good morning it is the customary practice of this committee to swear all witnesses who are to provide testimony can i please ask you to rise and raise your right  testimony is being given when that light turns yellow it means you have one minute to wrap up and when it shows red it requires you to stop speaking what i would like to do is just offer a brief introduction of  director of physical infrastructure issues at the government accountability office mister jerry cerasale is senior vice president of the government affairs for the direct marketing association m director of the national postal policy council and mister michael murphy is president of the japs olson company a printing and logistics company in saint louis park mn thank you all for your willingness to come forward and help the possible our future operational plans to continue to improve delivery efficiency and the station and branch optimization initiative as you are well aware the financial situation of the postal service is grave it would be far worse it not for the aggressive actions we have implemented for example since two thousand and two we have reduced cost by more than one dollar billion annually these efforts are particularly impressive when you consider that our delivery network continues to grow at a rate of about one point two new delivery points each year in effect we are delivering less mail to more addresses which means we receive less revenue per address served cutting costs in deliveries is particularly challenging because a substantial portion of delivery costs are fixed our carriers must deliver to each address whether there is one piece of mail or several within these constraints we have embarked upon several initiatives that have improved delivery efficiency the first initiative is the historic interim alternate route adjustment process that we have agreed to with the national association of letter carriers nalc in two thousand and eight this agreement enabled us to jointly conduct evaluations on some ninety three thousand routes and rapidly eliminate approximately two five hundred routes realizing that additional process improvements could be made both parties jointly agreed to a new modified agreement in april two thousand and nine the cost savings are estimated to eliminate approximately twenty five million city delivery work hours or some one dollar billion  years two thousand and nine and two thousand and ten one consolidation activity that is underway is the review of station and branch locations in larger cities where we have a number of offices in close proximity we began the review with some three thousand two hundred locations that handled the most retail transactions and the most deliveries we anticipate that out of these three thousand two hundred locations less than one thousand will be considered as viable candidates to study further changes in mail processing technology have reduced the amount of space needed for carrier operations at many stations and branches as a consequence opportunities exist to consolidate carr operations into fewer locations without affecting service many stations and branches were established at a time when first class mail volume growth was robust there were few means of alternate access to postal services and virtually all retail revenue came from window transactions today about twenty nine percent of retail revenue is generated through alternate access channels such as our web site usps com and automated postal centers as local management undertakes the station and branch review they will consider factors such as customer access service standards cost savings impact on employees environmental impact real estate values and long term postal needs we are taking all of these actions to use our resources wisely and position the postal service to survive this financial crisis while continuing top quality service to the american public along this line i ask congress to support the postal service's efforts to operate in a business like manner as we make necessary decisions as you know the postal service has alerted stakeholders that mail volume levels can no longer sustain six day a week delivery in prior testimony the postmaster general asked congress to consider allowing a change in delivery frequency at the same time the postmaster general tasked postal management with undertaking an internal review of five day delivery so we have sufficient information and data to share with stakeholders we are in the process of finalizing our study and have targeted the next months to share the results with our stakeholders and to begin a series of community outreach meetings we plan to share this study with employees customers mailers and members of congress moreover we will be asking the postal regulatory commission for an advisory opinion in closing i would like to thank this subcommittee and the oversight and government reform committee for their action on h r twenty two i hope in the near future the house will be able to quickly move retiree health benefit legislation finally i would like to reiterate our commitment to continuing to make mail operations as efficient as possible while maintaining our excellent levels of service to the nation thank you and i would be pleased to respond to your question consolidation to identify expectations for the docket and all procedural concerns with this input the commission will shortly establish the agenda for examining the initiative and addressing all the issues to ensure a wide range of public input the commission is considering holding hearings outside of the washington dc area what the commission is being asked to do is determine if this consolidation initiative will generate changes in the nature of postal service on a nationwide basis and if so issue this advisory opinion that the consolidation process would result in closure decisions which will preserve levels of service consistent with the policies of postal legislation in short that the process will in fact achieve answers to a lot of the questions that members of the committee have raised that should be addressed we are looking at that process to these have been addressed here one will occur tomorrow in washburn ia the new initiative will significantly accelerate that process it began in may of this year with the prescreening for discontinuance