d let's >víxa6&eñ go@5rq bu 5)y+ do our job and forget about it. that's the easy way out.loñgñ one, the organization$v internally. we owe it to them to talk about how proud we are of the work they are doing and wel @ñ owe to it the citizens and people that aren't in uniform just trying to figure it touched about it. so i'm not dissuaded, i'm notvhtnb chagrinned and i'll continue♪ to try whether it's venues like this, opportunities in the media. i say yes to every opportunity although rare and infrequent as they are, i want to talk about the mission and the men andfcm" women of the organization. and we'll continue to do so. sho,sfñ be doing wy let us$bamñ know. right. a lot of times people say when will you come out here and talk and do this. give us the opportunities. everyone2 nh that comes inp4zsñ request i advocate withinágs.x the opportunity this is a good opportunity, it's an opportunity

to talk about the campaign at the secretary's level how that is meshing what we're doingñl?) at the portsv we want to make morrow bust in the future. so help us t"+wout. >> if i,(qcould turn é +÷ robert to follow up on that r2çquestion. robert, you're in a unique position having been on the hill now for a while and i won't put you in an awkward position into what politicians will do in the coming congress but in terms am what you would like congress to focus on from a border security issue from a risk based strategy issue, what would you like to see happen?b81 what kind of key topics would you like to see addressed early on in this congress? >> this question ties in with what the gentleman asked and arizona.9pf when they asked me what should you focus on i was asked at 4#1%99 recently what did we

after thinking about it there'szp÷ only two states. that's the dialogue completely. i'm hoping the articles continue to change that ti log. i hope one of many articles that border patrol agents will take issues with and put out as wellyú?ñ as dhs. in the article as it comes outuu r of what we need to focus on is border security won't be completed by resources alone. it takes interagency operation w and intelligence investigative effort and focused efforts on those individuals responsible 5u for the majority of the crime.ú &ñ j the debate every day all hours of the day. resources, resources, resources and it's extremely important. if it's not coupled with the interagency knowledge skills and abilities we have with the intelligence community the investigative community and they are not to discussion onp individuals, then we'll continue to struggle. so i would say that's thenh;t most

important. >>g%tík yes.tdiq÷ >> identify worked aí,25ç lot with you guys over the years, and i have to say that underc chief fisher's leadership this agency has really t l robert's product is a perfect example of the6 kind of thinking that's going on.b>í inside this organization. both of you know that borders have two sides to them.ñ could you talk about your international x you talked about interagency extensively butjkriñ what about the international component to that factor into what you've written? >> thank question and for your45ax kind remarks.&hffo very critical. as a matter of fact it's the approaches. we're not just talking about the line, so to speak, and things only start when they come in to the united states.

matter of fact just beyond intelligence andñge working with our partners is to identify the threat wellkwñ in advance. so we kind of take xxy cpb has done in the air passengup environment. how do you minimize risk in the air< you toif threats andnb"qjj let them get on th(gqkk plane so we don't have to do turn arounds likenf%ñ we used to do in 2003 in bangor, maine. we take that same approach. we look at how>=1nszw& do we first identify those threats early. second, within the approach, within those which a lot of times you know this general, you have been down féfthere. even within the corridors to our terrain will dictate routes of qo travel. how do we leverage that with government of mexico and the work you have done and your team in ending us to bridge what you'vesxy) established and working and taking that a stepr8'ñ forward and doingp0tñ the work with federal police is threat assessments.

so we have the same situational awareness. doesn't meanz"e're asking beyond what they are asking for. we start with tezy stuff. if we can agree to either understand what bh that0 threat environment looks like or even if we disagree at the end what we should do about it that's okay f working with mexico and they do recognize that, you know, some may look at it this is migration through the country and nobody should do anything. but those in those leadership positions fromi"wy the military and certainly the security side of it recognize that the threat even though it may be heading to the u.s. is going8 through their area and we're making[3 incremental steps and trying to2ukx do the joint planning and joint patrols.ñ-ñ we're looking for continued support in that regard both in terms of frequency of deployments and number of deployments and really looking for a"sa

commitment over time which is the critical piece as you saw when we were down there. >> sir if i couldrcáaz follow up tñf.apthat briefly. you talked about the southern border and southern approaches. can you talk briefly about the northern border? obviously, not as many one would o w8tut scenarios which arel concern along the northern border, but i have toif was the candidate for a while in the pentagon so i'm curious what the border patrol might be doing along our northern border. >> what they are doing is identify what their risk) indicators will be on the north. if you look at any of the 12pqít risk indicators the metrics are specific on a threat which i would generally characterize as flow. people and things coming across the southern >0 order. so, obviously, if we're trying to measure the extent to which we're reducing that flow thosevh&b metrics make sense.]=" i want does not make sense:rox to á:ñ>wz2÷ adopt those,3q)c metrics in a place

like montana andsú, hold the chief in montana accountable to reduce the average apprehension perd recidivist when they catch one person in the spring. it's a different environment. i'm not suggests there's zrñ threat. what the border patrol.jsy leadership is doingnmw sundaying this framework in managing risk. they are still held to account&÷ to manage risk but what they have to do is identify what the intent and capability tç$ defines the threat is in their area of operation. understand their vulnerabilities and what thenñ identify what that risk is. and to5nf[revdñ2oúca carve that out.évm pmg >> my name is b i'm grad i'm glad to hear increase in

dialogue with public)q border patrol's mission and strategies and the handout will be very useful in helping with that dialogue and ique4buut along with that my question goes to sharing the information as you gather these measurements and be impacts and i specifically would ask about giving numbersd4qrj about checkpoints, what happens at checkpoints,xwñ apprehensi7k] and seizures. a;e t of communities that i'mad.n14]z familiar with in arizona have0k8 asked for this informationx%%já their local checkpoints so they:$+ know1aé what is happening at those]l m#á$kpoints and have not been given 9( information as well as the transparency it does happen such as antonio hj4rñ rodriguez's death the transparencyn"bqñ around the facts and information that. when a border patrol agent involvendìáhp &hc% so t,cf publich z0

by)ax patrol can either be held accountable or facts are out there so they are judged by everyone equally. i'll point in that far corner. you'll see c$y assisted chief, if you'ró- inclined at the end of this walk over introduce yourself and he'll give you a business card and point of cop the act if there's a specific oñ!.3"q about the checkpoint over the past we're i want to know how many

i have a technical questionfm about your and how you use them in calculating this border flow particularly how do you measure what you&ç8 don't know? for those:l#ñ where you haven't aprehenned someone, they are not aé those 6z into your risk.,c' metric?@zn÷ñ >> that's a great point. that's the question even when i first tame up in 2010. i heard it repeatedly. so if a=zéq tree falls in the forest and there's nobody around does it make a sound? right. so how do you know what:f you don't know. you're giving us -- inn-q$4ñ still remember this. one of the first hearings i did z)hgao. this is back in 2010.fc' border patrol that's great. you're giving us your vzñ apprehensions. your 4(a enumerator. math was horrible for me.

then hefáñañ saidkzez it's just like chief give mev'8uúm9f intradiction rate. just think of it. it goes to the pfñ heart of a question i ]?y got. it was probably, i don't know,k;ehx six years ago or so.q'aú this was a) e i community that reallyó&cr wasn't on or near the border. we'rens talking about what we do and our deployments and finally this, this gracious woman& raises her handózb b saysoqjc chief i don't understand anything you're saying. can you just tell me last night

how many people came across the border and how many people did you apprehend. is that too difficult? there's twoñ 6hk tz sides.2ehv my left sideé gosh that is really 0jn.difficult. i have no idea. but so simplistic. q we do that. that's whate identify to the extent we're able to this3/;+ñ radio show so we have a denominator. this. this is not science. wuv'you're trying to do is you're trying to organize2ñ train, equip an organization mexicox;@36 bet&bx able!g to count how many people areb5l0 coming across that bor 2,000 miles.z with some rough$ljjñ and desperate $pñ terrain. how do you do that? for a number of years i still remember nobodynx y çpyzxñy-7 wanted

to even try. because as a proud organization if you couldn't do it with&ñ perfection you just didn't do it. which is why we held up apprehension numbers and defend it to theéáp÷ death because we could golxv into an e3 systemminñ and be able to tell you exact d what the fingerprint identificationí9wñ was, person's name, c?ñ

you tell them i would like for you to count on your shift this afternoon how many people camex&:y across.oñt okay.éqpthey want to do:bñdbtáy they will come back and say2y can count a lot better if you give me z÷3,a, b and /xc. through each successive÷xñ year we look at the -dh-÷r in whichj standardizing the

do our best to identify that. not as the metric. not trying tosfjw hijack you know, do away with + the effectiveness rate. this is one of fall that helps inform us about howo and what we're doing along that border. great point. >> time-i> and this is the= bt will ask it. >> ice just a follow upmaárñ on theampr vdone. what is the range in zú a percentage, the specific numbersc% that youoi÷tb jz you apprehend. what percent of the people that come across the border y6 apprehend? >>[ a about 79%,e78%.z6cá 95% confidence with margini#v%ñ of error of 2%. >> you use all of those math terms. i want to thank everyone

wedm[v3$y on c-span 3 energy secretary ernest moniz discuss the energy outlook for 2015. live cov;r[z from the wilson center in washington, d.c. begins at 10:30 a.m. eastern time. and president obama visits a ford assembly plant in wayne michigan to talk about jobs manufacturing and the economy. that's at 4:05:00 p.m. here on c-span 3. this sunday on q and a author dick layer talks about the 1915 film "birth of a nation." the efforts about civil rights advocate to prevent the movie's release. >> part ii of the movie after

the war,úi reconstruction is really the heart of this is where the blacks are just april pade by the portrayal of free slaves.k &háhp &hc% this is a scene showing what happens when you give former slaves the right to vote, the right to be elected, the right to govern. it's a scene in south carolina legislature where their first and primary order of business is to pass a bill allowing for interracial marriage because again, griffith's hands black men are solely interested in pursuing and having white women. ♪íiy

>> author dick lehr on the controversial story behind "birth of a nation." at the national press club post master general patrick donahoe discussed the future of the postal service and how they are adjusting to lower mail volume. he's led the agency since 2011 and leaving the job on february 1st. this is an hour. >> nice to be back here)a-eñ at the national press club and i'm glad to see everybody made it. neither rain nor snow nor gloom or dark of night. that's very good. this letter carrier. it's cold. and especially going up and down steps. keep them in your thoughts today as they are out there making sure the mail gets delivered. i would like to thank herb and the news makers committee for

inviting me back, making a little schedule in the program for a lame duck. but 40 years ago my uncle bob rousted me out of bed one summer morning, i was a soft for in college and wanted to make sure i went down the pittsburgh general post office in time to take the postal exam. if i hadn't done that 40 years ago i wouldn't be standing here today. ended up working the afternoon shift and it was going to university of pittsburgh during the day and i was going to graduate in four years and did that and so it wasn't easy because we had a lot of demands on our time back then but i do consider it very lucky in terms of great start to a career. now, if i could talk to a younger version of myself back then at that time there's no way that i would have guessed that i would have been with the

postal service almost 40 years later much less being able to lead a 630,000 person organization to serve as post master general. i truly was fortunate att every stage of my career. i found interesting challenges. opportunities. very good mentors. and that's a testament to a very, very special organization and really great people who are dedicated to serve the american public every day including days like today in the snow. however when you have 40 years of perspective and still working to get out of a tight fiscal crisis, you wonder about that young person who might join the postal service today. what's the organization going look like in ten to 20 years from now? how do we serve our customers in the future? will that person have the s!d' opportunities today in the organization that i had almost 40 years ago? these are questions that need to be addressed.

and the best approach is to take a broad long term view of the organization and develop strategies that best serve both our customers and our employees going into the future. can the postal service operate profitably far into the future? absolutely. can they continue to adapt quickly to changes in the marketplace? we've proved that. we can do that. can it continue to meet its full potential as an engine of growth for the american industry and american business? absolutely. can it do these things within the current business model? not likely. now if you followed my tenure as post master general over the past four years you know i spent a decent amount of time trying to push through legislation that would give the postal service greater operational flexibility. this means having greater# control the way we manage our workforce including health care benefits, means fully managing

our infrastructure it means having greater pricing and product flexibility. and it means being ableñg:fñ top problems and pursue opportunities without irrational benefits mandates and legislative requirements. retiring health benefits is my favorite example of be a absurd mandate. unlike any organization the postal service is to prefund retirement benefits that we promise to employees. we promise we should fund them. telephone congress has made the postal service prepay a 40 year obligation in ten years. which would have been very easy to pay if the internet had never been invented. compound the issue we massively overpaid for retireee health insurance. that's because our employees are in plans that do not leverage medicare. and the postal service and the employees pay for those medicare benefits so we pay for it and can't use it. under our current mandate we're

supposed to pay a total of $96 billion into the treasury department account for health benefits. we paid -- we've already paid m#h& $48 billion prior to 2011 and we've defaulted on roughly $22 billion in the past three years. the sad part of this is could it have been fixed immediately with legislation. if we integrate medicare into our retire yeah health care plans we would be fully funded after one final $3 billion payment. we're done. be fully funded. practically full'> funded into one retirement fund and fully funded into another. we would be in better financial shape than any other organization in this united states. rather than overspend on health carwe2could be spending these funds on a new vehicle fleet. package=

so what's holding it up? myopia, short sightedness. it sounds harsh but it's too easy for me to stand up and say it's congressional gridlock. we've been trying to get postal leverage jays passed in the past four years. we tried to elevate conversations about the future of the organization we never get beyond a narrow set of interests that are determined to preserve the status quo. the postal service has put together a smart comprehensive business plan and made recommendations about legislation changes to get us back on sound financial footing. we didn't get much support from our unions or“1 mailing industries because it threatens the status quo. they don't want the postal service to have greater product and pricing flexibility. i find this odd because ongoing lack of reform creates more pressure to raise prices which

is exactly what happened last year. our labor unions view the future of the organization mostly through a lens of preserving jobs and benefits as they currently exist.>á% technology is driving dramatic changes in the delivery service. look at amazon. they are offering one hour delivery in new york city. the postal service needs the flexibility to be part of thosekkg changes and more importantly shape those changes. the postal service is delivering packages seven days a week in most parts of the country. we don't need to be delivering mail on saturday. doesn't make financial sense given over 30% drop in our volume. and the- change going five day delivery. my hope is that a new congress will find ways to build consensus and i want has to start with the real willingness foornt of all stakeholders to take a longer term view of the organization. the narrow interests cannot continue to)d get in the way of the broader national>/ interest.

just this past year the american postal workers union mounted a campaign to disrupt our partnership with staples which was a good business partner for the postal service. the postal service partnered with staples to provide customer with morven access to a wide range of products and service in roughly 82 staple stores. it was successful in terms of driving revenue for both partners. unfortunately the apw approach is to keep all transactions at the post office. that's not convenient for customers especially in today's world and not a smart strategy from a retail perspective for our business or any other business. we much prefer to be able to sell our products and services with a multitude of retail partners and be in popular locations to make it easier and morven for people to do business with us. it's an example of narrow short sighted views winning over the longer broader long term strategy and unfortunately for

now it's a little tougher to find retail partners. attitudes have to change and i hope they will. i've bern accused of being optimistic to a fault and perhaps i am. but i believe this new congress long term future of the postal service and pass legislation that we need. as someone who is leaving this job in a few weeks i'll offer some unsolicited advice on the way out. first of all acknowledge the reality that mailing and shipping marketplace is changing rapidly. first class mail volume have decline more than 35% in the past tent)l[ years. that would be worth ry$17 billion in annual revenue annual, $17 billion of revenue that's gone and it's not coming back. e commerce is driving big demand for delivery service and that's driving our package growth. location based technology is

delivery and integrating mail and digital technologys is creating powerful strong business opportunities for senders of mail. these are facts about our business that need be part of the tuch business model discussion. will the postal service continues to fulfill its core business message? yes. but congress needs look at the postal service as a business that is going to be a lot different in the coming years and should be viewed as a positive desirable outcome. second congress needs to take a broader long term view of the organization. america needs a strong postal service. it needs a postal service with a business model that's profitable over the long term so it can continually invest in the future. we owe our customers and the nation a postal service that will continue to drive the economy. help business grow. provide continually improved products and services. of the organization would benefit greatly working towards

a ten or 15 year time horizon. if you truly embrace the longer term view many of the narrow special interests that have completely -- would have a completely different context and be much less important. third, the postal service needs the authority and flexibility to manage the organization more like a business. this means streammzf÷ line governance, this means fewer pricing, workforce flexibility and freedom from very irrational mandates that we're under today. we'll always have strong oversight and checks and balances are in place but we need to have an attitude across this entire industry that encourages flexibility in the way we manage the organization and adapt to the marketplace. fourth, i would encourage congress to view the postal service as a test bed or a laboratory of change that may be applied to the rest ofo ú federal government. we look at our workforce andbksc÷ what we'll need in 20 to 30 years from now.

what we're doing today has to evolve. no shock people aren't looking for a single employer over the course of their careers. in today's world does it make sense to offer a pension to a 22-year-old. how reliable is that? the postal service's financial issues are similar to those facing the federal government. at some point costs have to come down and the promises of benefits have tojp be paid. just look today at the unfunded liabilities for our military veterans federal state and local retirement systems. we propose transitioning from a define benefit program to a defined cont !;] program for postal employees. an ira would give employees moree1 flexibility and much more responsible and much morn nest arrangement with all is said and done. i would like to see the congress encourage much more

experimentation at the federal x level. the postal service has the kind of management that would appreciate being at the front end of change and would make good use of those opportunities. health care reformxu is another important area for experimentation. i don't think anyone would argue that the federal government isn't massively overpaying for all employee and retireee health care. let the postal service develop a much more cost effective approach. we've developed some promising proposals and we should have the flexibility to pursue them. over the past four years i've had the privilege of leading a great management team. and a tremendous organization through some challenging times. i'm very pleased to say that our last fiscal year was the best in the past six years. we learned control without accountable, accounting for the pre-funding but a controllable profit of $1.4mekñ billion. and considering that we recorded a $2.4 billion loss in 2012 that

profit represents big success for the organization. we've accumulatedy f0f also $6 billion in cash which gives us some flexibility to make some long overduedm investments. it was pretty gloom joy=t there in 2008 and 2009 as we came out of the recession and we were facing declines in every part of our business. we had to revamp and improve our core offerings, significantly upgrade our+ !tu(u development and market strategies which in our package business in particular. if you take a look at the fact that we offer date specific delivery, free insurance, free tracking of priority mail a great value to customers and it continues to attract more customers to the postal service. however, we couldn't have offered those features if we didn't take a long term approach to upgrading our technology and tracking systems. we've worked hard to put strong

data and technology platforms in place to drive future innovation. one of the reasons we solidified our mail revenue over the past few years is because of the rich reporting data that we provide now to your commercial customers. we've also worked hard to develop a culture of risk taking and experimentation. we're delivering groceries in the san francisco area. we're doing same day delivers in new ç ork. we're delivering on sundays and taking on some small scale warehousing services. in all of these reveal nice results. direct mail is designed to bring small businesses in to the u2ahymail. it was an experiment four years ago. we also invested in our product development and marketing strategies. we revitalized sales operations. we've done a wonderful job in

getting close to our customers and competing for their business. we've been just as aggressive on the cost side of the equation. since 2006 we reduced the annual cost base by $16 billion.9) that's a year. annual cost base. 16 billion. we did that by consolidating 305 mailb) processing facilities our window hours at 13,000 post offices. eliminated 3,000 delivery routes even as the number of deliveries increased by a million new deliveries per year and reduced the size of the workforce relying on an orderly process of attrition without resolving to layoffs. i think from many perspective you have to say it was the result of developing a strong long term strategy ignoring the nay sayers and following through. if we hadn't press sod hard and moved as quickly as we did especially on the cost side of the equation i have no out to be

we would have run off the fiscal cliff now. if we had done nothing congress would have bailed us out to the tunes ofoç annually. one message i have today is this. we made a lot of tough decisions that were based on the long term vup of what's right for this organization. we used every bit of flexibility we had as we should have. that should be seen as a strong argument for allowing this organization the additional flexibility it needs to deal with our bigger structural issues. if given that flexibility i have no doubt the postal service will adapt in a changing world changing marketplace and do so profitably. let me conclude by recognizing the performance of our employees during this holiday k)# we saw package deliveries increase by over 18%. and our on time performance was the best ever. our employees were delivering in

some tough weather conditions like today and on sundays and did a great job and that's a testament to+++n< job leading the organization. makes it a lot easier to pass the baton knowing the organization will be in good hands. thank you again for the invitation. the opportunity to speak with you. identify enjoyed getting to know many of you over the past few years and with that i would be happy to answer any of your

questions. thank you so much. >> thank you. do we have a microphone in the audience to pass along. seems like we'll just have to speak up. i'll take the first question. you mentioned the four years of work trying to get a postal bill passed and that didn't happen. how do you see prospects for legislation with the new congress? there's obviously a new chairman of committees in both chambers and postal reform is not something that they have been listing as the top priority butter will be a priority for the organization. what's the strategy and what do you see as the prospects for a bill in this congress? >> thank you. well, first of all, i think that the work that senators tom coburn and tom carper did was very good. it set as good base. it was a very good long term look at the organization, covered many different fronts. again irritated some people. let's slim it down.

do the minimum going forward. having the basis set going forward is critical. i think we got some good support in both the house and the senate. jason, the knew chairman on the house side used to be the subcommittee chairman of the postal service so he's familiar. he and eliajah cummings understands we need some changes. senator johnston was on the committee. came to all thaergs. very interested in the issues we faced. i think both sides realize it's critical going forward to have a strong postal service and you'll see some action. may not be the first thing that couples but both house to and senate are looking for some wins and i think from a postal service perspective there's a pretty good chance that there will be a good bill coming out

here. my hope is it addresses long term as much as short term issues. >> let's open it up to the audience. >> you mentioned that congress viewed the postal service as a test laboratory for special service generally and then you talked about does it make sense to have the promise of government pension to a 22-year-old. so i'm wondering generally what kinds of changes or what kinds of things would you like to see the postal service do that could apply to the entire federal service and specifically as it relates to pensions. your suggesting the government do away with pensions or all terrify pensions for its workforce? >> i think the issue that i've had with is that i think when a person like me came into the system and things were a lot different in

terms of a person spending many years in one place it made a lot more sense. when you see employees today and we see with it our management trainee, our management interns we go out and recruit kids off college campus and many come in and spend three or four years and off doing another job. i often think to myself in the case there and in the case especially when you look forward to, you know a lot of change potentially in the postal service in 20 years from now, i think it's fair to employees to give them a lot more control over what their retirement actually looks like. so when they come in we should be working with the unions to come up with some very interesting proposals around whether it's an ira or some type of a defined contribution 401(k). give people the flexibility to manage those things in a way that gives them more control. if you're a postal person coming in today at 25 years oshlgdld 20

years from now you may not want to be in a postal system. so i think we should step back take a good look and i'm not saying, you know rob the system or take the benefits away. it's critical as we see in the u.s. today that we have good pension systems and good retirement systems for people so they are not having to work until they are 70 or 75 years old. part of the changes also would be rules of withdrawal and making it a little bit harder for a person to move the money into something that wouldn't make good sense for them. but i think, you know the postal service and the federal government should be at the cutting-edge of some of those things rather than far behind where everybody else. [ inaudible ] >> we over pay for health care in an extraordinary manner. we got the fhhb which was a

great program in 1962. the federal government and the postal service would be the largest purchaser of health care out there in the health care market today. in the postal service we would have a million over a million people in the plan. we should be able to go out and whether it's an individual plan like a blue cross or a mix of a number of plans based on some regional offerings should be able to get a really good plan that provides a lot of flexibility, that provide as forward look at health care and get it at a reasonable price. i talked to other people and as a matter of fact there are companies represented in this room who told me what they've done from a health care perspective on a much smaller basis. we should have the same opportunity not only in the postal service fwigt. federal government has not funded one cent of retireee health benefits. that's a trillion dollars worth

of liability sitting out there and it's irresponsible not to address it. >> i'm from the "new york times." you touched on this a little bit in your speech but could you say what your sense is of how much smaller both in terms of infrastructure and staffing does the postal service need to be going forward? as mail volume continue to decrease. >> what's happened over the last ten years from a postal service standpoint is we've been able to pretty quickly adjust to changes in volume. it's interesting because define mail as mail and packages. within those groups those markets there's all kinds -- there's a gigantic range in terms of what people pay and how much revenue comes into the postal service. i think the key thing to keep in

mind is that over the course of the last ten years we've lost 60% of single piece mail, blue mocks mail 49 cents. that 49 cents mail is the most profitable mail we've had. that's the volume that's gone away the quickest. as you look forward you thinknk to yourself we'll probably lose another at least half of what you have there so you go from 20 billion to 10 billion and then settle out with greeting cards and bill payment. when that happens you got to account for $5 billion for revenue there' year you lose. on the other side of the house we've been growing the package business. it's a very competitive space. u.p.s. and fedex are excellent companies but you got companies like laser ship and others that

have the same technology that everybody else has. so knowing that you can't say we'll grow everybody out with our packages because that's truly a dogfight. understanding that and looking ahead right now we got about 4 the 90,000 career employees, another 140]m(lz now noncareer employees. we need from a flexibility and affordability standpoint a balance going forward so that, you know, we sit down with the unions.ósh9

mailing community because we certainly, you know feel with asking for a lot more flexibility with pricing you don't want to do that in a way that puts the business in way by raising prices and putting mailers out of business. there's a balance of everything you have there. >> let's talk about noncompetitive products. you know i write for folks that do standard mail. they would argue you're talking about as one of those narrow special interests, they indeed are not that narrow they are floating the boat with what they pay. they will say well okay, there needs flexibility in pricing but it's very expensive to market by direct mail versus internet. marketers have that option. and they will say raise the price, less volume. so, i know in speaking to you in the past, get control of the pricing we'll be fair and

reasonable with you. how can that work going forward? >> i think -- i think that, again, market -- the market will decide what you can actually charge. that's the position that we need to be in. i think that when you're in that situation the unions also understand that the market decides what a person actually gets paid and it's a balance of the fact that we're self-supporting no tax money you got to be able to have reasonable volumes whether it's mailing packages or reasonable price and excellent service and at the same time be able to, to meet payroll and offer jobs that people want to come in and work for on a daily basis so that's the equation. the fact that we're locked up on pricing on one side and i've already said to unions any kind of a price gap swaeg gap. you can't argue that one way or the other. you got to have that kind of flexibility. every other organization has that.

i think from a postal service perspective we've had a great group of governors little short. we need some positions filled. they always displayed a great responsibility and understanding where the mailers are coming from as well as the postal service as well as the american public. >> if i can follow up. >> sure. >> in new jersey right now there's legislature that introduced do not mail legislation like do-not-call. people talk about junk mail. if you were giving full pricing and i know i'm asking you to crystal ball this. how do you see that working in concert with the fact that marketing by mail is getting expensive. >> i think -- i would tell you it should be performance based pricing. that's where we should go. in today's world you can measure everything. you know that at that lot of the people that are investing in mail today are investing in digital. you can measure hits in digital.

you can measure with the intelligent mail bar code not only the day a person gets a catalog you can measure within an hour. you can see from what address who bought something and responded to that mail piece. i would say what we should be doing especially in that world, which is pretty competitive really when you think about it not market dominant we should look at a pricing scheme that's performance based. >> yes. can you speak a little bit about the mail processing consolidation in virginia and the early retirement buy outs that are going to come with it. you were talking a few minutes ago about short sightedness in congress and unions and something that they both have been very outspoken and against. >> i think -- let's frame it up first of all.

it's important to understand what we're talking about because in our world people love to put thing out there that may cloud the issue a little bit. as i mentioned before we have a substantial -- we've experienced substantial loss in certain portions of our mail especially single piece first class. that drives everything. it used to be half of our first class mail and just to put it into perspective in the last ten years when i mentioned that $17 billion number 14.5 of it came from single piece first class. so as we looked to try to second lie date the networks what we've done is taken a look across the entire market. the mailers have already made these changes. the mailers made these changes. when i was a kid starting in pittsburgh in 1975, every night bell telephone would bring mail. remember bell telephone. how about mellon bank. they would bring mail in. or duquesne light.

they are still in business. but every night. every facility across the country would have that. people would bring commercial mail and we kpro sees and deliver overnight. at&t dropped mail in three spots. verizon drops in two. many large companies that teal with credit card billing drop mail in one spot nationally. so they've already consolidated operations. we have this plant network that's still useful from a standpoint of destination volume putting mail in order for a carrier to deliver. but the whole front the end afternoon shift i started on is not there any more. there is no afternoon shift. so what we've wanted to do is take the remaining facilities, you heard we've already consolidated 305 remarkably the service is still great tracksing is still great, the value is still there, that's how you end up with a profit by the way versus a loss two years ago. and we'll consolidate the last 82 out and be in a situation

where we'll operate these facilities on about an 18 to 20-hour day versus a 12-hour day now. there's money to be made on that from a standpoint of not having as many facilities, not having as many as managers and supervisors, custodial work, light, heat electric. but the other thing allows us to make good decisions going into the future around equipment investment. we have 6,700 letter sorting pieces of equipment. you don't need that many when you consolidate. there's a number of changes. bottom line is this, with the exception of the holiday and your birthday, okay, you think about your own mail box. when is the last time you got a piece of mail that had a stamp on it? yeah. you don't get it. this whole change represents at most 4% of the mail. we think it's closer to about 2.5%. so you can't hold an entire

system hostage and continue to run up debt and continue to avoid making investments over 2% to 4% of the mail and that mail is unfortunately for us going away at the fastest pace. now from a responsibility standpoint we never let anybody off. i told you i'm from pittsburgh. most people will remember 1980s in pittsburgh we lost 100,000 jobs in that city. gone. steel industry went away and a whole bunch of other jobs and a whole bunch of towns and most people don't even remember or didn't even remember hearing about it back in the '80s when it happened. that stuck with me for all these years and i've always felt very compelled to make sure any changes we make, the minimal negative impact on employees. people do come to work in an organization for at that long time in many cases and if they do that we try to make sure the employment is taken care of going forward. >> i wanted to know what you and

the postal service have done combat that tip last month or so. >> from an assault perspective in the postal service there's a number of situations that we have. as any time that anybody ever has an assault whether it's by a customer or anything internally there are many venues to report that. the i.g. union grief vance process. we deal with it immediately. nothing is taken lightly. we follow up and we take whatever actions we need to a, prevent it and b, address it if it happens. >> have you ordered anything -- [ inaudible ] >> we have got, i think the best system in this united states responding. we respond immediately to anything that comes up. whether it's a known assault or whether it's just potentially even something as harsh words and we follow up -- we take all those things very slirs and

address them immediately. >> and broader violent crime i want has increased particularly robberies nationwide. anything you would recommend for your successor. >> part of the consolidation is make sure our letter carriers start earlier in the morning. in neighborhoods it's unfortunate, some neighborhoods in the evening delivering pannings today our letter carriers are more exposed to somebody with bad intentions pop so as we consolidate the other thing that happens the mail is available much earlier for letter carriers in the morning so we can start them rather than 8:00, 6:30 in the morning get them off the street before dark. >> so you talk about what the postal service isn't. the decline in first class mail. dogfight for package delivery.

so what do you see, thoughs in the long term you know ten years out five years out, i don't know. what is the mail going to look like and what role will the postal service have in delivering whatever this new concept of the mail is? >> well, i think the key thing to keep in mind is the fact that we are every where every day. we have 215,000 routes every day that visit americans and even on sunday now. we probably scene out somewhere over 4,000 or 5,000 delivery routes. maybe two or three hour sunday delivery routes. even with changes when he to make in our post offices. we still have 32,000 physical locations in every town in america and we've had, to with the post plan we shrunk the hours but kept the presence there. that was done on purpose. what you'll see going into the

future and this is why we expanded into sunday deliver and groceries and same day deliver and warehousing. you know today in a couple of spots can order something and it comes right out of our post office delivered to your house the same day or in one day? and i think that with changing american demographics much more need for convenience that we shouldn't limit the postal service to the idea that it's just mail or packages. there are going digital products out there. there's an interesting article in the paper last night at ces, somebody has now developed a way to sign on to the internet just looking at it with your face. facial recognition. can you sign on without even a thumb print like apple does now. there's a need to make sure that face is who it is and the postal service can play an interesting role there. so there's plenty much interesting opportunities going out in the future, we think from

a standpoint of delivering many different things. grocery business could be a multibillion dollar business from our perspective. to me i would never do it. i would never thought about ordering groceries. when you see what people do it's amazing that the growth opportunities you got out there. so, we're working with a couple of partners now. there's big opportunities. so take advantage. 215,000 routes visiting houses every day, 30000 plus post offices we think there's a bright future out there. you can't limit yourself to what you're doing now. you got to keep it wide and flexible. that's why we're asking for flexibility of product and pricing going into the future. >> you talked about expanding. you have been criticized over doing that. the office of inspector general recommended pilot projects for

nonbank financial service. ralph nader called on you for the postal regulatory chair person put out two dozen recommendations. how do you follow up on. on the other side selling off post offices. it's called a bank heist with no cop on the beat. historic places with new deal architecture and art being sold off to real estate companies. how do you respond to that. captioning performed by vitac