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Mr. STEVENS. We haven't. The Postal Service itself has, and they feel it is really major. I know this committee has spoken on that matter. But it is essentially a high-level congressional decision, to what extent should we look to the postal customer to solve the national budget problem, and that is beyond our capability; it is very much a policy decision.

Mr. HORTON. Well, this Member's contention is that we shouldn't do that, and I have resisted those efforts every opportunity I have had.

I remember a few years back when the Postal Service was on budget, and we determined that we would do everything we could to take it off budget, and it is supposed to be off budget now, and I would just like to again sound notice that we don't want it on budget again.

It does confuse the mix, it seems to me, when the Postal Service is trying to operate at a profit or operate as best it can to have this continuous hit every year by the Federal Government on the question of trying to solve the Federals' problem of the deficit. I mean I want to solve the deficit too, but, on the other hand, I don't think we ought to take it out on the Postal Service and the patrons of the Postal Service.

Thank you, Mr. Chairman. Chairman CLAY. Thank you. Ms. Norton. Ms. NORTON. Thank you, Mr. Chairman. Mr. Stevens, if one considers demand pricing in the abstract within a market economy, it would seem to make certain sense that demand pricing might be in order here. I wonder if you have, in making this recommendation, considered how demand pricing would be met by existing competitors of the Postal Service. I assume that the Postal Service would continue to have less flexibility than its competitors, and I would like your evaluation, therefore, of the response or the anticipated response of competitors.

Mr. STEVENS. Well, I certainly don't think it is a cure-all, Ms. Norton. You are right, competitors compete, and they will continue to aggressively go after Postal Service markets. I don't think it would do away with the alternative delivery industry which is just starting up

I do think, however—and there is an economic cost to this I do think it would slow the growth of that industry down somewhat just as the growth of UPS would have been slowed somewhat if the Postal Service had been able to adjust its package delivery prices more flexibly in the past.

Ms. NORTON. But you don't indicate change in any of the other factors, only in demand pricing, and so I have to assume that the Postal Service would still be encumbered relative to its competitors, and thus I am not certain that change in one of the factors would have the effect or a significant effect, given the status quo elsewhere. Indeed, I'm moved to ask, have you considered that any of the other factors should be changed? Have you considered that any others might be added or that some of them might be eliminated? I mean isn't this a dynamic process?

Mr. STEVENS. Certainly, and the next panel you are going to hear from concentrates on the procedural obstacles to Postal Service ratemaking that I think are very debilitating. We would agree that they need more flexibility not just in terms of the criteria that are used, that we talk about, but also the processes and the timeliness of the response they can make.

So we have no disagreement at all either with what the task force will be reporting to you or with the IPA—the Institute of Public Administration-study which concentrated more on the procedural factors, the 10 months it takes for the Postal Service to get a rate case through the Rate Commission. We just did not deal with those processes as much, partly because so many other people were concentrating on that. We looked at the fundamental criteria and the economics of that in this particular report.

Ms. NORTON. I think the committee has to look seriously at the whole ball of wax here.

Mr. STEVENS. I would agree with you, yes.

Ms. NORTON. I'm very afraid of unintended consequences. Indeed, one could anticipate the exact opposite might occur if the Postal Service, which is unique, changes in one respect to meet its competition but not in others. It seems to me to be a very dicey proposition, not that it might not ultimately be called for, but I can't imagine that one would only change that and believe that one had outsmarted competition which had infinite flexibility, chastened only by market factors.

Mr. STEVENS. We certainly don't mean to imply that is the only thing that needs to be done.

Ms. NORTON. But it is, of course, the only thing you recommended.

Mr. STEVENS. In that particular report we concentrated on the criteria.

Ms. NORTON. Nor did your testimony indicate that this change ought to be seen in the context of other changes that might be necessary and could not itself be depended upon to perhaps do the job, or indeed you didn't indicate that it might do the opposite.

Mr. STEVENS. Well, we did say that pricing flexibility is not the only thing the Postal Service needs to survive; also control of its operational costs I would say is even more essentially, franklythat unless they can get their costs under control, and if they have to break even, their prices will be so far above their competitors that it will be a dinosaur in any case.

Ms. NORTON. What would you say are the major strategies that the Postal Service uses now to meet its competition?

Mr. STEVENS. To meet its competition? I think they are somewhat confused about that. They have a competitiveness task force that is meeting. In fact, I have addressed them a few weeks ago in their initial meeting. They are trying right now to devise a strategy of how to remain competitive. I don't think they claim to have the answers. I think they are looking for the answers still, and they are using their large industry customers to help provide them. So I think that is a question you probably need to address to the Postal Service itself. From my perspective, they don't have a very good strategy yet, but they do recognize that and are working on it.

Ms. NORTON. You found no strategies in place, no explicit strategies to meet present competition.

Mr. STEVENS. No explicit strategies. There is certainly a consciousness of it there. There is a recognition that they have a big problem, but exactly what to do about it, no, I think the Postal Service is in doubt.

Ms. NORTON. There was testimony last month from Francis J. Connors of the National Association of Letter Carriers concerning effects of automation as it is now being implemented-for example, in the alteration of routes there was delayed delivery and sometimes no delivery; and that these disruptions had become commonplace. Have you any suggestions as the Postal Service goes through this transition of ways to avoid disruptions in service in the Postal Service?

Mr. ELMORE. Ms. Norton, any time you make a change in a carrier route you are going to have some disruptions and some service problems, but you can minimize those, no doubt about it.

The greatest need in getting carrier routes ready for automation is to keep your customers fully informed. I mean some customers are going to get mail earlier in the day and some customers are going to get theirs later in the day. If they don't know about that, they are going to get upset. So a necessary thing is to keep your customer informed.

Ms. NORTON. Is the Postal Service doing that?

Mr. ELMORE. They are doing that sort of—yes, they are doing it in some places; other places, they are not. The places that have problems, I would bet you that the manager has not been out front, communicating with his customers, to let them know what is coming down and to let them know what is going to come down not next week, but what will be happening over another 3-6 months. So that is a necessary ingredient to put into place.

But there are lots of things impacting on it. They are bringing people in, routers, people that help out the carriers. The carriers don't particularly like that arrangement. They don't particularly like people putting their hands on their mail, and I can understand some of that, but they need those folks to get the mail ready. Then sometimes they have problems in getting mail to the delivery station from the mail processing center. So there are problems out there, and those complaints you heard or comments you heard are legitimate; they are legitimate comments. They have encountered delivery problems from adjusting carrier routes, there is no doubt about it.

Mr. STEVENS. One positive thing I would say about the Postal Service, Ms. Norton, is that they are now measuring the customers' perception of their service to a much greater and more publicized extent than they have before. So when the customer is annoyed, when the customer is not getting what he feels the Postal Service should be providing, it is quite a responsive and public way in which that information will come out. That is an advance over the past. It used to be that they could claim that there were no problems, and nobody would have any data that would dispute that. Now we have it.

Ms. NORTON. I was surprised to hear Mr. Elmore say that sometimes they do and sometimes they don't inform customers that there may be some disruption that, “We are going to automation, and please forgive me.” If you go into a building that is being con

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structed, you feel better about seeing a sign that says, you know, "Pardon our disruption. We are only trying to make service better.” I would have thought that that would be a blanket policy of the Postal Service and not be left to catch as catch can, whether the manager thought to do it.

Mr. STEVENS. You will probably find instructions in the manual that talk about community relationships that say to do everything that Mr. Elmore said they should do. We all know that certain managers have different priorities, and certainly there are some places where that is not as high a priority as making the numbers, for instance, or lowering grievances, all the other things the postmasters are tasked to do.

Chairman Clay. The time of the gentlelady has expired.
Ms. NORTON. May I ask one more question?
Chairman CLAY. Yes, on Mr. Sawyer's time.
Ms. NORTON. Thank you very much.

One final question I really did want to ask, and that is the extent to which you found a dialog between labor and management on the development and implementation of automation strategies.

Mr. STEVENS. I would have to say that has also varied a great deal, too. It depends a lot on who the postmaster is, the management sectional center director. I can point to some cases—and I'm sure you have heard about them too—where it has been egregious; I can point to some cases where it seems to be pretty good.

I should mention, by the way, that we are starting as our next major priority in the Postal Service realm to look at the whole problem with labor and management relations, and that is why I suggested that this committee should keep a very close tab on that, because, as Mr. Frank said, he is aware that in his 4 years there he didn't make much of an impact on what he perceived to be the adversarial and paramilitary relationship of the Postal Service to its workers. I think he recognized that is a problem, and we do too. It is one that is awful difficult to wrestle with, but we have made, I think, the commitment that we need to get into that too. We haven't yet really.

Ms. NORTON. I appreciate the chairman's indulgence.
Chairman CLAY. Thank you.
Mr. Sawyer.
Mr. SAWYER. Thank you, Mr. Chairman.

I apologize for not getting here for the beginning of the testimony. I am pleased, however, to welcome our panel. I notice something missing up here. For the last 3 years I've been wondering what the L stood for in L. Nye Stevens, and now it's gone altogether. But I won't raise that issue today.

If you have touched on this before, please say so, and I'll be glad to check the record. Former Postmaster General Frank talked about workforce reductions and spoke of it primarily in terms of attrition. Is it your sense that that will be the case in the future, or will it require lay-offs?

And let me just take this a step further because I don't want to take more time than necessary. For those people who may have been displaced, is their retraining taking place? In the face of all this, is this policy of attrition or lay-off, whichever it may be, likely to lead to a substantial demographic change in the workforce of the

Postal Service itself—an aging of the workforce, a trade-off, if you will, in terms of efficiencies that may or may not be measurable?

Mr. STEVENS. I see you came back to the census question at the end.

The major problem we have with the Postmaster General's assertion in this area is his concentration solely on the career workforce as the measure of savings. He did say that he felt that the impact of automation could be absorbed without lay-offs, but as I did say before, I think we haven't heard much of that since he left.

The major problem is going to come with volume. If volume keeps rising, the Postal Service will be able to accommodate the workers. There will be some high points and low points and certainly disruptions in individual people's lives. It will be a lot easier in fast-growing cities than in ones that are essentially stable economically and in terms of population.

We would also say the Postal Service has not prepared well for that. They can't say, “This job will be eliminated, and this person who is available 50 miles away will fill it." There has been no planning at that individual level, and that makes the workers some what apprehensive.

With regard to the change in the workforce, I hadn't really thought about this, but it seems to me that it will be an older workforce. They will be able to release employees. If there are layoffs, they can now do it with people who have less than 6 years se niority–who are of course, the younger folks. They are going to have a group of transitional workers who are not paid very much, and I would presume they again will be quite junior. The remaining career workforce will be predominantly people who were hired well in the past, and therefore I would think it would be a more aged group. We haven't really done any work on that, but it seems reasonable to me to expect that, and the implications of that I really don't know.

Mr. SAWYER. I would hope at some point we might take a look at that, because the enormous amount of money that is being spent on automation and the hoped-for efficiencies that result from that may be offset in other arenas, particularly as the most labor-intensive work that is done will fall to those who are perhaps oldest.

Mr. STEVENS. Yes. We have seen that in the letter carriers, Mr. Sawyer, because one of the changes that automation is bringing about is that letter carriers who used to spend 4 hours sorting mail back at the facility and 4 hours on the street are now being asked to cut their sorting to 2 hours and have to spend 6 hours carrying a bag around the street, and as they get older I think that could be more of a physical demand and objection on the folks.

Mr. SAWYER. Well, it seems to me that that raises personnel questions that may have not been addressed but perhaps ought to be addressed. Thank you very much.

Thank you, Mr. Chairman.
Chairman CLAY. Thank you.
Are there any additional questions?
If not, we thank you for your testimony.
Mr. STEVENS. Thank you, Mr. Chairman.

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