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USPS Warns of Layoffs, Blames Slowing in Advertising Mail

Press release from the issuing company

WASHINGTON 2/7/01 - The U.S. Postal Service announced continued record service and customer satisfaction levels and productivity improvements at its monthly Board of Governors meeting in San Antonio, Texas, today. Between Sept. 9 - Dec. 1, 2000, 93 percent of First-Class Mail, with a next-day delivery standard was delivered on-time - marking the 13th consecutive quarter at 93 percent or higher delivery performance, as independently measured by Pricewaterhouse Coopers. In a customer satisfaction survey, the Gallup Organization reports that nine out of 10 households hold a positive view of the Postal Service, and that more than two-thirds of the nation's households rate overall postal performance as excellent or very good (see release #009, Customer Satisfaction, Overnight Delivery of Local First-Class Mail Receives High Marks). The Postal Service also announced that due to a shift in mailing trends, which many see as a response to a softening of the national economy, the agency will defer planned capital investments. Other action included the Board extending the current borrowing authority to April 2001. Reporting to the Board, Chief Financial Officer Richard Strasser said total factor productivity grew by 1.1 percent, which equates to reduced expenses of $217 million. Although Standard A mail volume, which consists largely of advertising mail, increased during the most recent reporting period, volumes in most postal core products and services declined, mirroring the downturn in the American economy. Higher margin First-Class and Priority Mail have both been adversely affected by the economic downturn. Aggressive cost management programs have been put into place to contain the effect of a shift to less profitable types of mail. Postal management reduced total labor expenses by 6,200 work years in fiscal year 2000 and plan a further reduction by 13,200 work years in 2001. Projects are being deferred to reduce capital requirements by about $1 billion for fiscal 2001.