January 16, 2012 | last updated June 4, 2012 11:34 am

CT mail industry backs postal service cutbacks

The workers at Newington direct marketer Data-Mail send 1.5 billion pieces of mail annually. The company is among the industry leaders pushing for the U.S. Postal Service to find solid financial footing to position itself for the long-term.
Robert Croce, vice president of government relations, Valassis

Connecticut's robust mail industry is eagerly urging the U.S. Postal Service to operate on solid financial footing, even if post offices and sorting facilities must be closed and service slowed.

"Anything that helps the Postal Service become more financially stable helps us as a company because it is about our future," said Mark Mandell, co-owner and senior vice president of finance and technology for Newington mail marketer Data-Mail, which sends 1.5 billion pieces of mail annually.

At the end of 2011, the USPS announced proposed cuts to its facilities — closing 252 of its 487 mail processing facilities and 3,658 post offices — to achieve financially solvency. The self-supporting government enterprise must cut $20 billion in expenses by 2015 to be profitable.

In Connecticut, the Wallingford and Stamford processing facilities are on the chopping block for a total savings of $39.1 million, leaving Hartford as the only processing facility in Connecticut. USPS also is considering closing 15 Connecticut post offices, including three in Hartford.

The closings impact first-class mail — cards, letters, bills — with delivery standards slipping two or three extra days, depending on the destination. The changes aren't expected to impact standard mail — formerly known as third-class mail, which includes marketing mail. Since the bulk of Connecticut's mail industry revolves around standard mail, companies in the area see the proposed changes as a positive necessary step for survival of a vital government service.

"There's a lot of jobs in Connecticut in mail," said Robert Croce, vice president of government relations for Michigan mail marketer Valassis. The firm, which has major operations in Windsor, sends 3.5 billion pieces of mail annually and is one of the USPS' largest customers. "We are very concerned with the solvency and the viability of the U.S. Postal Service."

At the urging of Congress, USPS put a moratorium on all its closings until May 15, although the agency still is scheduled to make those closing after that date.

Across the United States, the mail industry provides an estimated $1.2 trillion to the economy. In Greater Hartford, 30,000 jobs are involved, counting mail marketing, printing, graphic design and manufacturing.

Mail marketers care less about how long mail takes to deliver than the reliability of the delivery, Mandell said. Marketers want their mail to arrive on-time, whether it's a grocery store sending coupons before a sale, politicians sending mailers before an election or a business sending advertisements. They will send their mailers as far in advance as necessary for the post office to deliver them, as long as they can rest assured they arrive by the specified date.

Stamford-based Pitney Bowes generates $5.6 billion in annual revenue and employs 33,000 worldwide selling mail equipment and providing marketing through mail. Even though many of its customers will see an impact through the changes in first-class mail, the company supports anything USPS needs to do to stay in business long-term.

"We certainly rely on the postal service and want it to be healthy financially for a long time," said Ashley Lyons, vice president of federal relations for Pitney Bowes. "We understand there are no easy answers here."

Since 2006, the post office has seen a 25 percent reduction in the amount of first-class mail and expects another 25 percent reduction in the next five years, largely due to the rise of e-mail and electronic payments, said Christine Dugas, USPS spokeswoman. The agency sent out 171 billion pieces of mail in 2010, including 80 billion first-class.

First-class mail is the most profitable form of mail for USPS, and its entire system was set up to accommodate quick routing of these cards, letters and bills, Dugas said

"That's a tremendous loss to our revenue," Dugas said. "We can't continue to support an infrastructure that was designed to handle mass amounts of first-class mail."

If USPS makes no changes in its services, the agency will suffer $238 billion in losses over the next 10 years, Dugas said.

While the Connecticut mail industry is sympathetic to the USPS' plight, Greater Hartford companies would rather the federal government take other steps first.

The most talked about issue is a $5.5 billion payment the USPS makes annually for the current and future health care costs of its retirees. USPS claims this fund is overpaid to cover costs for the next 75 years, but only Congress can authorize a change in the annual payment.

Croce said Congress needs to resolve issues such as these before attacking USPS over the proposed cuts. Valassis pays $500 million annually in postage; and the company and the industry can ill afford to keep up with rising postage rates if Congress refuses to address USPS financial issues and tries to force the agency from making the proposed closures and changes in service.

"They have to change their business model," Croce said. "The way we communicate now is different than the way it was before."

USPS is an important part of the economy and moving the agency to a 21st century way of thinking is vital to keeping the mail flowing out of Greater Hartford's direct marketing industry, Mandell said.

"Mail is still a very, very important part of the marketing mix," Mandell said. "People still like mail in their mailbox."

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