Saturday, January 29, 2011

How Two Words Can Lick What's Ailing Publishers

Halleleujah! We have found the two little words that will save the American magazine industry.

No, I’m not talking about calling ourselves "magazine media" as some advocate, or turning to "Chapter 11", as many publishers have done. I’m referring to Conde Nast’s new slogan for Bon Appetit: “Bite me.”

It’s just the kind of slogan we all need – a little bit naughty and oh so Me Generation. Just think of the possibilities if other publishers jump on the bandwagon:
  • Candy Industry: “Lick me” (if Cosmopolitan doesn’t claim that first).
  • Cigar Afficionado: “Smoke me.”
  • The Economist: “Sleep with me.” (My eyes glaze over every time I try to look at those dreary pages with their egghead prose.)
  • Hardware Retailing: “Drill me.”
  • Rolling Stone: “See me. Feel me. Touch me. Heal me.”
  • Vacuum International: Never mind.
And if Cycle World and Penthouse argue over who which one gets to say “Ride me,” they can always turn to The American Lawyer (“So sue me.”) for advice.

It’s enough to make this old print dinosaur feel tragically hip.

I’m calling on all magazine lovers to join the cause by suggesting “me” slogans for their favorite publications. You can email your ideas to or submit them as comments to this article.

As for me, I need to go work on implementing the new slogan for Dead Tree Edition: “Climb me.”

If you enjoyed this article, you have a really twisted sense of humor, which means you might also like these Dead Tree Edition attempts at humorous commentary on the magazine industry:  

Tuesday, January 25, 2011

We're Number 5! We're Number 5! -- Recent Honors for Dead Tree Edition

The new Web site Printing's Best Blogs officially launched today with Dead Tree Edition as one of the three featured "Mailing/Postal" blogs, the second such honor this blog has attained in recent months.

I can't really complain about Dead Tree Edition being pigeon-holed into the postal category because lately I have been writing more about the U.S. Postal Service than any other subject. And this blog doesn't fit into any of the other categories at the Web site, which is owned by North American Publishing Company (publisher of Printing Impressions and Publishing Executive).

Besides, my little blog (average of just under 1,000 visitors daily) is in good company. Both of the other featured postal blogs -- Courier, Express, and Postal Observer and Postalnews Blog -- have great track records and  published dynamite stories today on post office closings.

At Courier, Express, and Postal Observer, Alan Robinson managed to catching both The Washington Post and The Wall Street Journal with their pants down by pointing out that their recent sob stories about the closing of small-town post offices were mostly off base. Alan bothered to do something that the mainstream-media reporters apparently didn't -- actually read through the list of the 2,000 money-losing post offices that USPS has proposed for closure -- to find that the closings would "affect the nation's urban centers and have minimal impact on service to rural America."

Meanwhile, Postalnews Blog noted that it's not easy to define when a post office is losing money.

The other honor came four months ago, when noted industry commentator Patrick Henry named Dead Tree Edition #5 in his list of Top 10 blogs for printers and publishers. He also called me "an investigative journalist", which sounds a lot better than "a frustrated magazine-industry production guy who thinks he's a journalist because he once took a journalism course."

Again, Dead Tree Edition is in good company. Number 1 on Henry's list is Gordon Pritchard's Quality in Print, which is a phenomenal resource for printers and print buyers. Anyone who thinks bloggers are just people who sit around in their pajamas firing off ignorant comments and creating tacky-looking Web sites should check out Gordo's work.

(Disclosure: I'm not writing this in my pajamas, but I am wearing a bathrobe. And, please, no comments about tacky-looking blogs.)

Other articles about Dead Tree Edition:

Friday, January 21, 2011

Postal Service ‘Discovers’ A Way To Grow Direct Mail

Don’t be surprised if you start seeing more solicitations for Discover cards showing up in your mailbox.

The U.S. Postal Service and Discover Financial Services have reached a deal giving Discover incentives to increase its mail volume during the next three years. The arrangement could set a pattern for deals with other large mailers that, like Discover, are mailing fewer customer statements these days because of online billing.

The Negotiated Service Agreement “is intended to promote new growth in Standard Mail that will help offset the expected decline in DFS’ First-Class Mail volume,” says USPS’ recent filing with the Postal Regulatory Commission. The agreement needs the PRC’s blessing to be implemented.

