Dead Tree Edition

Sunday, September 30, 2012

Has USPS Targeted the Wrong Plants for Closure?

The U.S. Postal Service's plan to reduce its mail-processing network by half has a major flaw, according to a Postal Regulatory Commission opinion released Friday: The plan would tend "to move processing assignments from more productive plants to less productive plants."

USPS goofed in assuming that consolidating mail sorting into larger plants would improve productivity, according to the PRC's advisory opinion on the Postal Service's ambitious Network Rationalization plan. In fact, larger plants historically have tended to process fewer mail pieces per workhour than smaller ones, the PRC's analysis finds. (Five-Day Delivery and Reduced USPS Service Standards Could Face Legal Barrier explores another issue addressed in the lengthy advisory opinion.)

"Shifting volume from less productive to more productive plants, without changing operating windows or service standards, would increase productivity by 18 percent, and save $1.3 billion in direct mail processing costs," the ruling says.

That's more than the $968 million USPS projects that its plan will save in mail-processing costs, and the PRC believes that projection is overly optimistic because of questionable assumptions.

Redrawing the Map: A Look at USPS' Network Rationalization Plan

The U.S. Postal Service has been consolidating its mail-processing operations for several years, but it wasn't until I saw a recent postal official's presentation that I realized even more dramatic changes may be ahead.

The USPS's Network Rationalization Plan, opposed by some postal unions and not-in-my-district Congress members, would cut the number of processing centers nearly in half by 2015 -- from 461 this year to 232 in 2015. That's down from 673 in 2006 and 599 in 2009. (See also Has USPS Targeted the Wrong Plants for Closure?.)

As the maps below show, the impact would be especially dramatic in certain regions. Several states -- including Mississippi, Kansas, and Arizona -- would go from having six or more facilities to only one.

Going Paperless Doesn't Mean Going Green, The New York Times Proves

Perhaps we can finally say goodbye to those simplistic "Go green, go paperless" promotional campaigns.

There's nothing particularly green about the massive data centers that store the internet's data, The New York Times revealed this past weekend after in-depth investigation. Data centers waste electricity and spew pollutants in a way that "is sharply at odds with its [the information industry's] image of sleek efficiency and environmental friendliness," the lengthy but clearly written "Power, Pollution, and the Internet" says.

"The industry has long argued that computerizing business transactions and everyday tasks like banking and reading library books has the net effect of saving energy and resources." But data centers use more electricity than the paper industry, according to the The Times.

Among other highlights of the article:

"Most data centers, by design, consume vast amounts of energy in an incongruously wasteful manner, interviews and documents show. Online companies typically run their facilities at maximum capacity around the clock, whatever the demand."
"The pollution from data centers has increasingly been cited by the authorities for violating clean air regulations, documents show. In Silicon Valley, many data centers appear on the state government’s Toxic Air Contaminant Inventory, a roster of the area’s top stationary diesel polluters."
Data centers use "only 6 percent to 12 percent of the electricity powering their servers to perform computations. The rest was essentially used to keep servers idling and ready in case of a surge in activity that could slow or crash their operations."
Most of the data are created by consumers. "With no sense that data is physical or that storing it uses up space and energy, those consumers have developed the habit of sending huge data files back and forth, like videos and mass e-mails with photo attachments."

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Friday, September 21, 2012

What's the Future for the Paper Industry? Depends

The paper market's long-term decline has now spread to the fictional Dunder Mifflin Paper Company: "The Office" had the worst premiere in its nine-year history last night.

The episode had the show's second-lowest audience ever, attracting "just 4.32 million viewers, down 46 percent among 18–49-year-olds from its premiere last year," reports Vulture.com. In other words, the once-hot comedy centered around a dysfunctional paper company (Aren't they all dysfunctional?) is dropping as fast as newsprint demand.

It's not just newsprint that's shaky. A deal to restart the NewPage supercalendered machine in Port Hawkesbury, Nova Scotia fell through today (Sept. 22 update: and then was resurrected); its shaky status means that North America's only world-class, magazine-quality paper machine is in danger of being shipped to another continent or scrapped. And North America's second-largest player in the magazine category (Verso Paper) is at a competitive disadvantage not because it may be on the verge of bankruptcy reorganization but because several competitors have already been through or are in the Chapter 11 debt-cleansing process.

Declining demand means fewer paper machines are needed, but fortunately some of the idled machines are being put to good use. Several that once made copy paper have been converted recently to producing fluff pulp, the main ingredient in diapers.

Here's how to understand the trends: The bad news for pulp and paper companies is that Baby Boomers are reaching senior-citizen status, leaving fewer dinosaurs in the workplace who still print out their emails to read them. The good news is that the aging of the Baby Boom means more people on the continent are incontinent, which is boosting demand for hygiene products that rely on fluff pulp.

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