COMPETITIVENESS : Consultant to Deliver Advice on Overhauling Postal Service

Hoping to avoid another postage increase or heavy layoffs, some prominent business customers of the U.S. Postal Service are now working with the postal system’s managers and workers to streamline service and enact efficiencies.

The powerful Mailers Council--representing more than 21,000 companies that account for 75% of the total mail volume--hired Harvard University professor and noted consultant Michael E. Porter to investigate ways to overhaul the Postal Service and make it more competitive.

Now the Postal Service, under the direction of new Postmaster General Marvin T. Runyon Jr., has Porter and his firm, Monitor Corp., on a $210,000, three-month retainer.

Porter’s proposals: trim management ranks, expand services to untapped rural markets, install fax machines and other communication tools in post office branches, retrain and upgrade service jobs, reform the rate-setting process, and beef up less competitive markets such as bulk and third-class mail deliveries.

Porter said private companies are continuing to pick apart markets that the postal system once dominated.

BACKGROUND: In recent years, the Postal Service has been plagued by growing fiscal problems stemming from increased competition. Its work force is said to be suffering from low morale and it has been harshly criticized for failing to become the financially independent agency it was authorized to be in 1971.

The Postal Service registered a deficit of $1.5 billion last year, despite more automation and an increase in the cost of a first-class stamp to 29 cents.

Cost-cutting plans under former Postmaster General Anthony M. Frank included eliminating about 42,000 jobs through 1989 by retirement and other methods of attrition, with another 45,000 set to go before 1995. The Postal Service remains the largest civilian employer, with 750,000 workers.

ISSUES: Porter--once an appointee of Ronald Reagan to the President’s Commission on Industrial Competitiveness and a consultant to such businesses as AT&T; and Westinghouse--said that postal operations are unwieldy and unprofitable.

Porter recommended shoring up and fully exploiting the agency’s existing strengths.

For example, the Postal Service has unique access to rural markets--which are weak areas for two of its major rivals, Federal Express and United Parcel Service. Porter suggested expanding the services offered at these locations to include electronic equipment--such as fax and copy machines--and creating one-stop communications outlets.

Another strength is its 40,000 offices--connected by a huge transportation network--with frequent pickup and delivery services. He suggested expanding services that are successful and dropping those that are not, rather than adhering to an inflexible nationwide mail delivery plan.

And since research shows that the public approves of having “live” mail carriers, he suggested retraining workers to perform in-house or personalized services for consumers.

Porter’s proposals were generally well-received by Vincent Sombrotto, who is president of the 236,000-member National Assn. of Letter Carriers, although he warned that any plan to cut more jobs would hurt existing services.

“We cannot maintain the same level of service with the cuts we already have,” Sombrotto said at a recent panel discussion. “We already have thousands of examples of delayed mail . . . and more cuts aren’t going to help.”

The council also opposes more worker layoffs.

Runyon, sworn in July 6, has begun conferring with union leaders and key postal executives, but will not meet with House members until September, congressional sources say. Porter said he will present his ideas to Runyon next month.

“There’s a mood in Washington now, a sense of urgency to act,” Porter said, “and I’m hoping that this climate will provide the opportunity to change even sacred issues such as the Postal Service.”