of all stations and branches that reported to postmasters of twenty four pay grade level or higher this covers approximately three thousand two hundred stations that are primarily located in urban and suburban areas with this request there was some certainty in the sense of the guidelines were given that were supposed to be followed by the postal service but they did not specify the number of offices to be discontinued did not quantify the potential changes in the nature of any affected postal service and has not estimated the expected financial savings questions are being asked in the commission's docket that hopefully will clarify these facts and other aspects and criteria th used in the decision process the commission recognizes that under the paa the postal service has the flexibility and authority to make rational adjustments to its operations and networks to meet its business needs and create cost savings and efficiencies this is especially important in these stressful financial times but the postal service must be by law accountable and transparent to all postal customers be sensitive to the needs of the community at the local level that it serves and make changes in a strategic manner in its most recent report on universal postal service and postal monopoly the commission found that access to postal service is a fundamental aspect of the universal service a two thousand and eight commission sponsored study found that households tend to utilize their local post office extensively over half the respondents reported that a member of their household visited a post office in the last seven days an additional twenty five percent reported visiting within the last thirty days the postal service is obligated under past and current statutes to provide for thorough public notice and input into post office closure decision the statute further gives the commission authority to hear customer appeals on such decisions the commission has long held that a post office is any retail location staffed by postal service employees which obviously includes stations and branches yet notification of the public's right to appeal to the commission is not part of the postal service closure process being examined questions are being submitted have been submitted on this issue in the docket and it is likely to receive a thorough review in the commission docket now the appeal process is simple it is a letter submitted to the commission by  postal patrons in that area saying we weren't notified we weren't whatever it has to do with the procedures weren't followed it is not a complex go to court procedure of the subcommittee thank you for the opportunity to participate in this hearing today i will first provide updated information on the postal service's financial condition and outlook second discuss gao's decision to place the postal service's financial condition on our high risk list this week and third discuss the need to restructure postal mail processing retail and delivery networks the postal service's financial condition has deteriorated sharply over the past year mail volume projected to decline twenty eight billion pieces this fiscal year leading to some sobering statistics a net loss of seven dollars billion an increase in outstanding debt by the annual statutory limit of three dollars billion and an unprecedented one billion cash shortfall that will threaten the service's ability to make its mandated annual payment of five dollars forty cents billion for future retiree health benefits the outlook for fiscal year two thousand and ten is even more challenging as the service is projecting  outstanding debt to increase to thirteen dollars twenty cents billion just under its fifteen dollars billion statutory limit the postal service urgency needs to restructure to address its current and long term financial liability this week gao added the postal service financial condition to our list of high risk areas needing attention by congress and the executive branch we have called for a broad restructuring plan that addresses key timeframes and the plan should address both short and long term challenges these realigning postal services to reflect changes in the use of mail better aligning costs with revenues optimizing its operations networks and work force increasing mail volumes and revenues and retaining earnings to finance needed in the next four years a total of three hundred thousand employees are eligible or will be eligible for regular retirement close to half of the career work force the postal service has taken some network and i would like to point out several of these in the retail areas as discussed today the service recently began a national initiative to consolidate some of its roughly thirty seven thousand post offices branches and stations specifically operations at over th hundred retail stations and branches located in urban or suburban areas are looking at for opportunities for consolidation and decisions are expected starting this october in terms of mail processing the postal service has taken actions to close facilities and consolidate other mail processing and transportation operations however only one of approximately four hundred major processing facilities has been closed with regard to delivery operations and the report being released today to this subcommittee the postal service has over three hundred and fifty thousand carriers and delivery costs represent the postal service's largest cost segment there are two efforts underway to enhance delivery efficiency one realigning city routes is expected to generate about one dollar billion  in savings annually through the elimination of work hours and routes reduced space needs and more consistent delivery through realignment about four thousand three hundred routes have been eliminated to date so there is some good progress a second delivery related initiative focuses on the cents billion flat sequencing system that will automatically sort large mail pieces such as catalogs and magazines into delivery order on routes covered by the new machines city carriers on average will manually sort nearly five hundred fewer flat sized pieces of mail each day allowing them to spend more time delivering mail in closing while we recognize that the postal service will face resistance in realigning its networks on several