they said the post office could run out of money by next fall. why is the postal service in such serious financial shape? >> well, they're going bankrupt because of the internet age. too many mailmen, not enough nail to carry them. the most obvious thing is the internet. people are paying bills online. because of this the volume of first class mail has dropped about 20% in the past 20 years. and with that drop comes a drop in postal service revenues. they would have lost $10 billion if congress had not extended the deadline for bills that owed the u.s. treasury. and she basically said they they will continue to drop now.

>> senator is a ranking member of the affairs committee has called the uspc financial situation, quote, dire. what legislative solution is that committee working on? >> that city has a bipartisan bill. it came out in november. and it's expected in the next few weeks before president's day or just after president's day. and basically it would allow the postal service to rerup a refund. right now the postal service has half a million postal workers. it has too many. it needs to buy out.

they will also be phasing out door to door delivery. allow people to buy fishing licenses at the local post offices and also to be consolidating. he wants as much flexibility as he can get. since the postal service is partially a government agency, it needs permission from congress to do a lot of things. so he basically supports the buy out. he would like to move from six-day delivery to five-day delivery. but they would have to show that they have implemented several other cost saving measures before they would be allowed to

move to five day delivery under the senate bill. >> in one of your articles you wrote about an alternative bill offered by senator john mccain which mirrors the house version. how do these measures differ from the current version? >> john mccain offered a bill that is the companion version of republican darrell issa of california in the house. they would approve millions of dollars worth of closures. basically the commission would be the one who has to approve all the closures. >> congress is facing a may 15th deadline when the moratorium on the closings will be lifted. any indication they're going to get a bill passed? >> well, they've been chatting about it quite a bit. they've been pushing it off

since this fall. lawmakers wanted to take it up in august. then december. now around president's day weekend. the senate bill will be moving in the next few weeks. they're making it a top part priority for the first part of the session. i think they will meet that may deadline. >> an update from rachel with congressional quarterly. thanks for joining us. >> thanks so much. a processing plant is one of the facilities that would be closed. last month 500 people attended a meeting to discuss the matter. also on hand, the governor and all three members of the state's congressional delegation. this is one of the meetings

taking place around the country to get input from local residents about the closing of postal facilities. >> this is a very important part of the process. one of 50 studies going on across the united states. the postal service seeks significant changes. in the mail processing network among other things. i'll give you ut background on the changes and why we think they're necessary. i'll also share the proposed changes. i'm allowed to cover tonight. and there are many questions, and hopefully a lot of those will be answered as we go through the presentation. so i'm going to ask that you save your questions, comments and concerns until we're finished with the presentation.

we're hear tonight to hear from the community. and we're hoping that you'll focus your questions and your comments and your concerns on service and cost and customer issues. potential employee impacts are summarized in the presentation as well. and labor issues are handled internally in the postal service with the appropriate personnel. let's begin tonight with just a short video that will help illustrate how we process mail today. >> first class mail is declining at a rapid pace because people are mailing less. with less mail to process and deliver, the postal service has to make smart business decisions critical to preserving its future. the postal service is taking processing steps. these are part of the overall

strategy to get the postal service on the path to provtability and strengthen the financial future for customers and employees. right now they're a vast network of processing facilities. they were established to process inveesing volumes. investing volumes. now they're moving away from sending bills, statements and other doums once mailed exclusively the through first class mail. the simple fact is that the postal service must adjust the mail processing network to evolve as our nation's mailing habits change. most mail processing occurs during overnight hours with the majority of the processing occurring between midnight and 6:00 a.m. during the day, however, there's little processing that actually

occurs. most of the work involves business mail acceptance and maintenance. so for a significant part of the day a plant is largely idle. when there's a lot of capacity to process the ever dwindling volume of mail, how can the current system be changed with little or no impact to the customer. the answer is something to do with mail service standards. what most customers may not realize is that first class mail currently receives overnight service in metropolitan areas. the nationwide processing information has been set up to handle the need. the sobering reality is first class mail volumes will not return to the levels seen in the past and changing service standards to match reality is one way of keeping the postal service viral. what the postal service proposed is changing the overnight

service from a two to three day service. if the change were made, usps would have two days to process and deliver first class mail. this will allow a plant that processes mail only six hours a day to process mail for 20 hours a day. effectively doing the work of three plants at one plant. and increasing overall efficiency. this lengthened mail processing window will allow us to transport the mail a further distance to more centralized locations for processing. by simply making a small adjustment in service standards the the postal service could reduce the number of mail processing facilities for 500 to fewer than 200 and realize billions of dollars in annual savings. >> postal service is still very vital to the american economy and american society. we realize that. people realize that. we have to stay profitable in order to provide service to the american public.

we'll move people from one place to the other. in some cases we move employees for one job to another. we want to work with the people that can retire in order for them to go we'll be here for a long, long time. we have to get our financial house in order right now. >> sheez changes would bring huge cost savings but also lay the foundation for a finally stable future postal service that will continue to serve our customers for many years to come. >> thank you. before i go forward with the presentation i just want to make a couple of kmebts. i think it's important we understand why there are 252 studies going on across the

united states there was no facility selected based on any criteria that was specific to performance. the employees are outstanding. this is the network realignment of the postal service. and it's based on looking at the network that changes that we're going through right now, and looking at where we want to be to really be successful and support a large mailing industry as well. the postal service is responding to a changing marketplace the reality is the volume of mail we process annually has declined t

five years. and we know it will continue to decline. our mail pressing sefrt is much smaller than we can afford. we must make radical changes to the mail processing networks. so this evening we'll provide you information on two important topics. first we intend to radically rely on the mail processing network in the next two years based on a two to three day standard, and second, the initial results, the preliminary information on the river junction in vermont. this graph shows volume trends and projections through 2020. it shows the first class mail

products and standard mail, also known as advertising mail. since 2006, first class mail has declined 20% due to electronic conversion and the economic slow down. the sobering reality is it will not return to previous levels. more and more people are using electronics to pay their bills. experts predict that continued decline in the first class mail, the product that pays our bills at the postal service contributes the most to the bottom line. an integral part of the business is advertising mail.

even significant growth is not enough to make up for the ongoing decline if first class mail. this change in the makeup of the mail from first class to advertising mail therefore has significant ramifications for the instruct for two major reasons. one is we have less revenue to cover the cost of infrastructure. and we also have kpes capacity. to process less mail, we need to look at fewer facilities. i'm going to mention the word capacity quite a few times tonight. our footprint evolved over many years. and to take advantage of

immovements in technology. between 1970 and 2006 our focus was on expanding to handle the then current volume. we increased the use of automation. it was a period of growth and significant capital investment for the postal service. we built facilities with the confident at that time that the population and mail volumes would also increase. since 2006, the confidence has e vab rated. prior to 2006 our operational goal was to stay ahead of the growth curve and to be sure we had the capacity for larger volumes. now our goal is to stay ahead of the cost curve. and to operate at a lower cost

than revenues can support in the future. so now we're going from that expanding environment into a contracting environment. we have to reduce our infrastructure to get ahead of the dpe cleaning volumes. reducing our infrastructure in response to volume decline is nothing knew. since 2006 mail volume dropped 20%. we did this successfully without any impact on our customers. in fact, we delivered record service during this period. and these reductions were accomplished without laying off any employees. hue did we do that? involving studies that we're here for to discuss tonight. we've been using this process

for decades, and it has served us very well. we determine weather there's a business case for consolidation. there are opportunities built into the process. and also a written comment period that extends 15 days beyond tonight. these are times for community members and stake holders to comment, ask questions and provide concerns to the postal service and many times from theet meetings we get suggestions as well to help us look at the right thing to do. we continue to look at the process. the collective criteria in making our decisions. by 201 they may consistent of fewer processing facilities to put us ahead of the cost curve for the remainder of the decade.

the results would be a core decorating network. it would meet the needs for the next 30 years. here's what the mail processing footprint means today. you can see we have facilities throughout the country, facil y facilities of varying sizes that employ anywhere from 50 to 2,000 employees. what happens in these facilities is relatively simple. first the mail is brought in. then the mail is sorted. almost all of it through an automated process before it's shipped to local delivery or another mail processing facility depending on the ultimate destination. to support the overnight service commitment. most processing takes place in the middle of the night.

our entire network was designs based on the requirement that we deliver first class mail until the next business day. this has enormous implications because it constrains our operating windows, forcing us to process mail in the middle of the night and forces us to make a large number of mail processing locations. the stars on this map show all of the processing units. the blue stars, and i realize they're hard to see from the audience. the blue stars are facilities for which studies are already under way. the red stars represent the 252

addition mall processing facilities that were on the list released on december 15th. >> we'll be getting to that. appreciate that. >> let's get to it quickly. i got to go. >> yeah! >> we will move it along. thank you. >> trust me. these people know how to process mail. [ applause ] >> the studies will consider the overall financial impact of closure and consolidation and will include stake holder input. this is what the mail processing network might look like in the future if after consolidation all of the studies were approved.

a service standard is a stated goal for service achievement for each class of mail. the postal network is built to meet the existing goals. that means that even though the dramatic decline in mail volume has resulted in excess capacity in the network, it reduces the size of the network to address the excess capacity problem, we would not be able to kibtly cheaf the existing service standards. the operational benefit would be tremendous. and even though the change would go relatively unnoticed by the average customer, this would allow us to design a much more efficient, lower cost mail processing network with far fewer facilities. here we can get a sense of what the change would represent.

let me show you how we meet the current requirements. the circles represent 24-hour clocks. on the left you see it compresses the mail processing time into a small window of activity. beginning at midnight an continuing for the next four to six hours. i did meet with some of the employees at the plant, and they wanted to be sure that you knew in white river junction that you process more than the four to six hours, significantly more. even with that, we're going to show you further along there's a strong business case of savings. but this represents a national average of mail processing. and it is a little bit longer window. due to the overnight first class service standards we have to

maintain this capacity, even though it's not especially efficient. and given the time and distance doeshted with getting mail to and from each facility, it also means we have to maintain numerous facilities. it would be based on changes to a mail class service range. this would allow mail to be processed during a longer standard than 24 hours. we anticipate that this kind of nuch network would support a two to three day first class standard. it would include revised time for dropping off first class male or what we call entry times for first class mail. we would also expect them to result in 50% reduction in mail processing equipment and a significant reduction in the physical footprint, eliminating capacity, meaning time when the equipment is not running in our

network. it also enables us and the customers to optimize transportation. one obvious question about the changes is how does this impact the customer? there are two major areas of change to affect the commercial customers. first the local footprint. literal will where business customers would need to drop off mail. customers with drop off mail at most any accepting facility. however to get a discount that some mailers currently receive, mail must be entered where tg processed the local management team is available to discuss the specific concerns with the mailers. we did meet with a number of larger mailers this afternoon to start an ongoing dialogue with them. should this be a study that goes forward we would want to problem solve with them on a regular basis to make sure that their businesses are not impacted.

we also think our commercial customers could accommodate the new schedule. many have told us that this is something we need to consider. that being said we know the proposed changed would have a cig capital impact on the mailing industry and local matters. we outlined the proposal to most of the major groups on a are generally pleased with the response. we have a good track record of working with the industry and local mailers and a are committed to making sure it would be as smooth as possible. i would like to speak for a moment about our employees. these business decisions weren't made lightly and these changes would affect our employees. not only in white river junction

but in northern new england and the united states. for achieving efficiency gain ls over the past few years even in very challenging times. nearly every employee in our mail processing facilities could be touched by these changes. changes even the possibility of change is very unsettling. should sheez changes become a reality we would make every effort to accommodate employees and provide physicians where we can. over the past 12 years the size of the workforce has been reduced by 250 thourk positions, mostly through attrition. which largely involves retirements. we've never had to lay off employees. it's our culture to be responsible. a responsible employer and that

won't change. now that i've shared a little bit about the general information on area mail processing let's talk majority about this study. again let me make it clear that we have great employees in white river junction. this slide shows the distance of our locations is approximately 82 miles apart. just to give you a little geographic information here. and the next slide shows approximately 91 miles between the white river plant and the burlington, vermont, plant processing center. if the consolidation of

operations at these facilities is approved there's an expected annual savings of $8 million. the business case shows us in the preliminary data that the mail processing work hour savings are estimated to be $3.3 million annually. the mail process management savings are estimated to be $487,000. the maintenance savings, $3.2 million annually. there are other miscellaneous savings in there these are the major categories that we gave you here tonight. often times they have to change jobs, hours and work locations. all are in agreements with the unions in the study were to go

guard. the study shows a net reduction of 50 employees. an attempt will be made to put them inin the district. so it's taking the number of positions in the three plants involve involv involved and after the study if we were to close white river junction there would be a net increase of 51 positions for the facilities the consolidation would support a two to three day service standard for first class mail. other considerations include retail services currently available at the white river junction processing and distribution center. those would remain. business mail acceptance unit at the white river junction processing facility would