Transcript

Chris: Hi, this is Chris Lien.

     Anita: And I’m Anita Pursley. Welcome to Industry Corner, a podcast where we share postal industry news to help you stay informed.

Chris: On today’s podcast we recap the National Postal Forum, review the House hearing that took place on April 30th and discuss a flurry of postal legislation currently being proposed. So let’s get into it. Welcome to the podcast. Hi Anita.

     Anita: Good Morning, Chris.

Chris: Good morning. We’re back from the National Postal Forum and you know, uh, it was in Indianapolis this year. Anita, I guess I’m not a big race car fan, but I’ve noticed on television a lot of advertising for the Indy 500 which is coming up soon. And I thought, well that’s interesting. We were just in Indianapolis and had a chance to see that.

     Anita: Yeah, you want to go back?

Chris: Yeah, yeah. So it was very fascinating because like I said, I’m not really a car guy. I’m a computer guy. But it was very fascinating there. And I have to tell you, the National Postal Forum is really the preeminent event in the mailing industry each year. I mean there are a lot of other venues that focus on print and direct marketing and direct mail. But for me, the National Postal Forum has always been just that exciting time to come together as an industry. And I understand that this year the attendance was up, postal forum board was saying there was over 4,000 attendees, postal employees and industry. Is that what you saw as well?

     Anita: That’s what I heard too, that the attendance was up slightly. So I felt the energy in the audience, for sure.

Chris: Yeah, great energy. We had over 350 people stop by our booth. And that was great because there’s a lot of interactions with current customers, and you know, new customers with the Satori acquisition. We had some new partners that came by, excited to talk about them. And you know, the buzz that I heard a lot was they’re looking at expanding mail automation workflows. They’re looking at expanding technology, investing in different types of print technology. So we’re real excited. And of course, you know, one of the things that we got asked a lot is, you know, what is our plan with the acquisition of Satori software? And so we were able to share a little bit at a high level with some of the attendees in the booth. I’m more anxious actually, and not to make too much of a shameless plug, but our Information Exchange coming up in August, that’s going to be the opportunity where we’ll sit down with our customers and have a more candid conversation about the future roadmap. But NPF was just great interacting with people and partners, and the sessions were really good too I thought. What’d you think Anita?

     Anita: Every session that I went to was exceptional. I did share this with the postal forum board though. I think they need to go back to the beginner, intermediate advanced sessions because I got a lot of feedback, like you know, people walking out going, “Wow, that was great, but I already knew that.” Or, “It was really way over my head.” So I think that scenario that they could do some improvements on. But I thought the ones that I attended were great.

Chris: You know what, I’ll tell you the other thing I really liked about NPF this year too, and I know they’ve been working on that, is the certification, being able to get certified as a mailpiece design professional or all the other different levels of certification that the Postal Service offers with that. And that’s really important for the industry. You know, again, for our listeners, if you’re not getting certified or taking advantage of that opportunity – that’s a great way to enhance your subject matter expertise and really become that SME within your company to add additional value to your employer as well as to your customers. So NPF is a great place to be able to get certified and recognized for that, as well as get the education. And I think you’re right on that Anita, let’s see if we can get it so you can identify: “Am I just brand new to the industry?” And there are a lot of brand new people there. A quick show of hands in the session I know that I did showed about a third of the room were first time attendees to the National Postal Forum, and maybe about 20% – 25% of the people in the room said they’d only been in the milling industry for five years or less. So we got some new people there, new faces, and that’s a good thing. That’s definitely for me, it’s growth in our industry, which we definitely need.

     Anita: Well, you know, one thing I’ve found a little bit odd, and I’ll want to know if you agree, and that is that the opening sessions, which are already fabulous productions, but the focus was so heavily on marketing mail and you know, the complementary marketing aspects of digital and hard copy, and very little on packages. Right? And it seemed very, very marketing mail focused. What did you think?

Chris: Well, I agree with you on that. To me, and maybe it’s because most of our customers are producing marketing mail as mail service providers, it’s maybe a reflection of the Postal Service sort of coming back and saying, “Okay, what’s the core business?” Right? It’s not packages. And I know we’re going to talk about the House hearing here in a minute to pivot to that, but that was part of that conversation. So I think that was an opportunity for the Postal Service to recognize the people that were there that “Hey, we’re the United States Postal Service, we’re here to deliver mail.” And of course the largest volume of that is with marketing mail. I will do a quick shout-out though since I’ve got the mic here. I really appreciate the Postmaster General in the opening session on Monday morning recognizing software providers as part of key members of the mail supply chain.

     Anita: Right!

Chris: I’ve been attending the National Postal Forum for many, many years and to my recollection, she’s the first Postmaster General at an NPF that openly acknowledged the software vendor community. So I appreciate that and I told her as much when she stopped by our booth later that morning. So I appreciate the Postmaster General recognizing the criticality of software in the mail supply chain.

     Anita: We got a picture with Megan.

Chris: Yes, we did, and Jakki. Jakki Strako stopped by too, so it was really wonderful. We appreciate our postal partners and we certainly appreciate all of our customers. But let’s talk about that House hearing.

     Anita: Right, there’s so much to talk about.

Chris: Wow! You know, Anita I was texting you as I’m watching it and sort of contrasting it, right, to the Senate hearing that you and I watched together. Senate hearings are like watching golf. House hearings are like watching rugby. I mean they just pounded.

     Anita: Certainly, this one was.

Chris: And you know, I kind of felt bad for the PMG, but she did really well. But, but boy, I’ll tell you what, some of those representatives were pretty pointed in some of their comments to the Postal Service.

     Anita: Right, I think most people would say it wasn’t a great day for the Postal Service because Mark Meadows, who’s always been an advocate for the Postal Service, he actually became quite hostile. And actually surprised us because I wasn’t aware that the Postal Service had promised a 10 year report to Congress. And so of course, I don’t know what the facts are there, but Meadows was pretty upset that the Postal Service has not completed that and it’s not in his hands, so I think we’re going to hear a lot more about that. In fact, Chairman Cummings has already set a tentative hearing date for early July, I believe it is, to review the plan that the Postal Service submits.

Chris: Yeah, I noticed that there were two exchanges between Representative Meadows and the Postmaster General that I noted. One is, as you said, where he openly stated that she broke a promise. Now whether or not that you know it was an actual promise or what the exchange was that was not done in a public hearing.

     Anita: Or a misunderstanding, right.

Chris: Yeah, so it may have been a misunderstanding on that part. Having said that, certainly I think the industry is due. And you and I have talked about this in getting some more clarity on what this turnaround plan’s going to be. I understand we don’t have a full compliment of a board of governors yet, and hopefully we’ll have an opportunity to get an update later in the podcast here on it, but there should at least be an opportunity today to telegraph to Congress: What are some of the plans? Because some of those ideas that were bantered about previously are nonstarters, and one of those is five day delivery. Five day delivery of mail, and seven day delivery of packages is problematic from a bipartisan aspect. And Representative Meadows had come out specifically with that and then asked the PMG if five day delivery was going to be part of this omnibus, 10 year plan of everything going on with that, and after a couple of exchanges back and forth, the PMG noted that yes, it would be in there, because all things were going to be considered, and that led to another testy exchange, unfortunately.

     Anita: Well, I have to comment on Chairman Cummings’ introductory remarks, and that was one of the things we were texting about, right? “We must not place the burden of reforming the Postal Service on the backs of the postal workers. Their wages and benefits are modest.” And you know, we’re both chuckling about that. But, you know, I think that was his way of telling the Postal Service that any effort to reduce delivery days, or close postal facilities, or eliminate collective bargaining – off the table, it’s not even a starter.

Chris: And not to get into whether or not they’re modest or they’re excessive, the point I think to make on this is just for our listeners to understand, really on the surface what the division is within Congress right now. Here you have Chairman Cummings saying that the wages and benefits for the postal employees is modest and yet when you and I watched the Senate hearing previously in the year, the statement loud and clear that came across was that they were overpaid compared to private industry, UPS and FedEx employees. So there’s definitely a big gap in understanding in my mind between how the House views the situation with the Postal Service and how the Senate views the situation with the Postal Service. Which all leads to a division in what could end up being an omnibus piece of legislation that would be presented to Congress, ultimately for the President to sign, that would ameliorate some of these problems with the Postal Service. So I don’t know the likelihood of anything coming out that’s going to sort of fix the whole situation is going to happen. If anything, maybe it’ll just be a series of smaller pieces of legislation that might help, uh, with the Postal Service because we need help.

     Anita: Oh, I’ve got some interesting information on that, but let’s finish up the hearing first and I’ll share that. The 10 year plan, I assume we’ll see it before the July hearing, but what I did was I looked back at the last time the Postal Service issued a 10 year plan and that was in March of 2010. It did include the five day delivery, it included pursuing an exigent increase, which they did of course. And then also restructuring the RHB, Retirement Health Benefit pre-funding, to a pay as you go. So it was interesting to look back, that was, you know, nine years ago. But one thing that really piqued my interest was it had establishing a more flexible workforce because 300,000 or more employees were eligible for retirement in the next decade. So that means just in the last nine years, we’ve seen over 300,000 employees who were eligible or who have retired.

Chris: Wow. And to a degree, the Postal Service I think has implemented some of those plans. Right. I mean, my understanding is that there’s a growing number of mail carriers that are not considered career employees. I think that signals what the post service has put forth in that plan going back.

     Anita: Yeah. And I think it’s been fairly successful, but I know they do have a pretty high turnover rate in those temporary workers and flexible workers. All right. So let’s talk about the flurry of new postal legislation proposed.

Chris: Yeah. There’s a different approach instead of an omnibus bill, maybe just a series of smaller ones. Right?

     Anita: Right. There’s some that are, you know, not very significant. Like allowing alcohol sales, which is something that’s always puzzled me cause FedEx and UPS can ship alcohol, but the Postal Service can’t, you know, that’s always confusing. And then of course, updating the Postal Service’s vehicle fleet, you know, that’s on everybody’s mind. And then I think that there’s also an effort by Sanders and AOC Cortez, I always call her AOC. But anyway, they want the Postal Service to get back into postal banking, which I think you and I both agree that that’s a ridiculous notion.

Chris: Yeah, I think that’s a bridge too far. Right?

     Anita: But what’s interesting, okay, so here’s what I want to tell you. There’s one bill out there, it’s HR 2382, that is a simple 10 word proposal. It’s incredible. And all it does is it repeals the pre-funding requirement. So when I first heard that, I thought, well that’s ridiculous because it’s not going to score well. It’s not going to get a good congressional budget office score. But when I looked back at the testimony of Fred Rolando in that hearing that we just discussed, he mentions that it would not score poorly because, I’m going to read this to you because I couldn’t recall this: “The measure would no longer result in a CBO score. It would no longer increase the federal deficit because the CBO budget baseline now assumes that the Postal Service can no longer make its pre-funding payments.” So I thought, oh my gosh!

Chris: So they removed that…

     Anita: Right! Well, you know, surely he knows what he’s talking about, right? And the interesting thing too is that this bill has bipartisan sponsors, none of which are members of the committee of jurisdiction, interestingly enough, but it has been forwarded to the committee. So it doesn’t fix the other issues, but it sure would take the heat off of Congress to address the remaining issues and push out the crisis further. But it would be kind of hard to oppose a bill like this if it doesn’t get a bad CBO score and it fixes one of the major problems within the Postal Service. So I’m really curious whether this is gonna go forward.

Chris: Interesting. Okay. Yeah, 2382, so we’ll have to keep an eye on that one. But I agree with you. It’s nice to at least be able to talk about the quick wins, the more obvious pieces of it. And if we can’t get this larger omnibus bill, which seems to be difficult with some of the division going on in Congress, maybe we just break it up into smaller pieces and eat the elephant a bite at a time, right?

     Anita: Right. Everybody has said we need a comprehensive reform package, but I think it was largely due to the fact that picking up bits and pieces would not be what Congress wanted because of the CBO score. At least that’s my understanding. So, so this is interesting.

Chris: Yeah, that is interesting. We’ll have to watch that one. Well, let’s see where we’re wrapping up on our time here. Anything else with the Board of governors? Anything else going on Q2 financial?

     Anita: Well, Roman Martinez, Martinez, I always say that wrong and Ron Bloom were voted out of committee. So what that means is the next step will either be a floor vote or a voice vote. So it could happen any day and cross our fingers because that would give the Postal Service a quorum.

Chris: A quorum for the first time since 2014 I think. Is that what we looked back on?

     Anita: Exactly, yes. And I think I had heard that in the last board meeting, which was held in Indianapolis, one of the board members said that it’s hard to even fill the board committees because there’s only two of them. So I know they’re struggling and they want to work hard and do great things, but without governors the hands are tied. The last thing I wanted to mention is the Quarter 2 financial results. I don’t know, we probably don’t have a lot of time to cover that, but you know, nothing really surprising, but volume continues to decline. First Class mail was down almost 4% year to date. And then the disappointing thing was that marketing mail volume is also down.

Chris: And that’s compared to prior year, right? Same period last year?

     Anita: Yeah. Good point. Good point. But they posted a $2 billion net loss. So it looks like they’re on target for another year of $7 – $8 billion loss for the year. So it’s a situation that, like I said, isn’t that surprising, but it sure is disappointing.

Chris: I agree. We’ll have to dig a little bit deeper into some of that marketing mail to understand where the decline is, because certainly we know it’s a non-election year right now, and we saw quite a bit of a boost in political mail for last year, and when I’ve talked to customers and I had this conversation at NPF, a lot of customers, were anticipating more political mail as we come into third quarter of the calendar year. So we’ll have to see how that works with marketing mail if that bounces back from the political mail. But certainly that in many ways is the future. I think in terms of mail, direct mail is really critical for multichannel marketing.

     Anita: And when does the census go out? Does that this year or early 2020

Chris: 2020 I believe is. Yep. Yep. But they’re preparing for it this year, so, yep.

     Anita: All right, well that was what I wanted to cover.

Chris: Okay, well thank you, Anita. I appreciate the information as always, and I want to thank our listeners for tuning into the podcast. We really appreciate your feedback and are glad that many of you expressed to us at the National Postal Forum that you enjoy the podcast. So thank you for listening. If you have any questions about what Anita and I discussed or would like to know more about BCC software, visit our webpage at bccsoftware.com or give us a phone call. As always, we’d like to know, how can we help? Have a great day.