fronts we believe broad restructuring is imperative to help the postal service achieve sustainable financial viability for realignment to succeed the postal service must use a transparent process that is consistently applied engage with unions management associations the mailing industry and political leaders and and members of the subcommittee the national postal policy council greatly appreciates the opportunity to present its views on the station and branch initiative in a nutshell our members support this initiative to help address the current financial contraction facing usps and in the larger of providing the postmaster general and his team true flexibility to manage nppc is the trade association for large business users of letter mail primarily in first class before the downturn our approximately thirty members collectively mailed about thirty nine billion pieces and contributed some nine dollars fifty cents billion in postage every year at the outset let me say that the acceptance of the need for meaningful change in the postal system has been growing in recent days through no fault of its talented management team or it truly dedicated working men and women the postal service is experiencing a catastrophic decline in volume volume that won't come back robustly and for years grappling with the thorny issues of managing usps to its actual volume has become essential for preserving a bedrock institution still essential to commerce and communications in the united states in the st century so as one aspect of change we are pleased to be able to discuss this initiative for it is necessary not only in the short term but in the longer term  has not undertaken a scientific survey of its members but the consensus view is that when the economy comes back mail will not follow there should be some recovery in standard but first class which is the most lucrative for the postal service as you know will continue its decline albeit at a slower rate we support the initiative because the current system of post offices and other facilities grew up haphazardly with population growth and shifts an orderly rethinking of the system is long overdue and efficiencies in services are very likely to be obtained second the initiative will help streamline a system built for far more mail volume than it has or is likely to have for the foreseeable future third a carefully planned and thought through effort to close consolidate facilities should yield some cost savings fourth the closings and consolidations will occur largely if not exclusively in metropolitan jurisdictions this should lead we hope to a less emotional public reaction than in some smaller communities and given that there are other post offices or facilities nearby there should be continued easy access for the public fifth and most importantly nppc believes that the postmaster general and his team need to have as much flexibility to manage the system as possible to run it like a business over this decade postmaster general potter deputy pmg donahoe and their management team have demonstrated tremendous ability to drive costs out of the system they have done so while improving service and reducing the work force without alienating the unions and management associations in fact it has been an intense cooperative effort because of that outstanding track record the senior postal management team should be granted broad latitude to manage the system including optimizing stations and branches the urgency animating this plan and much else from usps is the daunting financial challenge it confronts you know very well that it is projecting one hundred and seventy five billion pieces of mail this year off committee for rapidly reporting out h r twenty two we are particularly appreciative of the prime sponsors messrs mchugh and davis we urge h r 's passage by the entire house at the earliest opportunity but regrettably usps is going to need further financial attention to right itself when h r twenty two was introduced last winter it seemed to give usps enough relief unfortunately the accelerating loss of volume since has simply overwhelmed the relief offered through r twenty two we don't pretend to have the solution many possibilities have been raised in this subcommittee and elsewhere in general we believe that any long term solution should be balanced and call on all postal stakeholders to make equivalent sacrifices to maintain the system however we feel constrained to note that one possibility an exigent rate increase would be profoundly counterproductive we know neither the postal service nor members of congress have called for such an increase but others in the postal community have raised it so let us be direct mailers simply cannot afford an increase they are doing everything they can to restrain costs as their own businesses severely decline in recession the number of layoffs in the postal based industries is at minimum in the hundreds of thousands there are also mergers and bankruptcies budgets for all items in these industries very much including postal are under tremendous pressure even a small increase may have a significant adverse reaction but an increase large enough to address usps losses would virtually guarantee a large volume drain postal budgets simply would not stretch to meet higher prices thank you once again for this opportunity to present our views i would be pleased to answer any questions you may have  and the short term sadly it is now short term help that h r twenty two gives us imperative the financial condition of the postal service is precarious and sadly it is not improving at this point in time the postal service  has to grow volume it has to become more efficient but at the same time mailers are facing the same financial conditions the twenty two percent drop in standard mail advertising reflects that fact as the economy comes back some of this mail will come back but sadly we don't think all of it will come back mailers cannot shoulder another rate increase as a matter of fact that rate increase may in fact prove fatal both for it and the postal service we therefore support the summer sale the postal service has put together in trying to increase mail volume we hope that this will be duplicated in the future with more advanced notice and will be taken greater advantage of to try and get mail back