Brennan Will Be First Woman To Lead the U.S. Postal Service

With Postmaster General Patrick Donahoe announcing his retirement today, the U.S. Postal Service's Board of Governors named USPS Chief Operating Officer Megan J. Brennan as his replacement.

When Donahoe ends his 39 years with the agency on Feb. 1, Brennan will become the first woman to hold the position of Postmaster General, 240 years after the Continental Congress appointed Benjamin Franklin to the job.

Megan J. Brennan

Donahoe started with USPS as a clerk and became PMG four years ago. He gave no reason for leaving what Dead Tree Edition has called "the worst CEO job in America".

Here is Brennan's biography as it appears on the Postal Service's web site:

Megan J. Brennan was named Chief Operating Officer and executive vice president in December 2010. Brennan leads the continuous improvement of the entire postal network operation as well as the allocations of people and resources. She reports to the Postmaster General.

Brennan has responsibility for the day-to-day activities of 491,000 career employees working in more than 31,000 facilities supported by a fleet of over 200,000 vehicles. She is responsible for Post Offices, delivery and retail operations, facilities and the mail processing network. Reporting to Brennan are the vice presidents of Delivery and Post Office Operations, Facilities, Network Operations, Retail Channel Operations and the seven vice presidents of Area Operations.

Previously she was vice president of Eastern Area Operations. As the senior postal official she oversaw an area that encompassed Pennsylvania, Ohio, West Virginia, Delaware, Kentucky, Central and South Jersey, Western New York and parts of Virginia and Indiana. Reporting to the deputy postmaster general and chief operating officer, she was responsible for postal operations, including processing and distribution, customer service and administrative operations.

A 27-year veteran of the Postal Service, Brennan served as vice president of Northeast Area Operations from May 2005 until being named vice president of Eastern Area Operations. Prior to that, she was manager of Operations Support for the Northeast Area. In this capacity, she was responsible for coordinating and integrating processing and distribution, transportation and delivery operations throughout the Northeast Area.

Brennan also held the headquarters position of manager of Field Support and Integration, where she worked directly for the Chief Operating Officer.

Brennan joined the Postal Service in 1986 as a letter carrier in Lancaster, Pennsylvania, and began her management career as a delivery and collection supervisor. She has in-depth experience in both line management and support positions, having worked at the district, area and headquarters levels. She served as district manager, Springfield, Massachusetts, and plant manager for the Lehigh Valley and Reading, Pennsylvania, processing and distribution facilities.

Brennan is a graduate of Immaculata College in Pennsylvania. She is a Sloan Fellow and holds a Master of Business Administration degree from the Massachusetts Institute of Technology.

Black Liquor Hangover: U.S. Paper Industry Cheers GOP Victory After Gorging on Democrats' Handouts

Snark alert: I believe in both the laws of science and the laws of economics, which these days means I'm neither a Republican or a Democrat. So don’t try to read any political bias into the following article; it is intended to be equally offensive to liberals and to conservatives. 

The Obama Administration has enabled U.S. paper companies to pocket an estimated $25 billion in black liquor tax credits the past six years, but here’s a clear sign the tap is about to run dry: The paper industry’s trade association this week hailed the recent Republican election victories as a sign of “Americans’ real appetite for change in Washington, D.C.”

“The bureaucracy that causes delay after delay and regulations that fail to balance benefits with costs have created an atmosphere of uncertainty in the business community, making it difficult to plan for future investment when the rules change faster than they can be implemented,” said Donna Harman, president and CEO of the American Forest & Paper Association. She specifically singled out environmental regulations.

To understand this turn of events, and why the paper industry is biting the Democratic hand that fed it so lavishly, it’s time for a quick civics lesson about the political parties’ competing approaches to climate change:

Democrats want to tackle climate change head on, promoting regulations to tamp down greenhouse gases and new programs to encourage clean energy sources. But those well-intentioned programs mostly end up getting hijacked to benefit favored companies in ways that do nothing to help the environment.

