Mr. Potter then reviewed the elements of the Postal Service's Survival Strategy. They look simple enough; cut costs, grow the business, and protect liquidity. He laid the strategies out for the next few years. We are on target to cut more than $6 billion in expenses during the current fiscal year, 2009. A great part of these savings will come from a reduction of 100 million workhours. Strategies for FY 2010 include Network Distribution Centers, increased usage of Flat Sequencing, continued reduction in delivery routes, the consolidation of stations and branches, and further administrative reductions. The Postal Service hopes to implement 5-day delivery by FY 2011. If all of these strategies are implemented, the Postal Service projects a move back into black ink in FY 2012. This projection assumes the passage of HR 22 through Congress, and the implementation of 5-day delivery. Of course, a positive turn in the economy will help the trend.
Mr. Potter added that the Postal Service will also be looking to use increased product freedom. He remarked that some foreign postal services paid for their universal service obligations with non-postal revenues such as banking and cell phone sales. (About a year ago, you might recall, our own Bill Krejci put together a proposal on postal banking. Maybe someone was listening!)
Without relief from HR 22 and the implementation of 5-day delivery, Mr. Potter told us that the Postal Service's losses would climb into double-digit billions. That can't happen.
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