly we once were. Competition is increasing. People have more choices than ever in the way they communicate with each other and with their customers. We're not the only game in town.
I happen to think we are the best game in town. But we can't make the mistake of thinking that if we build it, they will come. This is not a field of dreams, folks.
We have a lot of work to do. We have to tell our story. We have to spread the word. Let people know that there's real value in the mail - that mail offers the best choice. There are millions of businesses in every town and every city in the nation that don't know what the mail can do for them.
All of us have to spread a simple message: put the U.S. Mail to work for you.
It's not just selling ink on paper. It about staying in touch with customers. It's about reaching out to new customers. It's about personalization. It's about the convenience of having the message delivered to your door. It's about value.
In the business world, mass marketing has been replaced by micro-marketing. What worked yesterday may not work tomorrow.
Back in the 1960s, an advertiser could reach 80 percent of U.S. women with one TV spot aired on the three major networks. Today, to reach that same audience, the TV spot would have to run on over 100 channels.
A few months ago, Advertising Age magazine did a study about which medium did the best job of reaching target audiences. The article showed that 42 percent of respondents said direct mail provided the best return on investment.
Nowadays, smart marketers are using more direct mail in their advertising mix to reach customers, build brand awareness, and increase market share. Mail should be a part of every company's advertising mix. We have to make sure people know that.
It's not only companies that don't use the mail today that can benefit. Every company should take another look at what we offer. They might be surprised to learn how they can use the mail in new, innovative ways to build their business.
A great example is the credit card industry. Over the past three years, many of the nation's leading credit card companies have turned to the mail, both Standard and First-Class Mail, to sign up new cardholders. Why? Mail offers better value and a better return on their investment.
There was a time when American Express spent about 80 percent of its marketing dollars on television. That's no longer the case. Today, they've increased the use of mail because they're getting a better response from prospective customers.
Don't take my word for it. Let's let Al Kelly tell the story.
[Video clip from AmEx executive]
Thanks, Al.
Once again, the message is clear. There's real value in the mail. No other medium gets you in touch with your customer better than hard copy mail.
We're working hard to get that message out to businesses large and small. But we need a little help from you and the rest of the mailing industry.
This industry was built by entrepreneurs, small businesses. They built businesses from garages or from their basements. Today, the mailing industry appears focused on the mega-customer. But, we all know that the largest growth segment in the American economy remains the small- and mid-sized business.
Therefore, it only makes sense that if we expect to grow with -- or ahead -- of the economy that we, as an industry, need a new strategy to reach this segment and introduce and drive home the value of mail.
It's time we returned to the basics and a simple message to all customers, large and small alike: The U.S. Mail has value. Mail works!
This industry can do tremendous things when it puts its energy behind it. Just think of the changes we've made together, that no one thought possible: automation, drop-shipping.
For example, this year, we've partnered with the Print Council to help its members get well-grounded in the value of direct mail advertising. The printed piece is important. It gets noticed. But it's more than ink and paper. It's about selling the value of mail and how it can help build business. Remember, 48 percent of everything printed goes into the mail!
Here's what Paul Reilly, Chairman of The Print Council, has to say.
[Video clip of Reilly]
Thanks, Paul. That's another great opportunity to let people know there's value in the mail.
So where do we go from here?
We in the Postal Service are going to re-tool how we work with our customers. No, we are not going to forget the mega-mailers, but we are going to invest resources in going back to basics to reach millions of small- and mid-sized businesses.
Our employees - including clerks and letter carriers like Alicia Tutt and the other carriers you met this morning - are also helping us grow. They're out there every day talking to businesses on their routes, explaining to customers how to use the mail to increase their businesses. They turn prospects over to their postmasters, station managers, and our sales and marketing staff. Although we've just begun, we've seen more than $38 million in sales from this effort.
Every business is a potential user of the mail. And remember, it's small and mid-size businesses that are America's growth market. For the mailing industry, they remain an important, yet underserved segment of the marketplace.
Our local Postal Customer Councils have always offered a great opportunity to reach out to these businesses. This year, with the help of our National Advisory Committee, we've taken that effort up a few notches by creating a plan to enhance PCCs all across the country. We've devoted staff resources to help existing PCCs grow membership and attract new businesses.
The plan helps PCC co-chairs design professional workshops, seminars, and special events. We're going to offer educational opportunities such as our popular Mail Room Manager course at PCCs. We'll provide postal and private-sector experts to share information with local PCC members. Let's take a look at how far we've come this year with our new focus on PCCs.
[Show PCC Video]
As I said earlier, we're going to enlist some other industry partners to help us reach small and mid-sized businesses and strengthen our new PCC network.
John Greco is the new president of the Direct Marketing Association. John recently pledged DMA's support by offering to conduct their professional seminars at PCC meetings. Let's hear from John.
[Greco video]
Thanks, John. That's a great step. And we also need to get in touch with every small and mid-sized business out there.
The Small Business Administration has also pledged to become an active partner with our PCCs across the country. In this next video, SBA Administrator Hector Baretto will tell us more about how his agency will help us connect with small- and mid-sized businesses.
[Baretto video]
Thanks Hector.
As you can see, we're off to a great start. We must not lose the momentum. I need everyone of you to get engaged. Go up on Capitol Hill and make your voice heard. Talk to your customers about the value of the mail to their business. If you're not a member of a PCC where you live, join one when you get back home. If you don't have a PCC in your community, get one started. We'll help you do that.
And remember, the only way we're all going to grow this industry is to think bold, take bold action, and build the business together.
Thank you.