into the system looking on the cost side everything has to be on the table as our group  mailers we are willing to talk about everything to try and reduce cost the things you are looking at here today looking at the delivery route adjustments they have been going on for my entire lifetime my time up here as an employee in the house  one of the complaints that i always had at the committee on post office and civil service was my mail is not coming at the same times it used to complaints from businesses as well as individuals and that in fact has happened all the time as the demographics the geographic distribution of the american population has changed right now we have to look at it from the point of view of decreased volume decreased  but these have been happening before sadly the economic times are forcing this to happen more rapidly at this point in time but i think from our view the postal service is doing the right thing and working with their employee groups to try to get this right now  hurts some of our members because they are not going to get the mail at the same time they received it before but that is one of the things that we are all working together to try to keep the postal service strong and viable looking at the stations and branches it is our understanding that postal service is looking at not at rural offices they are looking at the proximity of other stations and branches to the one that they are thinking about closing looking at the retail trends at that branch looking at the impact on the employees the impact on the community which is very important they are looking at the savings the net savings if you close this facility and you have to move employees and carriers come out there there is more time the net savings has to be there and then the ability of other stations and branches to handle the traffic that is being closed so those are the things i think the setup that the postal service has put together they are looking at that if this closed the only postal retail service in a community even if it wasn't specifically a post office with a postmaster but a station and branch that they had jurisdiction not everyone agrees but that ability stays and this effort by the postal service doesn't change that factor we all need the postal service and we all have to chip in all of us me an opportunity to appear before you today to discuss some of the challenges facing the mailing industry and the postal service my name is michael murphy i am the president of japs olson company located in saint louis park m family business that has been in operation for more than one hundred years our business is printing and mailing we will produce more than six hundred million pieces of mail this year for all types of customers across the country i am here today also as chairman of the board of the mailing and fulfillment service association mfsa is the only association solely representing the mailing industry we have approximately six hundred members which are comprised of printers mailing service providers product fulfillment companies as well as suppliers to the trade needless to say the postal service is a vital partner in our businesses therefore we believe it is important that the postal service have the complete support of congress to manage its networks efficiently and to scale its infrastructure in proportion to its business needs our company and mfsa members urge the congress to allow the leaders of the postal service to do their jobs and to manage their public institution with the same goal of efficiency as that of private industry the postal service's board of governors the postmaster general and the agency's senior executives must be given the latitude to make the decisions necessary to return the postal system to profitability those decisions include the necessary measures that are essential to control cost and in turn postal rate control we hear some suggest that many of the messages carried by the postal service can be diverted to electronic distribution to the extent that this is true it could result in hundreds of thousands of jobs lost in the industries that depend on this distribution system in just the current recession thousands of jobs have already been lost in the supply chain that relies on the mail our association's experience over the past eighteen months suggests that from just those companies that have gone out of business we have lost one thousand five hundred jobs extrapolating that to the industry as a whole we believe that the industry has lost no less than fifteen thousand permanent jobs during that same period even with the challenges we have been facing there are still more than eight million people whose employment is affected by the postal system we owe it to these people to ensure that the postal system is on firm financial footing and will be a all these acronyms we had a situation with the mail handlers out in atlanta i think it was where they identified one of their stations for closure one of these amps and they gave the employees the thoughtful process while i admit that the finances here are very grave as a number of you have pointed out there is the need nevertheless to conduct ourselves with i think a thoughtful approach to this consolidation and do it in a way that causes the least bit of disruption and with all respect to these communities and to the employees that are affected and i think it is possible we have thirty seven thousand post offices out there and i am sure that there are some that are close to each other and that we can work this out but i have to ask you what that so we have a hold harmless provision for those post offices that says even though they are not making enough money to sustain themselves we are going to leave them in there because we have to provide essential services yet you have a sires's testimony was on that point what are you using as the standard here what are the criteria can we figure that out do you have that laid out somewhere with thirty seven thousand facilities here  thousand two hundred the two thousand two hundred were immediately eliminated for consideration for various reasons which i will go into as part of the criteria part of the criteria is what is the proximity of nearest services what are the mailing habits and consuming habits of the american public with the postal