Postal Service Tests Skill of Tony Frank, Former Thrift Chief

When he was a California businessman, Anthony M. Frank performed what now seems a remarkable feat in the 1980s: He ran a savings and loan association that grew to be gigantic yet remained solvent.

Now, as the nation’s postmaster general, he faces a still more daunting task. He is trying to overhaul an enterprise that delivers 40% of the world’s mail but that is often ridiculed for its bureaucracy and inefficiencies.

Confronted on all sides by agitated consumers, determined labor unions and a wary Congress, Frank has proposed a postal rate increase that even he admits is “too much, too soon.” Rates would rise early in 1991 for all classes of mail, including a nickel increase in the current 25-cent price for mailing a first-class letter.

In return, Frank pledges to keep the rise in Postal Service costs for a three-year period well below the economy’s general inflation rate. Inflation rose 14% during the past three years, but the Postal Service is asking for an average boost of about 20% to help wipe out its deficit.

“I am committed to paying back the 6% to the American public,” Frank wrote recently.

To succeed, Frank must press forward with an ambitious automation program and achieve a moderate wage settlement in this summer’s labor negotiations. His ultimate aim is to break even--the mission of the Postal Service as defined by Congress when it made the agency independent in 1971.

“Never before in Tony’s long and successful business career has he been told, ‘Run the biggest corporation in the country, and don’t make a profit, but don’t lose money either,’ ” said Rep. William D. Ford (D-Mich.), chairman of the House Post Office and Civil Service Committee. “If it comes out all right, he’s a big hero; if not, he’s a bum.”

The postmaster general, unable to lay off any workers, can’t wield the full range of management authority that he enjoyed as a California savings and loan executive. He directed the growth of Citizens Savings, a $400-million institution, into First Nationwide Financial Corp., one of the nation’s biggest S&Ls;, with assets of $16 billion.

Frank quickly learned about the limits of power in Washington after a few months on the job, when complaints from Congress forced him to cancel an exclusive contract with H. Ross Perot to devise money-saving measures for the Postal Service.

Critics give Frank, a gregarious man who has just completed his second year in the job, high marks for communicating with postal service workers, business mailers and the public. But they wonder if he can seize control of the massive postal bureaucracy and bend it to his will.

“I give him about a C-plus or B-minus,” said John Crutcher, a member of the independent Postal Rate Commission, which has 10 months to rule on the service’s rate request.

Frank “has done something desperately needed for a very long time” by being accessible to union leaders and rank-and-file workers, to big customers as well as the general public, according to Crutcher.

However, he criticizes Frank for “being too slow to grasp the reality of what is happening out in the field, failing to cut back staff” to take advantage of cost savings from new machinery. Under the labor contracts, jobs can be eliminated only through attrition. Crutcher believes that Frank should have moved more quickly to impose hiring freezes.

The Postal Service has 763,000 workers, down 20,000 since May, and 83% of its budget is consumed by labor costs. The system is “not capturing the savings (it) should have” because of automation, Crutcher said. “Prudent management would have grasped the reality of the situation much sooner.” Crutcher fears that Frank may be “afraid of the unions and afraid of Congress. In public service, it pays to be prudent, but not to that extent.”

Van H. Seagraves, the publisher of Business Mailers Review, says the postmaster general is “a very talented person who hasn’t got control of postal bureaucracy.”

The biggest test awaiting Frank is the negotiation with the 320,000-member American Postal Workers Union and the 278,000-member National Assn. of Letter Carriers. Both unions worry about how far Frank wants to go in substituting machinery for manpower, instituting new work rules and contracting out some jobs.

Frank’s key adversary is likely to be Moe Biller, APWU president and a hard-nosed veteran of past negotiations, who has seen many postmasters general come and go.

“We haven’t had much of a honeymoon,” said the blunt-speaking Biller. “Frank has said he thinks I’m a hardhead and don’t offer much cooperation. But . . . we don’t have a picture yet of what they are going to do, or what our workers are going to be doing in 5 years. That’s like me saying to you, ‘Work with me today, but tomorrow I’m going to be contracting out your job to somebody else.’ ”

Rubin Handelman, executive vice president of the National Assn. of Postal Supervisors, a management organization, offers cautious praise for Frank.

“His PR (public relations) work is OK,” Handelman said. “He is handling well everything he’s been doing so far. He does well on the Hill (with Congress) and with the Board of Governors.”

However, the postmaster general has “never been in union negotiations, and I’m not going to hazard a guess there,” Handelman said. “You are never going to satisfy everybody in a negotiation. But he will have to satisfy a majority. And if he doesn’t, then he’ll take it on the chin.”