Postal Service slashes executive ranks, reorganizes offices

In a highly anticipated move, Postmaster General John Potter has eliminated 20 percent of the Postal Service's executive positions. The reorganization, announced late Friday afternoon, also closes two regional offices-the Midwest and Mid-Atlantic. All told, 800 senior positions are being abolished. The agency's remaining eight regions must reduce management ranks 30 percent by the end of the year.

The announcement precedes the Postal Board of Governors meeting Monday and Tuesday to review financial numbers for the current fiscal year and fiscal 2002. Agency sources confirmed that unaudited year-end reports project a $1.65 billion loss for fiscal 2001. That is a far cry from the $3 billion loss agency officials were fearing as recently as June.

The better-than-expected loss projections did nothing to quiet speculation that the Board of Governors will use this week's meeting to give a green light for another rate hike. Agency officials said they need a 10 percent to 15 percent increase to bolster sagging revenue. If the agency files a rate case in the next couple of weeks, increases could take effect in October 2002, just as businesses are gearing up for the holiday season.

"We'd be very disappointed if this would happen," said Louis Mastria, spokesman for the Direct Marketing Association. "In this slowing economy, a government agency would essentially be putting an increased tax on businesses and consumers."

Mailers and other agency observers say the Postal Service should look for ways to improve efficiency and cut costs first. That includes consolidating processing plants and making better use of technology, says Robert McLean, executive director of the Mailers Council, an Arlington, Va.-based trade association.

Most agency watchers said the reorganization of the executive ranks is a good first step. It eliminates several overlapping management positions in such areas as marketing and product development. Also abolished was the office of vice president for electronic commerce. The Postal Service has been criticized in recent years for its e-commerce efforts.

But the agency is not abandoning electronic commerce, Potter said. Rather, it will look to retain only profitable initiatives. Earlier this month, the agency unveiled new additions to its electronic bill payment system.

Overall, Potter's objective is to streamline management activities and focus the agency on its core mission and products. Still, many are waiting for more definitive action from the postmaster general.

"Internal reorganization is not really the problem," says Gene Del Polito, president of the Association for Postal Commerce. "I want to know what direction they are going in and what their goals are. What is Potter going to do to reinvigorate the organization?"