Friday, December 23, 2011

Put Down That Burger And Start Singing!

Don't you just hate shopping malls at Christmas time?

As if the Christmas rush weren't bad enough, the malls make it excruciating by pummeling you with piped-in Jingle Bells and getting whiny kids all worked up about sitting in the lap of an obese pedophile.

But seeing this video renewed my faith in the human race's ability to create beauty amidst commercial schlock -- and my hope that someone will drag Frosty the Snowman out by the dumpsters and beat him senseless. Here's some shopping mall Christmas music I could definitely Handel.

So watch, listen, and enjoy. And have a Merry Christmas, a Happy Hanukkah (with Chinese food on the fifth day), a Festive Festivus, a Soulful Kwanzaa, a Far-Out Solstice, and a Joyous New Year.

Sunday, December 18, 2011

Wanted: New Postmaster General; Must Be Able To Kiss 535 Backsides Simultaneously

Now the Congressional silliness regarding Postmaster General Pat Donahoe has gone bipartisan.

Rep. Dennis Ross indicated a few days ago that Donahoe should be fired – apparently for bowing to pressure from 20 senators and agreeing to a mostly meaningless moratorium on the closing of postal facilities. The Republican subcommittee chairman’s attack comes less than two weeks after Democratic Congressman Peter DeFazio said the PMG should be canned for trying to save money by lowering the Postal Service’s delivery standards.

All this reminds me of what we tell little children: Every time you point a finger at someone else, four more are pointing back at you. Congress is largely to blame for the fix the Postal Service is in, and any meaningful reform requires Congressional action.

Can Donahoe focus on building new revenue sources or developing long-range plans, the way the CEO of any other multibillion-dollar business would? Nope, what passes for a business model at the Postal Service these days boils down to two strategies:

1) Persuade Congress and the general public that the Postal Service will soon go broke unless Congress makes some significant changes. (I’d say Donahoe is doing pretty well in this department.)

2) Suck up to the Postal Service’s dysfunctional 535-member board of directors -- Congress, that is, not the USPS Board of Governors -- in hopes of getting it to make the tough decisions necessary to save the agency. (A well nigh impossible task, I'd say.)

With the Postal Service’s finances hamstrung by Congressional inaction, Donahoe was forced to propose radical and unpopular cost-cutting measures like reducing service standards. And when 20 senators pushed for the moratorium, Donahoe would have been a fool to brush them off.

Ross’s response, via Twitter to postal blogger Alan Robinson: “PMG is trying to delay an [sic] deflect. First Brac management change may have to start at the top.”

“BRAC” refers to a Ross-proposed commission that would determine which post offices and processing centers are closed. The irony is that, even with the moratorium, Donahoe has the Postal Service on a fast track to close facilities "at least a year earlier than any BRAC could act," Robinson notes.

“In reality, the moratorium has little practical effect,” noted Postalnews Blog, “the USPS is continuing all of the processes it must go through in order to close the facilities, and few would actually have been shuttered by May.”

Related articles:

Monday, December 12, 2011

Why Mills Can't Keep the Coated Paper Market in Balance

There’s a simple way for North American mills to prevent the prices of coated paper from collapsing next year, the “Paper Guru” pointed out recently. Simple, but it won't work.

Responding to last week’s Dead Tree Edition article about the possibility of declining prices, Jack Miller, Printing Impressions’ Paper Guru, wrote, “Uncoated freesheet producers have reduced capacity, balanced supply and demand, and maintained prices.”

“With U.S. coated mills still under cost pressures from pulp and chemicals, and with margins where they are,” he suggested, the coated mills might take out capacity to keep the market in balance. But what works for uncoated freesheet will be hard to apply to coated paper.

The North American uncoated freesheet market is dominated by two big players, International Paper and Domtar, that are financially strong and have low-cost mills. That puts them in a position to idle machines or shut down mills if necessary to keep the market in balance.

But leadership of North America’s coated-paper market has one foot in the grave and the other on a banana peel. The #1 maker is NewPage, which is under Chapter 11 bankruptcy protection, making it nearly impossible to shut down a machine or mill in the short run. Besides, NewPage claims it has already mothballed all its high-cost machines.

The #2 manufacturer is Verso, a highly leveraged firm with a debt-to-equity ratio of about 18:1. Like NewPage, it’s not in much of a position to idle machines that could be generating cash.