To qualify for rebates and avoid a penalty, Discover’s mail volume in the first year must be 10% higher than in the February 2010-January 2011, then 15% the second year and 20% the third year. But there’s a kicker:

“To qualify for rebates DFS must send an extra $1.65 worth of Standard Mail to offset each dollar decline in postage rom First-Class Mail. This mechanism is intended to control the difference in contribution margin between First-Class Mail and Standard Mail, and to maintain or increase overall contribution from DFS mail.”

Without the agreement, the Postal Service says, Discover’s First-Class mailings (such as monthly statements) would decline about 5% annually and its Standard mail (such as credit card solicitations) would increase 7% to 11%.

“In order to qualify for a rebate (and avoid paying a penalty), DFS will have to increase the Standard Mail postage it pays another five to 15 percent,” the Postal Service’s request says. “The Postal Service estimates that this agreement will generate an additional $2 million to $15 million in contribution.”

The Postal Service envisions pursuing similar deals with other large mailers “to maintain or increase the value of a customer whose use of highly-profitable First-Class Mail is declining.”

Other recent articles about the Postal Service include:

Thursday, January 20, 2011

NewPage Gets Some Breathing Room

By recently renegotiating its banking relationships, New Page has apparently made it a bit more difficult for the main owner of rival paper maker Verso to gain control of the company.

NewPage, the largest maker of coated paper in the U.S., yesterday filed with the U.S. Securities and Exchange Commission an amendment to its $500 million revolving credit facility that extends the maturity date by at least five months, to March 1, 2012.

The heavily indebted company's 3rd Quarter earnings report described the dilemma it faced: "Our revolving credit facility matures on October 2, 2011 unless we repay or refinance our second-lien notes by July 4, 2011, in which case the revolving credit facility matures on December 21, 2012." Those notes have at times traded for 33 cents on the dollar, indicating investors' pessimism about NewPage's ability to repay them.

Apollo Management, which has a controlling stake in Verso, has snapped up many of those notes, giving it significant leverage over NewPage. In theory, it could have forced NewPage into insolvency six months from now by insisting on full repayment. But the amendment filed yesterday seems to give NewPage more breathing room.

Apollo and Cerberus, which owns NewPage, have reportedly been in talks recently about the paper company's debt problems (as described in NewPage, Verso Owners Reportedly Discussing a Deal). Jim Sturdivant of Publishing Executive reported today on speculation that Apollo may be trying to get some of NewPage's assets for Verso or perhaps representation on its board (and he referred to Dead Tree Edition as "influential").

The changes to the revolving credit facility were approved by 11 financial institutions on Jan. 14, with Wells Fargo the lead bank. But the document's references to "non-accepting lenders" indicates that some banks rejected the deal and are ending their relationships with NewPage.

Tuesday, January 18, 2011

Is That A Flat-Rate Envelope in His Pocket, Or Is the Postmaster General Just Glad To See You?

When the TV commercial came on during a playoff game over the weekend, I had a revelation: “That’s it!” I shouted. “That’s why the new Postmaster General looks so familiar.”

It was one of those Postal Service “If it fits, it ships” ads for Priority flat-rate boxes and envelopes, with the same alleged letter carrier who’s been featured all along – starting long before I know who Pat Donahoe was. (I say “alleged” because a letter carrier with that much heft would never last this long on a walking route; he would become an ex-carrier, AKA postal clerk.)

The guy in the ads looks a bit younger than Donahoe, but Hollywood can do amazing things with makeup and technology. Otherwise, the similarity is striking – same head shape, same eyes, same toothy smile, same white-boy-from-the-Midwest haircut.

A postal official outed Donahoe a few months ago as the supposed writer of Dead Tree Edition. (See D. Eadward Tree Unmasked!.) Now I realize he’s also been moonlighting the past several years as an actor in Postal Service commercials, no doubt to save the agency some money.

The USPS is, after all, a government entity that must keep its marketing expenses to the bare minimum. What, you wanted it to blow millions of dollars on endorsements from doped-up athletes?