service within those areas we have found that  have seen close to five percent less activity at our retail units while the percent of the american public going to our web site at usps com has increased customers also go to various other means of alternate access so we look at the proximity of the nearest services we look at is there adequate parking at the nearest services we look at the mailing habits of the public in that area where a station and branch is being served mister lynch ok well i think my time has just about expired so i will do a followup later on maybe in the second round the chair recognizes the gentleman from utah reasons on why the urgency i think i understand the financial needs but is there something else above and beyond the financial peril that they are in mister herr there are two different ways we look at the high risk list in the one we used with regard to the postal service is areas or agencies that we think are in need of broad transformation so in this case the postal service met that criteria i think the other thing is we tracked the financial condition over the past year and we looked at those numbers deteriorating that made the case more mister waller that has definitively been decided you are thinking about it is that something that you think would happen week in week out mister small we haven't concluded the study we should be finished with the study in the next  is participating or more importantly not participating in the input that will go into that study mister small we are working with the various stakeholders to get their feedback our customers the p also the unions we have talked to the unions about these tough issues associated with five day delivery members of congress so we are making sure that we talk with all of our stakeholders to understand what potential issues they would have by going to five day delivery mister chaffetz and those of you that represent the use of the postal service from more of a customer standpoint can you give me maybe starting with mister murphy your perspective on what would happen with five day delivery as opposed to s delivery is very important for them but i think all of them are looking at what are the tradeoffs the savings from five day delivery what other things are going to happen to try and improve the postal service one of the things we have to are in a similar position to jerry's members we are not so much divided i think the sentiment generally is we wouldn't want to do this we need to have six days of delivery but again what are the tradeoffs how do you get to a position where you resolve the postal service's difficulties so as part of a larger solution i think it could be something that could be seriously entertained and i it were done it would be a sacrifice let me just give you one example we have quite a few banks and financial institutions in our group and for them remittances flowing seven days a week are vital but it is not just that if there is a day of delivery that is taken out then it takes longer for bills to get there in the first place there are changes to float and therefore to business this title any time in the last i don't know ten years broader restructuring needed to address deteriorating finances why was the postal service taken off the high risk list in two i can think of that is worse than collapse of the constitutionally mandated postal service is for it to do what it is doing now falling apart piecemeal before our very eyes and when that happens it the element of surprise and clear absence of planning my question really goes i suppose to mister small initially here we are still talking about a five day week even though almost seventy percent of the american people say that they would favor a five day week we are still talking about it we have been talking about it now for a very long time i noted in your testimony you talked  about flat sequencing indicating the postal service did understand that sometimes you have to invest in order to if i may use the word right size only now are we talking about consolidation in  that one would expect from a business that has to do what many have to do now which is simply take some efficiencies pending something i don't know what is pending here except collapse and i don't hear that there is a right sizing plan of any kind that the postal service is engaged in seeing all the handwriting on the wall that i think even the average american can see right now what right sizing plan network the big issue to provide significant systemic response to the problem and that would be five day delivery the second issue we have undertaken the  in improvements in efficiencies are working toward reducing the deficit ms norton could i ask if any of you know what your competitors the private post offices what kind of shape they are in the fedexs ups ups might be a good example because it is a union company you are competing with these various privatized version of much of what you do they don't deliver the mail but you have gotten into their business have you looked into those businesses to see how your competitors are faring and whether or not there is anything that they are doing that you could benefit from also both fedex and ups use us as their last mile for many of their products ms norton i think we need to hear more about that in terms of right sizing the post office now look i am going to ask you a question this is nimby question i will not object and members have to understand that if you are more transparent about it and if it is part of right sizing we have to be prepared to defend what you have to do with respect to postal services having said that are there any post offices in the district of columbia or postal stations under review for closing see that is something that any member ought to be able to ask and get an answer small i believe that a list was submitted to this committee yesterday offhand i couldn't personally tell you if there are or not stations in the district of columbia but i would be happy transparency begets protests you are moving so slow that i think that you are not ahead of the decline and forgive me fall of the postal service unless you can hasten this process with the kind of declining advertising accelerated in the recession some of which won't come back advertising gravitating toward online