The U.S. Postal Service would be in Chapter 11 if it were a business, the Postmaster General points out, but others claim he and some political conservatives are manufacturing a crisis.
There has been much debate and confusion regarding USPS’s financial status. It helps to break the issue down into three questions:
Question #1: Is the Postal Service broke?
This is a debatable point, though the Postal Service’s financial reports show that it is indeed broke and about to exhaust its ability to borrow.
Those who say USPS’s finances are OK point out correctly that it has prepaid billions of dollars to the federal government to cover future retirees’ health benefits and overpaid billions more into a joint federal/USPS pension fund. A Congressional accounting game designed to mask the size of the government’s budget deficit basically has the Postal Service borrowing billions of dollars each year so that it can turn around and lend billions back to the government in the form of prepaying into the retiree-benefits fund.
Business-style accounting would treat that $21 billion loan to the federal government as an asset, giving USPS about $2 billion in net capital at the end of Fiscal Year 2011 rather than the -$19 billion net value it reported.
Wednesday, May 16, 2012
Monday, May 7, 2012
Flats Litigation System: USPS and Vendor Battling It Out Over Huge FSS Machines
A multimillion-dollar dispute between the U.S. Postal Service and the long-time vendor that built its troubled Flats Sequencing System has landed in court.
Northrop Grumman claims USPS owes it $179 million for work on the $874 million contract. USPS has largely rejected the claims and responded with its own claims for $341 million "because it did not realize certain cost savings it expected from deploying the systems," Northrop Grumman said in an April financial report. The company recently told stock analysts that it had decided "to deemphasize the domestic postal automation business going forward."
The company filed suit against the federal government Friday in the U.S. Court of Federal Claims, appealing the Postal Service's rejections of its claims and asking the court to declare USPS's claims as being without merit. Northrop Grumman's entire filing can be accessed here, while Law360 has a good overview of the case.
The next generation
As Northrop Grumman's lawsuit notes, "the FSS is a massive system of machines" representing "the next generation of automatic delivery point sequencing equipment designed to reduce the processing costs of flat mail," such as magazines and large envelopes. So far, however, the 100 "Flats Shredding System" machines have not performed as planned, though they apparently have led to some decreases in operating costs.
Northrop Grumman claims USPS owes it $179 million for work on the $874 million contract. USPS has largely rejected the claims and responded with its own claims for $341 million "because it did not realize certain cost savings it expected from deploying the systems," Northrop Grumman said in an April financial report. The company recently told stock analysts that it had decided "to deemphasize the domestic postal automation business going forward."
The company filed suit against the federal government Friday in the U.S. Court of Federal Claims, appealing the Postal Service's rejections of its claims and asking the court to declare USPS's claims as being without merit. Northrop Grumman's entire filing can be accessed here, while Law360 has a good overview of the case.
The next generation
As Northrop Grumman's lawsuit notes, "the FSS is a massive system of machines" representing "the next generation of automatic delivery point sequencing equipment designed to reduce the processing costs of flat mail," such as magazines and large envelopes. So far, however, the 100 "Flats Shredding System" machines have not performed as planned, though they apparently have led to some decreases in operating costs.
Saturday, May 5, 2012
It's Time for Liberals To Rethink USPS Downsizing
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| Thurgood Marshall Jr. |
The plan “would return the organization to sustained profitability,” Thurgood Marshall Jr., chairman of USPS’s Board of Governors, said in a prepared statement. In contrast, legislation recently approved by the Democratic-controlled Senate would “not provide the Postal Service with the flexibility and speed that it needs to have a sustainable business model.”
Marshall reiterated his support for "the tremendous job" being done by PMG Pat Donahoe, commending him ”for his excellent work in communicating internally and externally about the changes that we are implementing, the long-term future of the Postal Service and the future of mail” and for ”keeping our eyes focused on the long-term horizon.”