The official word is that the actor in those Postal Service commercials is a comedian and former Second City cast member named Mike Bradecich, who blogs under the name EgoCock “Because He Was Born With More of Each Than Anyone Could Possibly Know What To Do With."

Really, Pat! Do you think that qualifies you to run the Postal Service -- or to write an anonymous blog?

NewPage, Verso Owners Reportedly Discussing a Deal

Note: A subsequent article with additional information, NewPage Gets Some Breathing Room, was published on Jan. 20

The owners of North America's two largest makers of coated paper are discussing a deal that could result in one of them having a significant ownership stake in both manufacturers, according to a published report.

NewPage's owner, Cerberus, and Apollo Management, which has a controlling interest in #2 maker Verso Paper, are discussing what to do about NewPage's high levels of debt, PPI Pulp & Paper Week reported recently. Apollo is also the largest holder of #1 NewPage's $800 million second-lien bonds, the publication said.

"One mutually beneficial scenario could see Cerberus retaining a diluted equity stake by sharing ownership… with Apollo through debt equitization," the publication said. "Debt equitization" means debt held by Apollo would be converted to an ownership stake.

Apollo's apparent "loan to own" intentions for NewPage came to light early last year when it and two other hedge funds snapped up more than 50% of the second-lien bonds, apparently under the assumption that NewPage's inability to make debt payments would eventually give them control of the company.

Magazine publishers, printers, catalog companies, and other major buyers of coated paper would certainly cry foul if two companies controlling more than half of the continent's coated paper capacity tried to merge. But it's not clear whether Apollo would trigger any antitrust alarms if it obtained a sizable equity stake in NewPage by swapping debt for equity.

Analysts and industry executives have touted consolidation as the path to reasonable profitability for paper manufacturers. The tactic has worked well in the North American uncoated freesheet market but not so well in the newsprint market. UPM is trying it in the European coated and supercalendered markets with its proposed purchase of Myllykoski.

Related articles:

Friday, January 14, 2011

The Elephant Has Ears: Some Good News for Mailers Along With the Rate Hikes

In announcing rate increases yesterday, the U.S. Postal Service actually managed to win praise from many mailers.

It’s not that the new rate structures scheduled to take effect April 17 are particularly innovative. In many cases, they are merely less bad than other recent Postal Service price moves, both actual and attempted.

What especially pleased the mailing industry is that "Elephant Plaza", as some refer to the USPS HQ at L'Enfant Plaza showed yesterday that it is actually listening and responding to mailers, especially in regard to the flawed Intelligent Mail program. We got a hint of that last week with Postmaster General Pat Donohoe’s executive reorganization (see Donahoe, No Potter Clone, Quickly Making His Mark), but the signals were even clearer Thursday.

“Recognizing ongoing concerns about mailers’ readiness for broader adoption of the Intelligent Mail barcode (IMb, which Dead Tree Edition has relabeled as the FUBAR code), the USPS has decided that automation discounts for mail with POSTNET barcodes will continue to be offered beyond May 2011,” a USPS announcement said. In other words, mailers will not be severely punished (yet) for sticking with traditional barcodes.

A postal executive also acknowledged to a mailing industry briefing that the PostalOne! information system, which many mailers and mail vendors have to use and suffer through, is a mess. “No s*%t, Sherlock!” one publishing executive responded later. Also, Donahoe originally told mailing industry representatives yesterday morning that the new rates would take effect March 27, but they persuaded him that was too soon to implement.

"Overall, it was an incredible breath of fresh air for the mailing industry," Hamilton Davison, head of the American Catalog Mailers Assocaition, wrote to ACMA members. "The meeting signaled a real willingness on the part of Mr. Donahoe and the USPS to work on substantive issues and customer concerns. This is exactly the right move for a high fixed-cost institution that ultimately must grow its way out of financial difficulties."

The rate filing included two changes from past practice that will put millions of dollars more of mailers’ money into Postal Service coffers. The rates will take effect a month sooner than previous rate increases. For future years, the Postal Service plans to continue implementing new rates in April rather than May.

Also, the price cap was calculated based on annual changes in inflation through November 2010. If the Postal Service had followed its usual practice of waiting for today’s release of the December 2010 Consumer Price Index, the rate cap would have been 1.64% instead of 1.741%. (See USPS Delay Means Smaller Price Increases for Mailers for background on the timing issue.)

