on Mar 29th, 2010 in Mail Processing & Transportation | 15 comments

By Jim O’Brien


Back in 1990, Halstein Stralberg coined the term “automation refugees” to describe Postal Service mail processing employees who were assigned to manual operations when automation eliminated the work they had been doing. Since the Postal Service couldn’t lay off these employees, they had to be given something to do, and manual processing seemed to have an inexhaustible capacity to absorb employees by the simple expedient of reducing its productivity. The result was a sharp decline in mail processing productivity and a sharp increase in mail processing costs for Periodicals class. Periodicals class cost coverage has declined steadily since that time. Along with other efforts to get to the bottom of this issue, the Postal Service and Periodicals mailers formed a Joint Mail Processing Task Force in 1998. Halstein Stralberg and I were participants in this effort. We were puzzled by the fact that the flat sorting machines always seemed to be down during our seventeen Postal facility visits, in spite of the fact that they were supposed to run seventeen hours per day and that we visited facilities at all hours of the day and night. We were able to see the “bullpens” where mail processing employees manually tossed bundles of periodicals into rolling containers. Although the machines were down, the bullpens and other manual operations were always up and running. Fast forward to 2010. More Periodicals mail is manually processed than ever, and manual productivity continues to decline. Periodicals Class now only covers 75% of its costs. How can this dismal pattern of declining productivity and rising costs continue more than two decades after it was first identified, especially when the Postal Service has invested millions of dollars in flats automation equipment? How can the Postal Service continue to imply that Periodicals mailers are responsible for the cost coverage problem when mailers have substantially and consistently increased Periodicals worksharing? Yes, the recession did result in fewer advertising pages and lower revenue from Periodicals class mail, but the twenty-year-old elephant in the room continues to be the unanswered question of automation refugees and their impact on cost coverage. This issue would make an excellent subject for the OIG to investigate. The Postal Service should NOT be permitted to continue using Periodicals class mail processing as a dumping ground for its excess labor and the associated costs. What can be done to address the “automation refugees” issue? If Periodicals class mail is carrying a disproportional share of automation refugees, are there other areas where these employees can be used more effectively? Mr. O’Brien is the Vice President, Distribution & Postal Affairs for Time Incorporated. He is the Chairman of the Mailers Council, former Chairman of the Association for Postal Commerce (Postcom), former Chairman of the Magazine Publishers of America (MPA) Postal Committee, and a member of the MPA Government Affairs and Postal Committees. Mr. O’Brien has been involved with the printing, publishing, and distribution of magazines for more than 35 years. Prior to joining Time Incorporated in 1978, he held positions with R.R. Donnelley & Sons Company, United Parcel Service, and U.S. News & World Report. He is also the former CEO of Publishers Express, an alternative delivery that competed with the Postal Service in the delivery of magazines and catalogs. DISCLAIMER: The views expressed in this post are solely those of Mr. O’Brien and do not necessarily represent the views of the United States Postal Service or the Office of Inspector General. The U.S. Postal Service Office of Inspector General cannot guarantee the source, originality, accuracy, completeness, or reliability of any statement, data, finding, or opinion presented by this guest blogger.


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We need more carriers. Most humans can not walk more than 10 miles (6 hours) a day. We need fewer Flats Shuffler Shredders (FSS) and less Delusional Postal Propaganda (DPP). We already have walk-sequenced flats. I think everyone that's pretending they don't exist should help deliver them.

It couldn't possibly be poor USPS management. It's rather obvious, isn't it?

Mr. OBrian...From a carrier's standpoint, I don't know that you would want bundled periodicals sent through the machines. First, I can't say how often I get a magazine that is just a cover, no guts, because they have been ripped apart by the machine and no one puts them back together. I am embarassed to deliver such a messed up item, but the customer has the right to know so that they can call for a replacement to the damaged issue. The only things that aren't dammaged by these machines are the envelope type flats. I prefer the bundles, they take less time to case because they are generally in route order. If they are unbundled and sent through the machines, they become all mixed up and torn up. Second, if the customer has pre-sorted and bundled the flats, how much time is really saved by the mailhandler cutting off the plastic and putting them into the machine over tossing the bundle into a tub designated to a specific route or office? While maybe in the whole span of the trip these bundled items make, automating them may save time, is the destruction of these items worth that time? I would think that service should take some priority in a service based industry.

If productivity is the name of the game Mr. O Brian then brother how can you account for the masses of employees whose functions have no connection to moving a mail piece from point A to point B? While automation may in the right context provide a return on it's investment, all that is gained is dimineshed and surpassed by the drain of too many people in this organization who do not touch the mail.

hometown newspapers are never secured and the inserts and other section fall out. glue appplied to address labels makes the papers stick together.

I'm with Don in the sense that it could definitely be poor management. More carriers would help, too.

Say it ain't so!!!
just need to make sure the right people are doing the right thing in the right place at the right time.
A productivity analysis should be able to pinpoint the facilities moving Periodicals down the ladder.
Sounds like make work to me. Still the ripped cover issue?

There is no mystery why Periodicals lose money - and it is not the mythical, unproven "Automation refugee" theory. Periodicals get First-Class service (other than air transportation) but pay what amounts to Standard Mail rates. They are cumbersome, with many different shapes and sizes and are not well suited to automated processing. Given the rates they pay and the costs to get them so quickly through the system, I am surprised the cost coverage is not even worse.

How the management at 475 L'Enfant Plaza manages it's internal usage of employees and staffing is outside the purview of what a "stakeholder" can in detail understand through 17 short, staged dog and pony guided tours of their facilities.
Many non visible factors and issues contribute to what may appear to be a less efficient usage of automated flats processing equipment and an increased usage of manual processing for periodicals and other flats.
The real issue Mr. O'Brien wants answered is how can the Postal Service help further with saving the declining periodical industry? An industry that has been hit harder by electronic media and the economic downturn than the Postal Service.
Is it really the responsibility of the Postal Service to show one mailing class deference? Has there really been an increase in manual processing of flats over the past 21 years, even after the Postal Service has spent billions of dollars in automated flats processing equipment? Is manual processing directly causing the increased cost of processing periodicals for the industry? Could it be a resulting outcome of the so wished for 2006 PAEA or some other combination of factors?
Periodicals are the only mailing class product that does not cover it's attributable cost, even with the generous discounts for "worksharing," DDU, IMB, etc. Restated, the periodical mailing class, in a non obvious accounting balance sheet, is currently subsidized for 25% of their cost. An improvement over the greater subsidization they had previously received but not fulfilling the mandates of the 2006 PAEA?
Maybe the periodical industry should stop whining and face the fact that it is a declining bulk business. It has and is still receiving generous discounts and subsidies from the Postal Service. That the Postal Service has the infrastructure and ability to perform a task that they privately cannot accomplish at the same cost. Finally, the Postal Service has a right to expect every mailing class to cover their own attributable cost, whatever they may be, in order to stay solvent. Business is business.

I think that "Truthbetold" raises a number of interesting questions that reinforce the original point of my blog posting. First, he states that "Many non visible factors and issues contribute to what may appear to be a less efficient usage of automated flats processing equipment and an increased usage of manual processing for periodicals and other flats." I couldn't agree more! What I'm asking is that these "non-visible factors and issues" become visible and widely understood to the people who are paying the postage.

In addition, Truthbetold asks several pertinent questions indluding: "Has there really been an increase in manual processing of flats over the past 21 years, even after the Postal Service has spent billions of dollars in automated flats processing equipment? Is manual processing directly causing the increased cost of processing periodicals for the industry? Could it be a resulting outcome of the so wished for 2006 PAEA or some other combination of factors?" These are not new questions but the answers have never been provided. With Periodicals cost coverage now at 76%, these questions deserve to be answered.

As far as the state of the Periodicals industry is concerned, yes magazines have seen a significant decline in advertising revenue during the recession, but circulation figures have remained relatively flat. This means that consumers still want to receive hard copy magazines. Recent statistics indicate that magazine readership has increased by 7% in the last 5 years and 75% of teens read magazines. This doesn't seem to indicate a declining business but a business with a solid base today and a promising future as today's teens become tomorrow's readership base.

Finally, I must take issue with Truthbetold's comment about whining. Periodicals mailers want to cover their costs, but want to be sure that the costs are accurate. Between FY 2008 and 2009, the average cost that the Postal Service CRA attributed to manual sorting of an average Periodical flat increased by 28.23%. At the same time, the average cost attributed to sequencing flats by carriers increased by 19%. If raising a question about attributable costs after seeing 28% and 19% increases in one year comes across as whining, I would like to see how Truthbetold would respond if he or she saw a similar increase in a personal phone or electric bill. Would your response be considered whining or trying to have the truth be told?

How bout lets give our buddies at Northrup Grumman a big fat boondoggle contract, what's a few billion among friends, so what they can't make the thing work and it's still costing more every year, that's the way we do it us global ceo wanna-be's. WAKE UP!!

"What can be done to address the “automation refugees” issue?"

Lay the employees off. We should NEVER be employing people merely for the sake of giving them a job. It undermines innovation and prevents them from finding a job in the general workplace where they might be able to work on something even more important.

Plus, automating everything will reduce the costs of mail delivery immensely. Although, what really should be done is allow competition, even of mail that isn't urgent or packages. Really. Why does the government still have a monopoly on mail delivery?

I think that some clarification needs to be done. It is not necessarily the Periodicals Class of mail that is being shunted to Manual processing, it is an issue of Flats Processing category. It just happens that Periodicals make up a disproportionate percentage of Flats.

In the P&DF that I work in, it is certainly the case that a lot of Periodicals are handled Manually. The reason for this is in the interest of expedient delivery.

Do you think that Time and Newsweek et.al. are going to sit back quietly while their publications sit, waiting for processing behind the First Class Mail Flats? No! Do you think that USA Today or Wall Street Journal, et. al. would like to see their publication put on to mechanized machinery so that the sections could become separated and subscribers receive incomplete copies?

This is yet another case of damned if you do and damned if you don't. Many, many people think that the USPS and its workers could not care less about the public. This particular issue should go far to dispel that myth.

The fact is that the workers, at least in our plant, really bust their hump to get daily, overnight Periodicals in from the dock and turn it around in time to make the first dispatches to Associate Post Offices. Sometimes, this turnaround may take more than the usual one person workign that section. So what is wrong with using an Automation Refugee to get the work done on time?

It's a shame that something as incomplete as this posting would make it onto the Cato@Liberty pages as "news". Of course, it's all the fault of the Unions.

Nobody seems to consider that USPS negotiators agreed to the Contract Provisions, including a No Layoff clause for workers on the rolls at the time of the effective date of the agreement.

Perhpas the Layoff clause will be a bone of contention when negotiations commence later this year.

This essay is dealing with an outmoded issue so that it may distract focus from the actual mail processing problems of today..

The distinction between standard mail flats, periodical flats, and first class flats no longer serves the purpose it once had in ranking processing order. Todays flat processing machines need volume to be efficiently run. The main problem today is processing the flats mail that is scheduled to be processed. The flats processing equipment, the dedicated capital equipment, needs a planned staffing schedule to best use the labor and to allow for required equipment maintenance and software management.

Some mailers are reluctant to conform their product to the standards which would allow the current processing equipment to cost effectively process their mail.

It is also interesting to note that the USPS itself does not report the breakdown of per piece postage for first class flats. Statistics regarding First Class Flats have routinely been buried within the statistics for first class mail.

The job of the processing plants is to get the mail to the delivery stations so that the letter carriers can deliver that mail. The job of the processing plants is not to select at all times which is the most cost effective method to sort each piece of mail but is instead to process the mail so that that mail enters into the distribution network as efficiently as possible

good job