Post office to look at closings, change in six-day service as part of long-range transition

<br>WASHINGTON (AP) _ Postmaster General John Potter promised the nation Friday that, following this summer's planned rate increase, postage prices won't rise again for two years. <br><br>The postal

Friday, April 5th 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ Postmaster General John Potter promised the nation Friday that, following this summer's planned rate increase, postage prices won't rise again for two years.

The postal governing board is expected to give final approval next week to a 3-cent rate increase, boosting first-class stamps to 37 cents this summer.

Once that increase is in place, Potter said: ``I am committed to maintain that rate schedule until at least calendar year 2004.''

With that promise, he guarantees the agency won't apply for an increase next year. The long and complex process of raising rates means it can take almost a year for a rate application to take effect.

In the meantime, the agency is seeking to simplify the way it does business under a plan sent to Congress Thursday.

``If we don't accomplish transformation now, the universal service we rely on will be in jeopardy,'' Potter said in a speech at the National Press Club.

That plan would overhaul the agency's operations, including such possibilities as closing some offices, phasing in price increases in regular steps and even cutting back on six-day-a-week delivery.

Facing rising costs and shrinking business, the U.S. Postal Service lost $1.6 billion last year.

Failure to make fundamental changes would force it to operate under its ``present increasingly outmoded business model until enough customers abandon the system to make financial failure unavoidable,'' the Postal Service said in its proposal.

Potter stressed he isn't recommending wholesale post office closings and promised to work to keep six-day service. But he also noted that, unlike years ago, stamps are now available in grocery stores and via mail-order, telephone and Internet. And he said every aspect of postal operations needs to be looked at to improve finances and efficiency.

The terrorist attacks and anthrax-by-mail cost the post office hundreds of millions of dollars. Increasing losses are expected despite the 3-cent postage rate hike.

The proposal calls for a new law converting the post office to a commercial government agency after 2006. Meanwhile, there would be changes to cut costs and improve efficiency.

Legislation is being sought to allow changes in ``service levels and delivery frequency.''

``We know that people enjoy that six-day delivery, we know there is a business value to it,'' Potter said. With more pricing flexibility and adjustments to operations, he said, ``we believe that we can protect six-day delivery well into the future.''

Among other changes would be working with the Postal Rate Commission to streamline the rate process to provide more regular and predictable price changes, including phased-in rates. Potter said that might mean small annual increases for commercial mailers while the public would get an increase every other year or every third year.

The post office has not received any taxpayer subsidy for operations for years, although Congress recently voted $500 million to assist in coping with the anthrax contamination and to seek ways to prevent it from happening again.

The proposed long-term changes would move to a more private-business type of bargaining with unions, including a mediation process similar to that in the Railway Labor Act. Unlike the current system that often ends in compulsory arbitration, the proposed plan would include the possibility of strikes and lockouts.

William Burrus, president of the American Postal Workers Union, called that idea a ``nonstarter'' because the process could be manipulated by the White House to impose a settlement.

Burrus also reiterated his union's stance that the post office could increase revenues by reducing discounts it gives major mailers for presorting mail.

The proposed new agency would also drop the current requirement that it break even financially over time for one that allows profits that could be used to finance capital improvements or for other purposes.

It would use private business style purchasing rather than government systems and would look for new products and services to offer, including investing in related businesses and possibly permitting other retail operations in post offices.

The Newspaper Association of America complained that the proposal ``is a flawed vision for the future.''

``The newspaper industry has long been sensitive to the fiscal difficulties faced by the Postal Service, particularly since last year's anthrax attacks in the mail, and we support its efforts to conduct business more efficiently,'' said John F. Sturm, president of the association. ``The plan before us, however, is not the appropriate path.''

Sturm called for President Bush to appoint an independent panel to assess postal transformation.

However, the Direct Marketing Association, which represents companies that sell by mail, welcomed the plan.

``We believe that the Postal Service intends to move forward immediately and in a direction that will help to put it on a more financially sound footing,'' said H. Robert Wientzen, who heads the organization.