The new Periodicals rates don’t really fix any of the problems with the current rate structure, but at least they won’t exacerbate the problems much. The 9.8-cent gap between the Basic Carrier Route and 5-Digit Automated piece rates will be maintained, which is good news for co-mailing publishers (and for the printers than run co-mail operations).

Still, efficient mailers will take a bit more of a hit than average once again, with rate increases for some approaching 2.5%. (Do Postal Execs Want To Lose Money on Periodicals? Tough Question #4 For USPS has more background on this tendency with Periodicals rates.)

The Postal Service has made noises about encouraging the use of pallets and of dropshipping, but that hardly showed up in the new rates. There is still no meaningful discount for using Network Distribution Centers, which would encourage dropshipping by small publishers. And the rate increases for sacks were all below the 1.767% average for Outside County Periodicals.

All individual Outside County Periodicals rate changes will be in the narrow range of 0% to 3%.

Most efficient catalog mailers will also be hit a bit harder than inefficient ones. The average increase for Basic Carrier Route sent via Standard mail will be 1.4%, versus only 0.8% for non-Carrier Route Standard flats. Some catalogs and free publications that use Standard mail will actually see small rate decreases.

Thursday, January 13, 2011

Postal Rates To Rise In April

For an update, please see The Elephant Has Ears: Some Good News for Mailers Along With the Rate Hikes.

The U.S. Postal Service will announce rate increases for most classes of mail, but apparently not for the First-Class stamp, later today, according to a reliable source.

Postal officials put the word out today to some mailing associations that rates for the "market-dominant" classes -- First-Class, Standard, and Periodicals -- would rise in mid-April. The average increase for each class is capped at 1.741%, based on annual changes in the Consumer Price Index.

A postal official indicated it would keep the price of a First-Class stamp at 44 cents, enabling it to impose higher-than-cap increases on First-Class flats.

If the Postal Service doesn't announce new rates today, the cap would probably decrease when the December 2010 CPI is released tomorrow morning, as explained in USPS Delay Means Smaller Price Increases for Mailers.

Saturday, January 8, 2011

Donahoe, No Potter Clone, Quickly Making His Mark

With a radical management reorganization, including the break-up of the Intelligent Mail group, new Postmaster General Pat Donahoe showed once again yesterday that he won't just quietly follow in his predecessor's footsteps.

Exactly what the new structure means is not completely clear, but what is clear is that more change is coming.

"Today's actions and announcements are the beginning of a much larger process that will involve every level of the organization, including the closure of some Districts. As we continue our restructuring, we anticipate that Reduction in Force (RIF) and Voluntary Early Retirement (VER) processes will be initiated by the end of the fiscal quarter," Donahoe said in a memo yesterday to top Postal Service executives.

Because Donahoe was the right-hand man for his predecessor, Jack Potter, it was widely assumed that he would just follow in Potter's footsteps. But in addition to yesterday's announcement that includes a 16% reduction in the number of senior executives, the Donahoe-led Postal Service has already revealed an expansion of the Forever stamp concept.

What brought joy to many mailers yesterday was the apparent recognition that the Intelligent Mail program needs a management overhaul. Intelligent Mail has moved into the Information Technology department, with Thomas Day (who was Senior Vice President, Intelligent Mail and Address Quality), nowhere on the new organizational chart.

Perhaps the final straw was Day's recent article for Mailing Systems Technology, in which he made false claims about the use of Intelligent Mail barcodes, including that "both the sender and preparer of a mailing can be kept informed as the mailing is processed all the way to the point of delivery." Tracking an individual mail piece to the point of delivery is only available via the Postal Service's Confirm service, which existed before IM barcodes were implemented.

Related articles:

Tuesday, January 4, 2011

USPS Is Wasting Money on Unwanted Services, Publishing Executive Says

The U.S. Postal Service’s costs for handling Periodicals mail are so high partly because it insists on providing services that publishers don't want, according to a leading publishing executive.

A recent Office of Inspector General report cited unofficial “Hot 2C” (or “Hot Periodicals”) programs as a major reason for the extensive – and expensive – manual processing of magazines and newspapers that supposedly help make Periodicals a money-loser for the USPS.

