Deputy Postmaster General Calls It Quits

Ron Stroman

Two days after it announced its selection of a new chief executive, the U.S. Postal Service's #2 official submitted his resignation, the USPS revealed today.

"On May 8, 2020, Ronald A. Stroman informed the Chairman of the Board of Governors and the Postmaster General of his intention to resign from the Postal Service effective on June 1, 2020," the agency stated in a report filed with the Securities and Exchange Commission.

On May 6, the USPS's Board of Governors announced that it had unanimously chosen Louis DeJoy, a logistics-industry executive and supporter of President Trump, to become Postmaster General. He is slated to replace retiring PMG Megan Brennan on June 15.

Update: A few hours after this article was published, Brennan issued a letter announcing Stroman's resignation, noting that he is "the highest ranking African American in the history of the Postal Service" and that he spearheaded the service's vote-by mail and sustainability initiatives. (Was she praising him or explaining why the Trump Administration supposedly pushed him out?)

Stroman's resignation means he will no longer serve on the Board of Governors, which consists mostly of political appointees.

DeJoy's selection was announced less than a week after David Williams, a former USPS Inspector General, resigned as vice chairman of the Board of Governors -- reportedly because of Treasury Department meddling in what is supposed to be an apolitical agency. The Mailers Hub News newsletter recently referred to Williams as "one of the most qualified individuals ever to serve on the Board."

Stroman has been Deputy PMG since 2011. His more than 40 years of federal service include previous stints as an attorney and executive with the General Accounting Office, the House of Representatives staff, and the departments of Transportation and Housing and Urban Development.

How USPS Is Like an Airline, and Why That Matters

A postal official made a revealing statement last week about the U.S. Postal Service’s attempt to get higher-than-inflation rate increases.

If USPS’s “financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy,” Deputy Postmaster General Ron Stroman wrote last week in a Post & Parcel letter to the editor. The request for “exigent” rate increases – on which a ruling is due Monday --was “a last resort,” according to USPS’s #2 man.

USPS has spent years trying to pass exigent rate increases to help it dig out of the red. So why would it even think about walking away from a legal victory that could be worth a couple of billion dollars a years?

My theory: Postal officials aren’t sure an extraordinary rate increase will help the agency. They’re worried that breaching the inflation-based cap that has kept most postal rates in check will undermine confidence in the mail system, pushing mailers to switch even more communications to digital delivery.

In the simplistic thinking of some Congress members – whom USPS is apparently trying to appease with its rate request – the answer to insufficient revenue is simple: Increase your rates.

But postal officials know that higher prices don’t mean more revenue if they lead to fewer mailings. They’ve seen this movie before in the pre-rate-cap days, and the ending wasn’t pretty, including a drastic decline in catalog mailings.

It helps to understand that, as I wrote in 2009, the U.S. Postal Service is like a money-losing airline that is flying a lot of half-full planes. Many of the airline’s costs are the same regardless how many passengers are on the planes.

You can’t fly with fewer pilots or reduce the jet’s depreciation just because most of the seats are empty. Nor can the Postal Service deliver to fewer addresses just because its mail bags are not as full as they used to be.

If the airline raises its prices, competitors will lure away passengers with lower fares. At the margin, even a bargain-rate passenger is profitable; the only cost of adding one to a plane is a few gallons of jet fuel, a bag of stale pretzels, and a tiny can of soda.

Jacking up postal rates merely causes marketers to prospect more with email instead of direct mail, publishers to convert more subscribers to digital editions, and corporations to offer more incentives for customers who switch to electronic billing.

What the Postal Service needs is mostly in the hands of Congress, which structured USPS in the pre-internet days to be a cash cow for the federal government. Times have changed, and the cash cow has been milked so dry it can’t replace 25-year-old delivery vehicles that are held together with duct tape and rubber bands.

But the laws and practices that drained the Postal Service of billions of dollars remain unchanged. And, more than ever, USPS needs less not-in-my district Congressional interference that stymies reasonable downsizing of its distribution network.

