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Post Master General Patrick Donahoe on efforts to reduce the U.S. Postal Service’s costs.
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Pleasure any time.
Turning now to the post office it has been BAA news for the past week and as we just mention.
The GAO says it's -- face and he deteriorating financial situation.
And which does not have sufficient revenues to cover its expenses and financial obligations we now -- but the Spencer has a plan.
And joining me -- -- the man himself Patrick Donahoe postmaster general of the United States it is great to have you back on the show.
We placing your time -- and I wanna get your reaction right away to what you just heard there.
Fully agree with what the GE is said we work very closely with them.
It is a business model issue there -- exactly right we've lost a substantial a lot of first class mail.
And even though are packaged business is -- very well there's not enough to make the difference up so we have had to do a lot of cost reductions and and one of them is to eliminate Saturday as they have mail delivery was deliver packages.
You don't know what I see you do interviews and I see you -- you strike me as someone who has a planet is desperate to make changes and it feels like you're being held back from doing.
What you think you need to do in order make this business viable we asked you for specific things that you wanna get done and there are some really big changes in here.
One is you want to require the Postal Service to sponsor its own health care plan.
What does that mean exactly and how much money do you think you can say.
Well right now the Postal Service this part of the federal plan.
It's a good plan but we think if we took our own plan over what was a big provider like a blue cross or united health -- somebody like that.
We would be able to -- one million people.
Compete and have the best plan and in terms of size and scope of the United States it would do a couple things that would reduce our costs related we think.
By about one point five billion dollars plus.
It would allow us to reduce the retiree health benefit numbers going forward.
We've got fifty billion dollars in retirement.
Savings for our retirees already we're still on hold for another fifty we think we could really reduce it with our plan.
No I love the idea you going -- -- this competitively have you seen a lot of resistance -- -- -- -- back.
Well it's it's not so much fighting back this is change people worry about that and then we've gone on record saying that the fifty billion that we already have -- the set aside.
We -- putting that in a special treasury counsel that our employees do have coverage going on the future of -- our volumes go down revenues Saddam they'd be safe.
So how -- A lot of reform the business model and we are are ready obviously you wanna cut back to five -- mail service the biggest problem is the snail mail going out to places.
-- it's just not cost effective to deliver mail at -- same time people say that your basic missions so.
Where could you make big changes in save big money.
We've already been making big changes wouldn't matter of fact -- the last Booth and last for years we've reducing headcount.
-- almost 200000 people are people do -- great job they've been very productive as we've shrunk down.
We've -- facilities -- we've we've -- hours of post offices we've changed delivery routes.
At the same time we've been focusing on growing the business -- the package business we've had double digit growth the last couple years some -- business and so we think.
As we lose the first class volume we're going to be able to grow the package business.
The biggest problem you haven't always comes down to that aired the benefits for retired workers one thing you wanted you to tackle it for the future is to switch over.
-- defined contribution plan as opposed to defined benefit.
Is that enough or do you have do you cut benefits to workers who are further along and -- -- retired.
We're -- really good shape on our retirement plans for current workers.
We've got two plans -- matter fact one is over funded were asking for some money back from that.
And one is fully funded so our current employees are in great shape what we're proposing is.
Starting maybe next year the year after whatever we can work through on this.
This to work with the federal government to come up with a defined contribution plan we put the money in the same accounts for people have.
Savings the council thrift savings accounts.
But the key there exists number one it would become portable so for personal starts in the Postal Service point five years not -- now and they work twenty years.
Who knows what the -- is gonna look like rank and here's maybe some big changes they can take that retirement with some -- they want to take a different.
No -- the other thing that you guys are gonna well I really he's -- Traumatic time I I gotta ask you know you've gone from a business in 2006 that was making about a billion dollars a year to one that now loses sixteen billion.
The problem is so huge in so out of control the changes -- talking about do you really think that you can get back in the black -- be profitable again or.
Sure can't we break -- doctoral what.
The health care is worth seven billion a year it eliminates a pre funding requirements say is a civilian and a -- and health care costs -- from 65 day on on -- delivery is worth two billion dollars a year.
Many -- -- changes plus negotiations we've had with our unions destroying some labor costs we can be in the black we compared that found within three hours.
-- -- man with the plan I mean you take a lot of abuse from people out there -- front of the Postal Service and how much money it was in best of luck to you.
We appreciate I appreciate your time here.
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