“Periodicals publishers have repeatedly made clear that they do not desire and are not willing to pay for 'hot' processing," Jim O’Brien, Vice President, Distribution & Postal Affairs for Time Incorporated, responded yesterday in a letter (full text is below) to the OIG. “Every publisher that we at Time Inc. have spoken with is quite willing to live within the USPS’ published service standards and neither requests nor supports manual processing of Hot 2C.”

Claiming that Periodicals mail only covers 75% of its costs, the Postal Service wants to change the rules so that publishers’ postage rates can be increased faster than inflation. (See Postal Service Preparing Double Whammy for Publishers.) But publishers have repeatedly pointed out the Postal Service’s insistence on bypassing automated sorting equipment and its use of questionable cost-accounting methods.

Dead Tree Edition also questioned this past summer whether postal executives are pursuing a “Washington Monument strategy” of purposely making the Periodicals class look like a money loser.

The OIG report listed three other reasons cited by postal managers for high Periodicals processing costs. O’Brien pointed out why all three are lame excuses:
  • Missed CETs: “When a Periodical mailing misses a CET [Critical Entry Time, which is the deadline for next-day delivery], the facility may be unable to process the mailing” with automated equipment and therefore does it manually or sends it to delivery units for manual sortation, the OIG reports says. O’Brien’s response: “The practice of manual processing of mail that arrives beyond the CET is neither requested nor supported by Periodicals mailers. There must be other reasons for local managers to choose manual processing of products that arrive after CET.”
  • Bundle breakage: Some of the processing and distribution centers the OIG studied routinely process certain periodicals manually because the bundles are so prone to breakage. O’Brien’s response: The Postal Service could cut down on the problem by ending what amounts to a subsidy for putting Periodicals mail into sacks, which increases bundle breakage. He also pointed out a problem, first identified in 1998, with the way the Postal Service often unloads pallets that causes many bundles to break.
  • Mailpiece characteristics: “Management identified certain publications that, from prior experience, they are unable to process on automated equipment,” the OIG report said. “These mailpieces, frequently newspaper-shaped publications, are processed in manual flats operations.” O’Brien’s response: “If mail is non-machinable, it should be paying the non-machinable rate. If the non-machinable rate covers 100% of the related costs, then the USPS should be indifferent whether mail is non-machinable or machinable.”
O’Brien also urged the OIG to investigate why a growing proportion of Periodicals mail is being handled manually even though publishers are increasingly preparing their mail in ways that, in the OIG’s own words, “require a minimum level of manual processing.” O’Brien and others have blamed much of that trend on the use of “automation refugees”, which involves idling machines while excess employees handle the mail manually.

Related articles:
Here is the full text of O’Brien’s letter to David C. Williams, Inspector General of the USPS:

I’m writing regarding the recent OIG Audit Report on Periodicals Mail Costs (Report Number CRR-AR-11-001). Let me begin by thanking you and your staff for undertaking this project. The unexplained rise in Periodicals costs has been a significant problem for a number of years. The conclusion of the OIG report cites several reasons for the increases in manual processing costs, including:

• The “Hot 2C” program.
• Missed Critical Entry Times.
• Bundle breakage and preparation problems.
• Characteristics that make mailpieces non-machinable.

While identifying these possible causes for the problem, however, the report failed to take account of some information that has substantial relevance to the questions it was addressing. For example, the Hot 2C program was NEVER requested by the customers of the Postal Service. While the report does indicate that the Hot 2C program is unofficial, it does not reflect the fact that it is not customer driven and that Periodicals publishers have repeatedly made clear that they do not desire and are not willing to pay for “hot” processing. Every publisher that we at Time Inc. have spoken with is quite willing to live within the USPS’ published service standards and neither requests nor supports manual processing of Hot 2C.