The quintessential GOP approach is to scoff at climate change or the need for carbon-reducing regulations and incentives. Conservatives declare disagreement with the diagnosis (humans are speeding up dangerous climate change) because they don’t like the proposed cure (big government programs). But that doesn’t stop savvy Republicans from investing in companies that will profit from the new Arctic shipping lanes being created by the melting of polar ice.

Some liquor to ease the pain 
The Democrats’ approach started paying off for the paper companies about six years ago, when "the miracle of black liquor" in the form of round-heeled Internal Revenue Service rulings literally kept several companies afloat during a down paper market. The IRS gave the companies permission to abuse biofuel-incentive programs by collecting billions in eco-incentives for doing what they had already been doing for decades – burning black liquor, a pulp byproduct, as a fuel source.

“Industry-wide, black liquor may have cost taxpayers upward of $25 billion,” Jane J. Kim, an IRS lawyer, stated recently in a letter to select Congress members and Treasury officials. She cited Black Liquor, “Son of Black Liquor”, and “Grandson of Black Liquor” tax credits as prime examples of “IRS Management abuse.”

Her protest adds to that of William Henck, a whistleblower IRS lawyer who says IRS employees examining the black liquor credits were told by high-level agency officials “to take a position that was contrary to the law and to published IRS guidance.”

Clearly a cover-up
“There was in my opinion clearly a cover-up of the decision to allow well connected taxpayers to avoid reporting the black liquor tax credits as taxable income,” he wrote. He sees evidence that the cover-up goes all the way to the IRS’s Chief Counsel, an Obama appointee. (In one of many ironies in this twisted saga, one of the largest beneficiaries of the credits, Georgia-Pacific, is owned by the Koch brothers, who are not exactly known for their friendliness to the Obama Administration.)

There is evidence that Democrats left the original black liquor tax credits in place to win a key pro-Obamacare vote from Republican Sen. Olympia Snowe of Maine, where the credits helped a large pulp mill remain in business. (Republican legislators may not like big government in general, but they sure like it when it means bringing some pork home to their constituents. And it’s hard to say which party is worse about creating corporate welfare programs for companies that make generous campaign contributions.)

The Obama Administration and Democratic Congressional leaders also finagled with the credits and threats of additional credits to help “pay” for Obamacare. (Another civics lesson: The concept of "paying" for stuff in the Alice-in-Wonderland world of Congress has little to do with covering its costs. Don't try this at home, unless you want to take an extended tour of a federal correctional facility.)

Closing time
Paper companies are just about done squeezing the last drops from the black liquor credits. For example, Domtar said that the $222 million in earnings it booked last month because of favorable (and questionable) IRS rulings on the taxability of the credits is the last it will see of the government’s black liquor largess.

With no more black-liquor credits or other handouts coming down the pipe, suddenly big government doesn’t look so good to the paper industry.

Said the AF&PA’s Harman: “In the coming months, I look forward to working with the new Congress to help create policies that make businesses a partner in meeting the needs of society through sustainable regulations that balance environmental, social, and economic considerations.”

Translation: “We could stomach the Democrats’ big-government policies as long as the hand-outs exceeded the cost of anti-business regulations. But now that the money has stopped flowing, we might as well throw in our lot with the party that is likely to roll back those regulations.”

Related reading:

• WikiLeaks Reveals Praise for Dead Tree Edition from an Unlikely Source: What a consultant to the AF&PA said about our coverage of the black liquor scandal.
• What, Exactly, Is Black Liquor? Just Ask the Tax Man
• Why U.S. Pulp Mills Are Like NBA Players

  

USPS Network Consolidation: A Tale of 3 Pictures

A lot of ink has been spilled discussing and cussing the U.S. Postal Service's plan to close 82 mail processing centers next year. But the three images below tell the story in a nutshell.

David Williams, USPS' vice president of networks, showed these slides in a recent presentation to mailers about the "Phase II" consolidations scheduled to begin in January.

