2006 CONTRACT UPDATE No. 6

*     *     *

  In the next week or two, action at the main table will allow the Postal Service to present its “business case,” where management focuses on postal finances and postal operations.  The NPMHU team expects much of the financial presentation to be based on the data previously disclosed in the USPS Integrated Financial Plan, as described in the last Contract Update. 
     One area on which the Postal Service likes to focus is changes in mail volume, and how those changes are impacting the USPS business model.  As the Postal Service stated in its 2005 Annual Report, it is “widely recognized [that] the price-volume challenges we are experiencing today were not anticipated in the business model that was designed in 1970.”  That business model assumed that the volume of First-Class letter mail would grow indefinitely and would finance expanding USPS operations.  Instead, the advent of electronic communications has led to a slight decline in First-Class volume since 2001.
     That decline, according to USPS projections, is expected to continue, although there are encouraging signs (First-Class mail volume rose slightly in 2005, due primarily to growth in discounted pieces).  So far this year, as of July, First-Class mail volume has declined approximately one half of one percent against the same period last year
     The good news, on the other hand, is that the volume of Standard Mail has been increasing steadily in recent years.  In 2005, total volume for Standard Mail exceeded First-Class mail for the first time.  As of July of this year, Standard Mail has increased 1.7% over the same period last year.  While Standard volume is more volatile than First-Class volume historically has been, Standard Mail certainly is expected to be the major component of the USPS mail mix in the future.
     Finally, Priority Mail and Express Mail have shown encouraging signs of strength in recent years.  This July, Priority Mail is up 4.9% over the same period last year, while Express Mail is up 1.8%.  The Postal Service attributes this increase, in part, to the fact that both services have become easier to use, and that competitors have increased their prices.

*     *     *

     Another crucial aspect of ongoing bargaining is subcommittee meetings.  Pursuant to the parties’ bargaining ground rules, subcommittees will “facilitate the negotiation process.”  Each subcommittee will make recommendations to the parties’ chief spokespersons, who are the only persons authorized to enter into tentative agreements.
     To this point, the parties have agreed upon seven subcommittees, focusing on the following topics: 

• Articles 4 and 12
• Article 7 and non-career reports
• Article 8
• Articles 10 and 11
• Articles 15, 16, and 17
• Article 32
• Memoranda of Understanding and Letters of Intent

     Subcommittee meetings are expected to occur frequently over the coming weeks.