SAPPI is the only other manufacturer with significant market share, but it produces coated freesheet almost exclusively. Coated groundwood (AKA coated mechanical) is where the big trouble lurks.

The bottom line is that no company with the financial strength to reduce capacity has enough North American market share to make much of a difference in the supply-demand balance. That’s why industry analyst Verle Sutton recently predicted that coated prices will decrease next year until losses force some companies to idle their machines.

Saturday, December 10, 2011

Delayed Retirements, Rising Overtime Bedevil USPS Finances

Despite all the talk of restructuring and downsizing at the U.S. Postal Service, its labor costs have hardly budged in the past year.

With employees working more overtime and relatively few retiring, the agency’s cost of salary and benefits inched down by barely 1% during the fiscal year that ended Sept. 30. So far this year, the decline is a paltry 0.2% lower than the same time last year. In contrast, USPS projects that its revenues will decrease nearly 3% this fiscal year.

One barrier to cost cutting is a slowing attrition rate. In the Postal Service’s latest employee statistical report, released yesterday, the number of full-time employees had declined by fewer than 13,000 in the past 12 months, versus more than 17,000 in the previous year. Postmaster General Pat Donahoe has indicated that the USPS workforce needs to shrink by about 35,000 employees annually to reach its ideal size of 425,000 in 2015.

The dire need to reduce the workforce has spawned proposals to offer various incentives to employees who retire. But in the short run, such talk is backfiring, giving workers an incentive not to quit but to hold out instead for better retirement packages.

Overtime hours increased 9% during Fiscal Year 2011 even though straight-time hours were down nearly 4%. Once again, the trend in FY2012 is not the Postal Service’s friend: OT is up nearly 12% so far versus the same period last year.

Overtime so far this year is dramatically higher for city carriers, mailhandlers, and supervisors. Full-time city carriers and mail handlers are both averaging about five hours of overtime per week. Meanwhile, city carriers who are “part-time flexible” or “transitional” have been even busier, working more than one hour of overtime for every 6 hours of straight time.

The increased overtime for carriers is consistent with recent reports of carriers working well past dark to serve longer routes and to compensate for hiccups in the Flats Sequencing System.

The Postal Service has managed to keep wage inflation largely in check, with the average straight-time rate rising only 1.2% during FY2011, to $26.18 per hour.

Here are two more noteworthy statistics about the Postal Service workforce: There are 315 employees who are at least 80 years old and 194 with 50 or more years of service. Both numbers are increasing.

Related articles:

Sunday, December 4, 2011

Why Coated Paper Prices Look Ready for a Fall

North American prices for coated paper will decline and more paper machines will be idled next year, according to a leading industry analyst.

Even supercalendered paper, currently in short supply, could see declining prices by the middle of 2012, Reel Time Report editor Verle Sutton said in a webinar recorded a few days ago. The webinar, "Price & demand outlook 2012 for newsprint, publication papers", is still available for download from Industry Intelligence.

Sutton’s forecast runs counter to the brave talk coming out of the mills and the more bullish analysis from rival forecaster RISI. He noted that his and RISI’s 2012 price forecasts are as much as $120-per-ton apart. Sutton, always the iconoclast and often spot-on with his predictions, pooh-poohed claims that rising costs for pulp and other items will prevent prices from declining.

“Coated pricing will decline until capacity is removed. By the end of 2012, it is estimated that about 400,000 to 600,000 tons must be shut down [in North America] in order to balance supply and demand,” Sutton said.

Sutton based his prediction partly on the recent surprising weakening in demand during what should be the busiest buying season.

"Since 2000, even those of us who have been relatively pessimistic on the impact of electronic communications on demand have generally underestimated the true impact of the electronic revolution on paper demand. That occurred again in 2011 in a big way."

Sutton also provided insightful commentary on the newsprint market, why prospects for the idled Port Hawkesbury mill are suddenly looking up, the outlook for European exports to North America, and whether North American mills will use coated machines to make supercalendered paper next year. But as someone who respects copyrights (especially since my day job is in publishing), I won’t reveal any more details about the Sutton webinar.

Among the many previous Dead Tree Edition articles that cited Sutton or his Reel Time Edition newsletter are: