Pitney Bowes Assesses Progress and Opportunities

STAMFORD, Conn., December 20, 2007 – As the mailing industry marks the first anniversary of landmark postal reform legislation, Pitney Bowes Inc. (NYSE:PBI) offered an upbeat assessment of the work that has been done to implement the law’s provisions, and of the implications the new law has for anyone who sends or receives mail.

President Bush signed the Postal Accountability and Enhancement Act on December 20, 2006, launching a new era for the United States Postal Service. Under the new law, increases in the price of postage for most mail cannot exceed the rate of inflation for at least the next nine years, and the Postal Service has unprecedented flexibility to manage the rates it charges beneath this “rate cap.” The law also envisions a major redesign of the postal network, calls for the creation of new service standards, and encourages the Postal Service to adopt new technologies to speed operations and lower costs.

“The postal reform bill was a major rethinking of virtually every aspect of postal operations,” said Pitney Bowes Executive Chairman Michael Critelli who, as chairman of the Mailing Industry CEO Council, was involved in helping to shape the final legislation. “We see tremendous long-term benefits both for the Postal Service and the mailing industry.”

Critelli praised the new Postal Regulatory Commission for swiftly establishing its mission and strategy, for engaging the industry in its deliberations, and for delivering, eight months ahead of schedule, new regulations that will determine how the Postal Service will set its rates in the future, beginning in 2008. Critelli also complimented the Postal Service for moving quickly to propose the new service standards called for under the law, also after extensive industry consultations.

“This kind of engagement with the industry is crucial to the long-term success of postal reform,” said Critelli. “The mailing industry employs some nine million Americans and accounts for $900 billion in economic activity. We all have a huge stake in making sure we capture the benefits of postal reform without needlessly disrupting this powerful economic engine.”

The next year should see equally important developments, Critelli noted. The Postal Service is expected to issue its first rates using the new rules, and the Postal Service and the Postal Regulatory Commission face crucial reporting deadlines to Congress on several aspects of postal operations.

“We are very encouraged by the swift actions of the leadership at both the Postal Service and the Postal Regulatory Commission,” Critelli said. “They are focused on fulfilling the many obligations placed on them by postal reform, and we look forward to continued dialogue and action to make the mailstream even more valuable and effective than ever before.”

Setting the Record Straight clears the slate?

In a sternly worded editorial, the Federal Times last week called on Postmaster General Jack Potter to take action against disgraced former executive Azeezaly Jaffer, or make way for “a new leadership team”. The paper points out that “Jaffer’s alleged improprieties were known and apparently tacitly accepted for years before he finally resigned in June”.

The editorial, published in the August 21 print edition of the paper, asserts that “What has been sorely absent here is basic leadership from Postmaster General John Potter”, that both the PMG and the Office of Inspector General “failed to take allegations against Jaffer seriously when they first surfaced, and he failed to ensure that the proper controls were in place to prevent the kind of wasteful spending exemplified in the IG report”.

The piece concludes: “Potter and the leadership of the Postal Service have a choice to make now. The IG report documents a strong case, depicting a public official who ran amok with his official credit card, sexually harassed fellow employees and abused his trusted position. If Potter doesn’t think that merits criminal or other punitive action, perhaps it is time for a new leadership team to take charge of the U.S. Postal Service.”

According to the local TV station, the city of Rockford Illinois must be sitting on the edge of its collective seat this morning. WIFR reports that the “fate” of the Rockford processing plant will be announced today. That may or may not be the case, but the story at least provided a local politician with another opportunity to milk the alleged controversy. Congressman Don Manzullo is quoted as saying: “When you start off with the premise that Rockford has probably the finest cancellation service in the country, you can only come to one conclusion…that it should stay open”.

“The finest cancellation service in the country”? What does that even mean? No smudges?

Postal Service Announcement to Come Monday

Update: It’s official!

The finely crafted Rockford cancellation lives! Good for the employees! Having been through a number of boneheaded, arbitrary reorganizations myself, I can sympathize with the workers who would have ended up moving to other jobs and locations.

I can’t help thinking that management missed the boat on this one, though. Its clumsy PR efforts allowed the APWU and local politicians to set the agenda and monopolize the discussion. Maybe the Rockford move made sense, and maybe it didn’t- we’ll never know now. It certainly doesn’t bode well for the future of the USPS’s network redesign plans.

Azeez Jaffer has responded to an article posted on the Online Journal blog that charged the Bush Administration with ‘raiding’ USPS funds to pay for Bush’s war against Iraq.

Jaffer points out the obvious inaccuracies in the blog article, but fails to mention that the most recent increase was, in fact, the direct result of Bush’s insistence on “revenue neutrality” in any postal reform bill. That has forced the USPS to raise rates in order to fund a $3 billion payment to the Treasury this year. The money is supposed to be held in trust, but regardless of whether the money goes to fund the war, the bottom line is that it reduces Bush’s budget deficit by $3 billion.

Jaffer concludes with this rather odd statement: ”Mr. Masden also implies that the war funding is possible because the Postal Rate Commission is full of Bush Administration appointees who have authority over postage rates. Wrong again. Although the Postal Rate Commission plays an important role in the development of postage rates, it’s the Governors of the Postal Service who have the final say.”

True as far as it goes, but aren’t the Governors also appointed by the President?

Setting The Record Straight

I enjoy Azeez Jaffer’s responses to anti-postal newspaper columns, editorials, etc., as much as anyone, but I sometimes wonder if he’s missing the Postal Service’s real PR problem. Sending off another clever letter to the editor complaining about the use of the phrase “going postal” may be satisfying, but in the long run, what difference does it really make?

Meanwhile, we seem to be either shooting ourselves in the foot when we deal with postal reform in DC, or burying our head in the sand when it comes to dealing with plant consolidations in the field. Why can KFOX in El Paso say that they’ve waited months for someone from the El Paso Post Office to talk to them? Why can Senator Harkin complain that we won’t tell him what our plans are for Sioux City? Why are we letting the mailers, unions, and politicians do all the talking?

Why are we wasting our time going postal over “going postal” when there are more important things to worry about?