The report also refers to missed Critical Entry Times (CETs) as a cause of manual processing. As in the case of Hot 2C, Periodicals mailers have not requested that they receive any special processing as a consequence of arriving after the CET. In fact, the opposite is true. For example, if one of the our magazines arrives later than the CET, we at Time Inc. automatically assume that in-home delivery will occur one day later than scheduled and adjust our Deltrak system to reflect the late arrival. As a result, a late-arriving Time Inc. truck will have no impact upon the USPS’ delivery service scores. The practice of manual processing of mail that arrives beyond the CET is neither requested nor supported by Periodicals mailers. There must be other reasons for local managers to choose manual processing of products that arrive after CET.

The issue of bundle breakage is not new. It was identified as one of the factors contributing to Periodicals costs in a 1998 Periodicals Mail Processing Task Force. During the R90-1 rate case, when Periodicals mailers first complained about anomalously large increases in the mail processing costs attributed to Periodicals, several postal officials suggested it might be due to bundle breakage, even though there was no evidence at that time that there had been any increase in such breakage which might explain the higher costs.

Bundle breakage is much more likely when flats bundles are entered in sacks. A 1999-2000 USPS survey, with industry participation, found that about 0.5% of the Periodicals flats bundles entered on pallets break , and that 1.26% of Standard flats bundles entered on pallets break. But for bundles entered in sacks, the percentage of bundle breakage was in the double digits, both for Periodicals and Standard flats. Because the percentage of Periodicals entered in sacks has been declining for many years, one would expect the extent of bundle breakage to also have declined.

The Postal Service could help reduce Periodicals costs, including costs caused by bundle breakage, by correcting an imbalance in the current rate structure where mailers who use sacks pay a smaller portion of the costs of those sacks than those who use pallets pay for the cost of pallets. This gives mailers a disincentive to switch to the use of pallets. (See the cost passthrough percentages for Periodicals bundles and containers in FY09-3, Docket No. ACR2009. For example, if a 3-digit sack is entered at the originating SCF, the mailer pays a sack charge which is equal to 34.2% of what it costs the Postal Service to handle that sack. The corresponding charge for a pallet is 50% of the costs.)

With regard to bundles that break even though they are entered from pallets, the 1998 study indicated that if employees operate the pallet dumping equipment in a manner where one layer gets dumped at a time, significantly fewer bundles are broken in comparison to a pallet that is dumped in a single motion. In essence when a single motion is employed, the first bundles to hit the conveyor belt are at the bottom of a 2,000 lb avalanche and are not built to withstand such pressure. Bundle breakage is also caused by the “waterfall system” that helps to singulate bundles on the APPS machines. The USPS has known about this problem for a number of years and has attempted to correct the problem but it is my understanding that bundles continue to break in this area. While I am certain that there are mailers who still use string and rubber bands that contribute to broken bundles, I am also convinced that there are a number of actions that the Postal Service can take to significantly reduce the number of broken bundles.

The issue of non-machinable mail also appears to be straightforward. If mail is non-machinable, it should be paying the non-machinable rate. If the non-machinable rate covers 100% of the related costs, then the USPS should be indifferent whether mail is non-machinable or machinable. Any increases in non-machinable mail would reflect higher revenues as well as higher costs.

As in the case of bundle and pallet costs, non-machinable mail is an item that cost based rates would resolve. The rate structure in place today has all of the proper rate cells to correct these problems, but the USPS must begin to take the necessary steps to adjust the rates within those cells. Without such an adjustment, mailers will continue to provide mail that drives up costs. But after the R2006-1 rate case, when non-machinable rates first were introduced for Periodicals flats, the Postal Service, inexplicably, chose to not apply such rates for 5-digit non-machinable flats with barcodes. Not only did the Postal Service thereby deprive itself of the extra revenues that the application of non-machinable rates to such flats would have provided, it also missed the opportunity to give 5-digit mailers a stronger incentive to use a machinable flats format, which could have reduced manual processing.

The report also states that the “Postal Service data collection systems and procedures accurately attribute costs to Periodicals based on the existing cost attribution models.” This may be true, but is the OIG certain that the existing cost attribution models are accurate? These models and the IOCS data collection system have been the subject of numerous debates before the Postal Rate Commission and Postal Regulatory Commission and warrant a much deeper dive than what was reflected in the OIG’s report. For example, during several rate cases, starting in Docket No. R97-1, the Postal Service argued against the Commission's long held view that the costs of most mail processing operations vary one hundred percent with the volume handled at those operations, i.e., that there are no economies of scale in mail processing. The issue was never settled. Each year since the enactment of PAEA, the Postal Service has been reporting costs based on the Commission's traditional assumptions about volume variability (costs are 100% volume variable). One must assume, however, that the Postal Service still believes true volume variability is less than 100 percent, in which case it would follow that the true marginal costs of Periodicals and other products are less than the costs that have been reported in the recent ACR's.