Scion of a liberal icon
If you’re going to attack a plan as an anti-labor Tea Party plot, it doesn’t help to have the name “Thurgood Marshall” singing its praises. Marshall’s father is an icon of the Civil Rights Movement for creating and implementing the brilliant legal strategy that gradually dismantled Jim Crow education laws before becoming the first African-American Supreme Court justice.
Marshall Jr. has his own liberal credentials, having served under Bill Clinton, Al Gore, and Ted Kennedy.
Unlike bleeding-heart senators who can’t stand the thought of closing a single post office, Marshall has actually looked at the numbers. The math is simple: The Postal Service’s expenses are billions of dollars higher than its revenues (even if the retiree-benefits and pension accounting games are excluded). Without aggressive action, revenues will continue declining faster than expenses.
Tuesday, May 1, 2012
Trouble in Magazine Land: We're Running Out of Celebrities!
An early peak at First Quarter newsstand numbers shows a slowing decline in U.S. magazine sales, but also an ominous portent.
Noting that retail sales of gossip-oriented titles are in the tank, industry consortium MagNet told its affiliates this week that, "One of the major hurdles affecting weekly celebrity publications is the ability to find new celebrities and subject matter that consumers are interested in discovering."
Brad & Angie don't cut it. Early sales data for editions of People and OK! featuring the couple's recent engagement, MagNet said, "indicate that both issues will produce sales results at least twenty percent less than previous issues' average sales," MagNet said.
That's a huge disappointment to many in the industry who were hoping for yet another boost from Brangelina. (For the record, we at Dead Tree Edition never considered the engagement big news: After having six children, the couple has obviously been engaged in something for quite a while.)
"Late in the fourth quarter of 2011, we started to see a slowing of the downward sales trend for magazines," MagNet reports. Led by non-weekly titles, the trend continued in the First Quarter of 2012. The overall decline in dollars from a year ago was an estimated 5.6%, versus the 10% year-over-year declines typical of 2011.
As we say in the magazine industry, "Slightly down is the new up."
One of the big successes was the April issue of National Geographic featuring the Titanic, which is on track to sell nearly 200,000 copies, more than 50% above the three previous issues. (Note: The cover story was about the real Titanic, the one that sank 100 years ago, not the Hollywood version, in which celebrities swim about in water frigid enough to cause immediate muscle spasms while spouting inanities like "Promise me you'll survive.")
If disasters, not celebrities, are now the key to retail success, will we be seeing a lot of cover stories about the U.S. Postal Service?
Other articles about retail sales of magazines include:
Noting that retail sales of gossip-oriented titles are in the tank, industry consortium MagNet told its affiliates this week that, "One of the major hurdles affecting weekly celebrity publications is the ability to find new celebrities and subject matter that consumers are interested in discovering."
Brad & Angie don't cut it. Early sales data for editions of People and OK! featuring the couple's recent engagement, MagNet said, "indicate that both issues will produce sales results at least twenty percent less than previous issues' average sales," MagNet said. That's a huge disappointment to many in the industry who were hoping for yet another boost from Brangelina. (For the record, we at Dead Tree Edition never considered the engagement big news: After having six children, the couple has obviously been engaged in something for quite a while.)
"Late in the fourth quarter of 2011, we started to see a slowing of the downward sales trend for magazines," MagNet reports. Led by non-weekly titles, the trend continued in the First Quarter of 2012. The overall decline in dollars from a year ago was an estimated 5.6%, versus the 10% year-over-year declines typical of 2011.
One of the big successes was the April issue of National Geographic featuring the Titanic, which is on track to sell nearly 200,000 copies, more than 50% above the three previous issues. (Note: The cover story was about the real Titanic, the one that sank 100 years ago, not the Hollywood version, in which celebrities swim about in water frigid enough to cause immediate muscle spasms while spouting inanities like "Promise me you'll survive.")
If disasters, not celebrities, are now the key to retail success, will we be seeing a lot of cover stories about the U.S. Postal Service?
Other articles about retail sales of magazines include:
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