Can the postal service get lean? - magazine mailers

Folio: The Magazine for Magazine Management, March 1, 1993 by Stephen Barr

PUBLISHERS REMAIN SKEPTICAL ABOUT WHETHER THE NEW POSTMASTER GENERAL'S AMBITIOUS PLANS WILL PROVE TO BE IN THE BEST INTEREST OF MAGAZINE MAILERS.

Eight months into his tenure as postmaster general, "Carvin'" Marvin Runyon has lived up to his moniker, trimming nearly 50,000 workers from the bloated United States Postal Service payroll. Add the $500 million budget surplus from 1992 and the promise that postal rates will stick through 1994--and magazine executives are breathing somewhat easier in 1993.

"I am pleased with Runyon's aggressive approach to controlling costs," says Diane Potter, vice president of circulation at New York City-based Times Mirror Magazines. "Because so much postal expense is labor-related, what he did last year was great. And not to see rate increases until 1995 is excellent. We hope he means it."

But the new leadership at the USPS has not left publishers completely in the clear. To begin with, there's ongoing concern about service lapses, even though the productivity of today's leaner Postal Service has so far matched, and in some instances surpassed, that of the pre-Runyon organization.

Also, reclassification is an issue that could have significant impact on magazine mailers, and publishers remain wary of what Runyon means when he talks about simplifying the rate structure. Within a month or so, an ad hoc reclassification committee should be taking its first public whack at pricing that better reflects what committee chairman Charles McBride calls "the work-sharing by mailers."

But perhaps the most convincing reason not to be lulled into a sense of security by Runyon's bulldog rule is the fact that no matter what Runyon does, distribution expenses can still be cut by publishers themselves. Even with the economy seeming to pull out of recession, who can justify ignoring printing-plant efficiencies and alternate-delivery opportunities that could yield five-, six- and even seven-figure savings?

"The pressure should be no less intense to look at costs," says Deborah Cray, a distribution manager at Chicago-based R.R. Donnelley & Sons Company, the nation's largest printer. "The challenge to reduce expenses may not be the same as when there's a rate case pending, but this is a time to explore every option out there." It's not a time to get fat and happy and run into the problems the industry is running away from.

What has proven most worrisome about Runyon's tenure at the USPS has been less what his policies are, and more what his policies could be. His willingness to send shivers through mailers was most evident last October when he dropped the four-day-delivery bombshell. Speaking to editors from The Washington Post, he must have been looking for a reaction--because he got it.

"I like the way he does things--he throws out ideas and scares people," says Joseph Schick, manager of Postal Affairs at Quad/Graphics and a member of the joint USPS-mailer Competitive Services Task Force. "People take it to mean he will ram an idea through, but his job is to look at things differently. If he's told, 'We've always done things this way,' he wants to know why."

The much-watched task force actually predates Runyon's arrival, but its August report, with 162 demands, certainly reflects his notion of a USPS that is more customer-oriented and less bureaucratic. Its first notable product will be a new Domestic Mail Manual that will clean up the technical language, simplify how sections are organized, and come in modules so mailers can buy only what they need. It's expected in the spring.

Wish lists for a more efficient Postal Service include centralized billing, eliminating the need for hardcopy back up, and making it easier to get answers at the local level. Already, printers report that USPS managers have been more responsive--in some cases giving a verbal OK on routine matters like pallet approvals, rather than waiting for the paperwork to begin consideration.

"The people are more end-result-oriented than process-driven," says Barbara Fry, postal relations manager for Quebecor Printing. Although the paperwork is still required, the conversion of titles from sacks to pallets has been faster.

Buzzing about reclassification

But for publishers, reclassification remains the touchiest topic. Although Runyon has made no direct statements about what he expects in terms of rate simplification, those who read between the lines wonder if he expects mail to be classified by type rather than content. Will there he a conflation of second- and third-class mail into a flats category? "A truck carrying the mail, a clerk processing the mail, a carrier delivering the mail--they don't care what's in the parcel," says Peter Moore, a postal consultant. "Magazines enjoy advantageous rates and preferential treatment for valid reasons, but what happens to second class if we don't care about content? Publishers froth at the mouth when I make the arguments."

McBride says his reclassification committee has received no directives from Runyon about what it should do with second class. And though he does not expect to break up the classes, there could be some shake-up within each of them. "If we're going to look at combining discounted work-sharing options into a single sub-class," he says, "I don't think second class would be an exception."