newspapers that are free but not enough to make it a viable business model at least righted the ship of state if you will in the case of some of the actions being contemplated we are looking at consolidation so there are fewer points of entry on the system which may be a very prudent thing to do but i am struck competition is available for six if i want to pay for it raising fees as has been stated by mister sackler there is probably some upper limit to how much we can get away with that without making ourselves less viable and driving away even more customers so i am just wondering there is no implicit criticism necessarily of the steps but have we looked at the risk of unintended consequences by way of  productivity like cost cutting measures mister herr congressman connolly thanks for that question it is an interesting point in looking at this one of the things we are suggesting is that the postal service needs to articulate the plan it talks about how it entail the postal regulatory commission may have a role in terms of reviewing some of those cases as well there are a lot of different pieces that go into maintaining universal service throughout the country i understand that some distribution centers from maine to arizona from florida to alaska to do that you would require a network of processing facilities in terms of the retail side one of the things that we noticed there are thirty seven thousand facilities but thirty percent of the retail revenue is not coming through post offices it is coming from alternatives grocery store sales things of that nature in talking with folks at the postal service about this retail initiative one of the things i was struck by is there is somewhat of a qualitative assessment at the community level trying to ensure that if there is a senior citizen community or groups that are being served that would be factored into that decisionmaking so there are tradeoffs but the other side of it is that there is also a great decline in the amount of mail going through the system  and one of the bedrock principles that the postal service has been operating under is being self sustaining so factoring those things into consideration and these changes we think a restructuring plan congress the administration looking at that would be an important step mister waller a couple of things i would like to say first in regards to the list of post office stations and branches under consideration at the meeting i mentioned this morning that occurred at the  commission the postal service promised to give a list of the six hundred and seventy seven facilities that are going to be studied when they file that that will go up on the prc gov web site immediately and will be available to all people in the country through that to look at whose and where etc this issue of looking at it as a whole thing is also of concern as we look at a process like this last time we did an advisory opinion it was on the processing facilities and the postal service's plan for looking at that and found quite a few problems that existed in the planning process at not looking at how many real savings were going to be achieved through that process and what backlashes might occur in productivity second in the work the commission has done so far  mister clay were still here i know he would want to ask that going beyond short term measures to return ourselves to solvency what is the long term business model we are confident thank you very much mister chairman let me thank you for calling the hearing i also want to thank all of the witnesses for appearing i think that some of us have known pretty much that we were going to be at this juncture probably for quite some time i think we were hoping against hope that we would not really get to this point so let me just say first of all  small i don't envy mister potter and yourself and other members of the staff and the board of governors as you try and wrestle this problem and figure out what is the fairest most effective most efficient way of making sure that our postal service remains solvent recognizing the economics and the status of our economy i know that there is the study underway relative to five day delivery what other cost cutting proposals did you consider before reaching the point both city and rural we have currently implemented a network structure change transforming the bulk mail centers into network distribution cent consolidating package and standard operations to realize economy's scale and efficiency in processing and reduced redundancies in transportation we have also embarked upon as was referred to before the amp effort where we have consolidated outgoing operations to better utilize equipment in certain plants as well as compressed tours to again take advantage of the unprecedented drop off in volume and being able to provide a more efficient means of utilizing our  within our plants mister davis so one could really say that you are down to the point where you don't have many options left you don't have many other places to go or i guess we would say you are between a rock small the last big option is unfortunately the need to go from six to five day delivery that is the one big piece out there that would add to helping us now time and time again that there were some other cost savings cost cutting approaches that the postal service perhaps could have  about that initiative and i think if volumes continue to decline there will be additional opportunities there we still believe that there are opportunities in terms of the broader facilities we talk about that in terms of the processing network we know there are some  consolidation studies that are still underway but we think that this broader plan that is referenced in our high risk report would be a next starting point to help achieve some consensus about where this might go going forward sir mister davis my time is about to expire but let me ask you  for five minutes mister chaffetz the gentleman brings up a great point about we are spending all these trillion dollars and here we have a constitutionally mandated service that truly does benefit and service every single american it does seem that it would be appropriate that while i would have voted and have voted against the stimulus money that some of those moneys should have been allocated to this service which not only benefits individuals but businesses alike i think we should explore that a little bit more if there are opportunities moving forward a question for you about the three thousand two hundred or so post offices that are closed what is the estimated savings by doing that mister small this is a bottom up approach offices that includes carrier operations which of course would not be eliminated rent ownership of facilities operations that whole cost center is worth sixteen  you break out the labor component certainly there has to be some estimation of what the number is is there not mister small well i think the reason why we cannot give you an estimate until october is because we have not taken a cookie cutter approach or set targets for how many would need to be eliminated and only those that are in close proximity provide ready access to the community would be under consideration and yes and we don't agree with it mister chaffetz why not mister small due to our dire financial deteriorating situation we have had this process in place for stations and branches for forty years that seems to work we have to be able to react quickly and rapidly to this financial situation mister chaffetz so if you gave them an extra thirty days you think that would be unacceptable mister small i believe that what is realistic in terms of actual cost savings mister herr we have seen the two estimates that have been provided the other thing that we have called for in prior testimony before this committee is that a study should be done and it should be made public so people can see and understand what those are very interested in taking a hard look at that and we would be happy to work with the committee on that if that would be of help mister chaffetz ok mister herr your other question we also asked about and one thing that has been a bit of a source of frustration is getting estimates about what way if you look at the way costs are accounted for in the postal service retail clerks which is what we are talking about here and then if you add on all the extra costs the space they take up and stuff like that you are talking about four dollars ten cents billion for we also obviously need to look at relevancy and marketing and how we make the post office more relevant in the services and i think one of the things that we need to spend more time on is the cross functionality that can happen some cash sooner rather than later and make the postal service again increasingly relevant in people's lives we have such great real estate facilities people all these assets are in place and yet i don't believe our  other elements within our own federal government are paying attention to those it is so frustrating when you have the federal government utilizing services outside when we have these services internally so i think we need to continue to explore that and particularly the hypothetical situation we talked earlier about this desire to look at going from six to five day delivery as you know the appropriations committee the subcommittee has again mandated that we retain six occur with our employees that assignment would basically be eliminated the way carriers are structured we deliver for six days a week you have a regular carrier on a route for five of the six days and then you have a carrier who performs the regular carrier's duties on their day off we have a negotiated agreement with the national association of letter carriers for a supplemental work force of fifteen thousand transitional employees plus an annual attrition rate of approximately eleven thousand carriers a year we are very proud of the fact that we have never had to lay employees off and that we will continue to try to place any employee that is affected but there is cushion available through the temporary work force and say or guarantee that there wouldn't be layoffs if we look at it or the timeframe by which we would have to get this done there is a possibility that we will be able to ask you going back to the consolidation of facilities i know that the postal service owns some buildings and then in other cases we actually rent or we have long term leases and options and what not when you are looking at a potential closure and i know representing a city with fairly high rental space downtown those expenses to maintain facilities like that of any considerable size it is a pretty expensive option do you have a way of balancing whether or not you close a facility based upon whether it is post office owned or leas i think it would be determined by which facility can absorb the gaining facility we have to weigh the balance of customer input and affect assets and services provided i could think about and i know you mentioned it on fox news yesterday offices that are close a block away from each other in my former district i can think of three examples right now where we had stations three grouping stations within a block of each other those are the types of facilities we would look at and we would have to determine if two facilities were consolidated into one which facility had the adequate space which facility had the adequate parking and then make the determination based on whether it is a leased or an owned facility mister lynch ok looking ahead i think there is a system in finland  sweden it is actually being replicated here in the united states i think they call them zumboxes or something like that where a person can go online and see their mail and they see what potentially could be delivered and if they want to toss it they can if they want it delivered they can click on it and if they don't want it if it is junk mail they can get rid of it by clicking on it and putting it in the trash can  that will greatly reduce the volume of mail because people won't have to get their junk mail i know it doesn't make the mailers happy but have you looked at anything like that for the postal service going forward is that the new model should we be preparing for that mister small i particularly do not have much knowledge of zumbox but i know there are folks who are studying it within the postal service we are always looking for new  products to bring out to the market i think on the panel we heard earlier about the summer sale we have also introduced the flat rate box and an advertising campaign around the flat rate box which has been  a huge success so far this summer so we are always looking at new products to be able to go to market with to enhance our situation mister lynch thank you my time  those individuals who would have to go and then there would be an opportunity to shift other employees to other facilities mister small the employees would be  consideration the needs of as many stakeholders as we possibly can and it seems as though if we get backed up against the wall you don't have any choice you have to decide something if your members  and associates were to decide what hurt them the most would it be five day delivery or would it be reorganization of stations recognizes the gentleman from ohio mister kucinich for five minutes mister small welcome we have had the opportunity to work together in cleveland years ago and i appreciated that and i appreciate your commitment to the postal service so don't take personally any questions i am about to ask you consolidation effort we have basically three different means with which we communicate with the public depending on the size of the community we either send a questionnaire seeking their input to the residence or we post at the local office local station for a period of time seeking their input all p o box holders get a hard copy form within their p process that we encourage is community meetings mister kucinich well let's talk about the community meetings do you have any knowledge of how many community meetings you may have held in let's meetings you are talking about i mean do you actually send a letter to everybody in a certain zip code saying we are going to have a meeting at the gallagher post office to talk about postal consolidation and here is what it could mean to the community and we want your input here is the time and the place i am not aware of meetings like that and i think that considering the gravity of send to the local districts for dissemination to the community of course each community is different and the makeup is different so we ask the local offices to just use that as a template practical explication or explanation of how this works in reality i would like to have that with respect to cleveland cuyahoga county so we can get into the nitty gritty about what you have sought in terms of public i t i look at this mister chairman and members of the committee here is my concern my concern is that you are actually dismantling a service infrastructure thousands and thousands of mailboxes out no one asked me about that i am a member of this committee i don't know how many other members were asked about th just take mailboxes out of communities gone now if you are in marketing it seems like you want to show the flag somewhere how does taking mailboxes out help a service delivery and then you are talking about closing infrastructure of the u s postal service starting with mailboxes in neighborhoods postal branches changes at branch offices changes at airport post offices post offices across this country and you are actually doing that piecemeal and right under the nose of congress because you wave the dollar bill we don't have enough money oh is that right that passed for anything over here that is a shortcut to  about this whole thing and i am not going to diminish the service of you mister small or anybody else in the u s postal service but there is another game going on here that really is about  taking this public wealth of universal postal service and carving it up and handing it out to special interest and i see the slow and steady understanding but i am not sure i do remember my concern is the slow walk to collapse i certainly appreciate the need for study i do think one has to be careful to look at all  the factors i am having a hard time understanding why we are just studying some of these matters such as the station branches  taken here that should have removed them but mister small i need to know now i know from your testimony at page five what you will be looking at considering such factors as customer access service standards cost savings impact on employees environmental impact real estate values all of this makes sense what i don't know from your testimony is how you chose the particular stations or branches to look at for those factors in the first place mister small ok i would be happy to explain  mentioned in mister waller's testimony he talked about eas twenty four and above offices so let me explain what an eas twenty four and above office is an eas twenty four is the lowest level potential office we are looking at typically eas twenty four has a post office where a postmaster is resident and the chief administrator for postal services as well as subordinate stations generally at twenty four there may be three or four stations as you get larger through twenty six and then to pcs what we call pc post offices such as miami where you have fifty stations so we are looking at large groups of stations where you have offices that are in close proximity to each other that mailers habits and consumers habits have told us that they no longer go to the retail unit that there has been a decline in retail activity and that there has been an increase ms norton so will these tend to be smaller stations or branches norton will these tend to be smaller stations or branches mister small they could be larger depending on whether they have adequate space to absorb a neighboring station which is in close proximity they could small it began in approximately may ms norton well mister chairman this is what i mean i really don't think this is rocket science and the notion that we are beginning in may to look at what offices are too close to one another or may have t consolidate is what i mean by slow walking the postal service to collapse and what i mean about facing the right sizing model earlier rather than later and mister herr that is what i mean when i thank you well i think this panel has suffered enough laughter i want to thank you seriously i want to thank you for your willingness to come before the committee to help us with our work there are as always several hearings going on at the same time so i would just caution you that there may be members who would like to submit questions in writing and if that is the case i would ask you to respond within seven days if you could thank you very much have a good day