What the Postal Service doesn’t need are rate-cap-busting price increases that drive away customers.

Related articles:

• What's Weighing Down the Postal Service?  
• Why the Exigent Postal Rate Increase Will Backfire
• UPS Praises Postal Service's Improvements, But Not Its Rate Hikes

Obama Supports Postage Increase: Is He Dissing the Print Industry?

The Obama Administration proposed above-inflation increases in postage rates Monday, just a week after the Postal Service indicated it had backed off of just such a rate hike for fear of hurting the printing industry.

The President released a deficit-reduction plan that would "permit USPS to seek the modest one-time increase in postage rates it proposed a year ago."

A week earlier, Deputy Postmaster General Ron Stroman explained in an interview why the Postal Service had decided not to pursue such an "exigent" rate increase: "One of the things we have seen in ongoing discussions with the print industry is that the industry itself is functioning with very close profit margins. We have been very concerned that we not raise prices too high because you just drive people out of the business."

The USPS proposal a year ago, which was rejected by the Postal Regulatory Commission, had average rate hikes of 5.8% for the market-dominant classes of mail. But for Periodicals mailers the increases would have been in the 8% to 9% range.

The president's plan would also "give USPS the ability to better align the costs of postage with the costs of mail delivery while still operating within the current price cap." That may refer to postal executives' desire to impose the highest rate hikes on products on which USPS allegedly loses money, such as Standard flats (catalogs) and Periodicals mail.

The president's plan would also "reduce USPS operating costs by giving USPS authority, which it has said it will exercise, to reduce mail delivery from six days to five days." That's an about face on Saturday delivery: Just seven months earlier, Obama released a budget proposal that included the usual language about requiring six days of delivery and banning the closing of small post offices.

Related articles:

• So Much For Encouraging Publishers To Mail Efficiently . . .
• USPS Seeks Special January Rate Increases 
• USPS Will Not Seek Exigent Rate Increase

Postal Service, White House Engaged in 'Intense Discussions'

U.S. Postal Service executives are having "intense discussions" with the Obama Administration about the agency's finances, USPS's #2 man said in a videotaped interview published today.

"We've also been in pretty close discussions with them over the last month," Deputy Postmaster General Ron Stroman told MyPrintResource.com.

It just so happens that the Postal Service revealed its "workforce optimization" plan, including cuts of 220,000 career employees and rescinding of no-layoff clauses in union contracts, exactly a month ago. (See Donahoe's Downsizing Plan for USPS Yields Huge PR Coup for more on how the proposal has drawn attention to USPS's financial plight.) The White House revealed last week that it is finally developing its own plan to prevent USPS from becoming insolvent.

"We are in the process of having intense discussions now with the Administration about what the content of that plan will be," Stroman said during the 11-minute interview from the floor of Graph Expo, a major printing trade show. Several meetings with the Administration are scheduled for this week, he added.

Other highlights of the interview included:

Ending the Medicare subsidy: "We are the second biggest payer into Medicare and yet our retirees don’t use Medicare. They use the existing federal government retirement healthcare system. We are not reaping any benefits" from the Medicare payments. USPS wants it retirees to rely mostly on Medicare, with "a postal healthcare system as a backstop."

More post-office closure studies: Once it decides on the fate of about 3,700 underperforming post offices, USPS will begin studying whether to close another 4,000 post offices.

Lower costs, better service: By shutting thousands of post offices and providing more services via privately owned stores, the Postal Service can both save money and improve customer access. "Our customers want access to postal products on a seven-day-a-week, 24-hour basis." It will provide that through "village post offices" in retail stores. "We have a tremendous relationship with Office Depot" and are negotiating deals with other major retailers.

On price increases: "One of the things we have seen in ongoing discussions with the print industry is that the industry itself is functioning with very close profit margins. We have been very concerned that we not raise prices too high because you just drive people out of the business," which ends up hurting the Postal Service.