Postmaster General DeJoy responds to his critics

Washington Postal Scene by Bill McAllister

In his first public response to his critics, Postmaster General Louis DeJoy defended his friendship with President Donald Trump, promised not to slow election mail and vowed to press ahead with changes that he said will save the United States Postal Service from financial ruin.

Speaking at his first public session with the Postal Service’s board of governors who appointed him, DeJoy sought to portray himself as an opponent of privatizing the USPS and not a tool of a president who has called his agency “a joke.”

“While I certainly have a good relationship with the President of the United States, the notion that I would ever make decisions concerning the Postal Service at the direction of the president, or anyone else in the administration, is wholly off base,” DeJoy declared at the Aug. 7 meeting at the Postal Service’s headquarters in Washington, D.C.

Asserting that his federal agency has “a proud tradition of being a nonpartisan organization,” the former North Carolina business executive and strong Republican financial donor offered no hint that he would be retreating from his early controversial steps to curtail overtime and reduce added mail delivery trips.

Those actions have angered Congressional Democrats, and some have charged the actions are inspired by Trump’s dislike of mail-in ballots and the Postal Service.

Some of DeJoy’s critics were calling a reorganization the USPS announced after the board meeting a “Friday night massacre.”

Postalnews.com, daily news digest of the postal world, said that 23 executives were reassigned or displaced by the restructuring.

David E. Williams, the Postal Service’s chief operating officer, was placed in charge of logistics and processing.

Kevin L. McAdams, vice president for delivery and retail operations and a 40-year USPS veteran, is not listed on the new chart.

“Another Friday night massacre by this administration — and this time dealing another devastating blow to our postal service,” Rep. Mary Gay Scanlon, D-Pa, said.

Rep. Gerald Connolly, D-Va., chairman of the House Subcommittee on Government Operations that oversees the USPS, called the reorganization “a Trojan horse” designed to destroy the mail service.

“Without dramatic change, there is no end in sight” to the agency’s years of huge financial losses, DeJoy said, adding he was “keenly aware of the magnitude of the financial challenges we face.”

During the meeting, the postmaster general threw his support behind continuing six-day mail deliveries, having postal retirees depend on Medicare for their health benefits and securing a new — and costly — fleet of delivery trucks.

“We will not and cannot wait for the legislative and regulatory process to save us,” DeJoy said, blaming Congress and the Postal Regulatory Commission for “nearly $80 billion of cumulative losses we have experienced since 2007.”

His address to the board was blunter than his predecessor’s comments have been.

“Our financial position is dire, stemming from substantial declines in mail volume, a broken business model and a management strategy that has not adequately addressed these issues,” he told the board of governors.

DeJoy said he was “not appointed by the governors to position the Postal Service to be privatized or to manage its decline.”

The USPS is “a trusted face of the federal government in every community,” he said, pledging to “do everything I can to put us back on a financially stable path.”

As for charges that he was out to disrupt election mail, DeJoy said “the Postal Service and I are fully committed to fulfilling our role in the electoral process.”

Despite predictions of a massive amount of mail-in balloting in the Nov. 3 election, the postmaster general noted that the USPS “has ample capacity to deliver all election mail securely and on-time in accordance with our delivery standards.”

DeJoy also said that the USPS, an agency that dates its roots to Colonial America, was “at the beginning of a transformative process.”

He did suggest that he will soon implement “an organizational realignment,” which one postal official said might reduce the number of regional headquarters from six to four.

The agency disclosed at the meeting that its net loss for the first three quarters of fiscal 2020 ending June 30 totaled $7.5 billion, compared to $5.9 billion in the same period in fiscal 2019.

“Significant declines in our mail volumes as the result of the pandemic were largely offset by corresponding growth in our package business,” DeJoy said in a press release.

Joseph Corbett, chief financial officer of the USPS, said, “The strong growth in the package volume in the third quarter was encouraging, but there is great uncertainty about whether that growth is sustainable.”

Total postal revenue in the first nine months of fiscal 2020 was $54.8 billion, compared to $54.3 in fiscal 2019.

First-class mail revenue fell in the third quarter to $5.5 billion, compared to $5.8 billion in 2019.

Shortly after the board of governors meeting, the Postal Service disclosed that it is imposing a hiring freeze on management positions and said it will be seeking approval from the Office of Personnel Management for an early retirement program for non-union employees.

DeJoy said he is creating three new organization structures within the agency: retail and delivery, logistics and process, and commerce and business solutions.

“This organizational change will capture operating efficiencies by providing clarity and economies of scale that will allow us to reduce our cost base and capture new revenue,” he said.

In an Aug. 13 letter to all postal employees, DeJoy showed no sign of retreating from his plans to revamp the Postal Service.

“While it will take some time to get the new organizational structure fully in place and achieving our expected levels of high performance, we are confident that it is the right alignment and that it was a change that needed to be made,” DeJoy said.

Rep. Carolyn Maloney, D-N.Y., chairwoman of the House Committee on Oversight and Reform, expressed regret that DeJoy was embarking on a reorganization in the middle of a pandemic.

“This comes on the top of the operational changes that are already causing severe mail delays across the country,” she said. “I call upon the Postmaster General to halt these changes now.”

Paul F. Steidler, a Lexington Institute fellow who follows the USPS, said the new financial statements make clear that the Postal Service does not need an emergency appropriation “for at least 12 months.” (Lexington Institute is a think tank in Arlington, Va.)

Steidler quoted from a filing the agency made. The filing states: “The Postal Service expects that it will have sufficient liquidity to continue operating through at least August 2021.”

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