Evidence that volume variability is less than 100% has been seen in recent years. As flats volume dropped precipitously, the costs being attributed to the remaining flats did not drop proportionately, causing large year-to-year declines in the cost coverage being reported both for Periodicals and Standard flats. Clearly, these declining cost coverage figures are not caused by flats being prepared any differently by the mailers, but by the Postal Service's inability to shed the costs of excess capacity.

As the OIG report states on page 15, “Periodicals’ share of manual flats sorting has been increasing, even though Periodicals mail volume declined and a higher percentage of Periodicals were prepared by mailers and at a level that should require a minimum level of manual processing.” Clearly, something is not right and further investigation is warranted. However, the report does not indicate a next step regarding such investigation. Is the OIG recommending that the Lean Six Sigma teams resolve these issues, or is the OIG going to conduct additional investigation? If the OIG is going to do more research, I suggest that you involve Halstein Stralberg, a consultant to Time Inc. Halstein is the industry expert on mail processing costs and was responsible for developing the USPS’ mail flow models. In addition, he has been studying mail processing operations and costs for decades.

The issue of rising manual processing mail costs is extremely important to Periodicals mailers and we are very appreciative of the OIG’s efforts. We are hopeful that the work doesn’t come to a halt now that this report has been issued. There are still many open issues that need to be resolved. In addition, given the fact that Periodicals cost coverage remains below 100%, time is of the essence in addressing this issue. We look forward to working with the OIG and the Postal Service in driving excessive and unexplained costs from the system.

Sunday, January 2, 2011

Voulez-Vous Debark Avec Moi? Former Paper Mill About To Become High-Tech Cool

In an unusual example of the Internet replacing paper, some high-tech types are about to discover how cool, and maybe even sexy, a paper mill can be.

The giant paper company UPM is a partner in a deal to turn its former Kajaani, Finland paper mill into “one of the world’s most eco-efficient server centres” for supercomputers and data storage.

Like many old paper mills, Kajaani has hydroelectric dams, which the data center will use to meet its ravenous electricity appetite in an environmentally friendly fashion.

The adjacent river will be tapped for “system cooling water,” reducing reliance on fossil-fuel-burning air conditioning systems. (Technical note: When water is used to make paper and then returned to the river as clean as it came into the mill, the result is called “waste water”. When a data center uses that same river and the outflow back to the river is hot enough to boil fish, that’s called “carbon-neutral cooling”.)

The new tenant, the IT Center for Science Ltd., might find some of the leftover equipment at the mill intriguing, especially if it’s one of those trendy, bring-your-dog-with-you workplaces. But it will soon find out that the debarker is for logs, not yappy poodles. And the web inspection system has nothing to do with the Internet.

But there’s always the couch (pronounced “koosh” or “kootch”), the sexiest place in a paper mill. That’s where water is drained from the pulp slurry, and it’s the base of the French verb coucher, as in the infamous line, “Voulez-vous coucher avec mois, ce soir?”

It’s hard to get an exact English translation of that steamy phrase, but I've used my rudimentary knowledge of French and paper making to come up with three attempts:
  1. “Would you like to help me with my wet-end chemistry tonight?”
  2. “How’s about dewatering some sheets with me on the third shift?
  3. “How about meeting me near the headbox this evening to work on improving formation?
I should also mention that a couch roll sucks water out of the pulp. (Don’t go there.)

I know what some of you are thinking: When Patti LaBelle sang the line – and when e.e. cummings, John Dos Passos, and Tennessee Williams used it in their writing – they were all referring to prostitution, not paper making.

Listen, if you’ve ever been to some God-forsaken subarctic mill town during February, you’d know that the area near a paper machine’s press section is the only place warm enough to “gitcha, gitcha ya ya”.

Other, somewhat lighthearted articles about the forest products industry include: