Postal Union Turns to Wall Street for Advice

The labor union representing more than 280,000 current and retired letter carriers is counting on him.

On Sunday, the National Association of Letter Carriers announced that it had hired Mr. Bloom and Lazard, the financial advisory and asset management firm, to develop a strategy to revitalize the deficit-laden postal service.

“We have retained Lazard and Ron Bloom to make sure we explore and expand the various range of solutions to address the postal service’s fiscal crisis as well as long-range business strategies not being pursued right now,” Fredric V. Rolando, the national president of the union, said in a phone interview. “They have experience in analyzing large, financially complex institutions and crafting creative solutions.”

In 2009, for example, Mr. Bloom, as a senior adviser on President Obama’s automotive industry task force, helped to reorganize General Motors and Chrysler. Meanwhile, the Treasury Department last year hired Lazard, which has worked with the United Automobile Workers union, to advise the government on the initial public offering of G.M.

Mr. Bloom, a former Wall Street investment banker, also worked with the United Steelworkers as a strategic adviser to help revive bankrupt companies and consolidate the nation’s steel makers to help save jobs.

Mr. Rolando said it was too soon to say how long the new advisory team would work for the union or how much the project would cost.

A representative of the postal service did not immediately respond to a request for comment.

The announcement comes as the postal service, facing a deficit of nearly $10 billion this fiscal year, is confronting critical problems in both revenue and expenses that threaten its viability.

With nearly 600,000 employees, the agency has huge labor costs even as first-class mail, a major source of revenue, has been declining because of consumers’ increasing use of e-mail. To remedy the problem, postal service executives, along with other government agencies and certain members of Congress, have proposed major cutbacks to the work force, postal locations and delivery days.

The postal service also must comply with a law requiring a $5.5 billion annual payment to finance the health coverage of future employees. The postal service says it has overpaid into the federal pension plan and proposes to recover billions of dollars from the government to meet the health payments.

But the union’s new partnership with Mr. Bloom and Lazard indicates that postal workers want to shift the debate about cost-cutting toward a discussion of potential growth strategies that they hope could make the agency viable for the long term. Like the steelworkers’ and the automobile workers’ unions before them, the union of letter carriers hopes to make a business case for its industry.

“We believe there is a business here,” Mr. Rolando said. “We believe there is a way to grow the business.”

It will not be easy at a time when the postal service’s capacity far outstrips consumer demand.

The post office operates 32,000 retail outlets and delivers mail to some 150 million addresses, including businesses, residences and post office boxes. To deliver mail six days a week to those households and businesses, the agency employed about 584,000 people last year. Labor costs now account for 80 percent of the agency’s expenses while competitors like the United Parcel Service, for example, devote only 53 percent of expenses to labor costs.

Meanwhile, over the last five years, mail volume has declined by more than 43 billion pieces, according to a recent press release from the postal service. In that time period, the volume of first-class mail declined 25 percent, including a 36 percent decline in individual letters — the kind that use postage stamps rather than meters.

Last month, Patrick R. Donahoe, the postmaster general, proposed cost-saving measures aimed at saving the agency $3 billion annually. Measures under consideration include closing or consolidating 250 processing centers, sharply reducing the agency’s transportation network and cutting as many as 35,000 jobs.

But Mr. Rolando, the president of the letter carriers’ union, said it would make more sense from a business perspective to view the postal service’s vast network of retail outlets, letter carriers and vehicles as an asset — and one that might be used to do more than deliver mail.

“Our hope is to be able to come up with a strategy to maximize the network and take the business into the future,” he said.

Since Mr. Bloom and Lazard are only beginning to analyze the business model of the postal service, Mr. Rolando declined to provide specific examples of how the network might be used.

Article source: http://feeds.nytimes.com/click.phdo?i=f7954595b782c526390713ff0aa52093