The first slide demonstrates why: The volume of highly profitable single-piece First Class letters is barely half of what it was seven years ago.
 
















The reduced volume is a major reason the Postal Service needs fewer sortation centers -- and the $750 million annual savings it estimates the consolidations will generate. ("AMP" refers to Area Mail Processing studies, USPS's process for evaluating the expected impact and savings from potential plant consolidations.)

The second slide demonstrates that the plants to be closed are spread throughout the country and are primarily Processing & Distribution Centers. Williams said the closings will be part of another "methodical, measured transition" and that, as usual, affected employees will be offered "options for staying with the Postal Service" rather than being laid off.



















The third slide shows the end result: By next October, the Postal Service plans to have only 239 processing centers, down 64% since 2007.

Other articles about USPS plant closings:  

• Postal Service 'AMPs' Up Facility Consolidations
• Printer Praises Postal Plant Consolidations 
• USPS 'Honors' Sen. Byrd With Plant Consolidations
• Has USPS Targeted the Wrong Plants for Closure? 
• Is the APWU Eating Its Young?

Donahoe Signals Change of Heart on Weekend Deliveries

Postmaster General Patrick Donahoe made a statement this week demonstrating that postal executives’ views about weekend delivery of packages have changed significantly in the past four years.

"The future will be a seven-day package world and a five-day mail world," a USA Today article quoted Donahoe as saying.

In 2010, the U.S. Postal Service released its “action plan for the future” that called for elimination of Saturday delivery, with no exceptions. But, responding to concerns about delayed deliveries of prescriptions and other vital parcels, postal officials acquiesced and changed their plan to include Saturday delivery of packages.

No one – not even the most ardent advocates of postal service or even the postal unions – was talking about adding Sunday delivery of any kind.

But in recent months, weekend delivery of parcels has gone from obligation to opportunity. The Postal Service is delivering Amazon packages in a growing number of urban markets. In San Francisco, it is testing same-day, seven-days-a-week delivery for multiple retailers and today added early-morning grocery deliveries to its test offerings in that city.

Donahoe’s comment to the newspaper suggests that the long-term plan is for Sunday to become just another day of delivery as far as parcels are concerned.

Why the change of heart?
Why are postal executives who wanted to eliminate a day of parcel delivery barely four years ago now trying to add a day?

They are seeing huge potential in the e-commerce boom, which is fueling rapid growth in business-to-residence deliveries. And they are recognizing where the much-maligned USPS has competitive advantages over its private competitors.

United Parcel Service, for example, is seeing 60+% annual growth in UPS SurePost, its low-priced option that turns packages over to the Postal Service for final delivery. FedEx’s SmartPost similarly relies on the Postal Service to for “the last mile” delivery to residential customers. Neither company can deliver to residential customers as efficiently as USPS can.

In a move to cut out those middlemen and grab more of the e-commerce dollars, the Postal Service recently reduced Priority Mail parcel rates for big mailers by as much as 55%.

Changes in its workforce have also enabled USPS to reduce its delivery costs. The average hourly rate for the city-carrier force, for example, dropped 5% in the past year as the Postal Service increasingly relied on city carrier assistants (CCAs) and other non-career employees. The agency plans to have only CCAs delivering groceries in the San Francisco test.

What’s also changing is the Postal Service’s strategic focus. The same electronic media that are cutting into USPS’s traditional bread and butter – delivering letters – are also creating profitable growth opportunities in the package business. That’s why it wants to give short shrift to traditional mail while expanding service in the package realm.

Unlike letter delivery, USPS doesn’t have a monopoly in the parcel world. But its massive delivery network and unique ability to reach every address in the country every day of the week may give it a virtual monopoly in certain types of package delivery.

Related articles:

• Frenemies: The Love-Hate Relationship Between UPS and the Postal Service Blossoms
• Third Bush on the Right, Please: USPS Grocery Deliveries Would Need Lots of TLC from Carriers
• How USPS Could Bypass Congress on Saturday Delivery