Career executive named postmaster general

The Postal Service's board of governors Monday tapped career postal executive John "Jack" Potter to be the next postmaster general. Potter will take over an ailing agency that could lose more than $2 billion this fiscal year and whose long-term outlook was recently categorized as "high risk" by the General Accounting Office. Potter, a 23-year veteran of the Postal Service currently serving as chief operations officer and executive vice president, becomes just the sixth career employee to ascend to the rank of postmaster general. He replaces William Henderson, who steps down May 31. The nine-member board of governors that runs the Postal Service chooses the postmaster general. The job does not require Senate confirmation. Earlier in the year, industry experts and agency sources speculated that the board would tap someone outside the Postal Service to run the agency. The two leading candidates-former Indianapolis mayor Stephen Goldsmith and Gary Gensler, former Treasury undersecretary-took their names out of consideration. Much to the surprise of Postal Service observers, Potter beat out another top insider, Deputy Postmaster General John Nolan. Potter faces many challenges, not the least of which is getting a handle on the agency's troubled financial outlook. The board increased rates twice this year and is likely to seek another rate hike in the fall. It is also running up against borrowing limits. The Postal Service can borrow up to $1 billion each fiscal year from the U.S. Treasury to cover operating expenses. It will likely hit that limit this summer. It's unclear what will happen at that point. The agency is also in labor negotiations with three of its unions. It's likely that wages will increase across the board for the unions. A sluggish economy, slowdown in the rate of growth for first class mail and rising fuel prices won't help matters either. These factors mean the Postal Service must find ways of increasing revenue and cutting costs. In addition to seeking a rate hike, the Postal Service has canceled all capital improvement plans for the remainder of the year in an attempt to hold down costs. Some industry sources suggest one of Potter's first actions should be to reduce the labor force. The Postal Service employs nearly 800,000 workers. Potter can eliminate some jobs, but a wholesale reduction would require opening up labor contracts. Union officials say they will fight any attempt to cut their members' jobs. Potter also has to find ways of making the agency more productive, said Robert McLean, executive director of the Mailers Council, an Arlington, Va.-based trade association. In a recent report, the Mailers Council gave the Postal Service grades varying from D+ to B for productivity. "They have to come up with new ways of moving the mail and instituting new technologies," he said. "Mail processing is a key area where they can do that." Whatever Potter decides to do is bound to get the attention of members of Congress. For the first time in several years, there is serious talk of pursuing postal reform legislation on Capitol Hill. But few expect swift action. "I don't think there is the consensus right now or the political appetite either in Congress or in the White House," said Gensler. "There has been some good movement, but it's been very limited in breadth. By and large the American people are not focused on this as an issue, so members won't be focused on it." Gensler said it is up to Potter to use his soapbox as postmaster general and make the case for legislative reform. "That may be his hardest challenge," he said.