Streamlining the Postal Service, when a merger fails and ‘Who lost Ukraine?’

By Steven Brill
May 13, 2014

U.S. postal service trucks sit parked at the post office in Del Mar, California

This piece has been updated with a postscript at the end.

1. Postal Service blues:

Last week’s report that the U.S. Postal Service lost another $1.9 billion in the last financial quarter made me yearn for a story detailing the cost constraints afflicting this largest and most hidebound of government services. Everything from union restrictions, to legacy pension obligations, to congressional pressure that keeps even the smallest rural post office not only open but open on Saturdays, to lobbyist strong-arming that keeps the service from using its 32,000 retail footprints to offer other services.

Here’s the way for a reporter to write this: Completely reimagine the Postal Service by supposing it was sold to a private company. In fact, suppose the uber-opposite of a government agency — Amazon — bought it.

What would the real estate be worth if a more efficient company, freed from congressional oversight, bought the agency and slimmed down its holdings, cashing in on some of the premium properties scattered through every town, while using those that remain to offer all kinds of additional retail services?

What would Amazon’s Jeff Bezos do with what the Postal Service’s website says is its $47 billion payroll, not to mention its 211,000 vehicles?

What efficiencies could be achieved by radically streamlined operations? What would that look like? Who would be the victims, from among its 626,000 employees to people who still depend on delivery of 158 billion pieces of snail mail processed annually? How could the government require in the sales contract that some of this collateral damage be limited?

There’s also the question of what all this would mean for the seller. How much of a dent in the federal deficit could be achieved through a cash sale or, more likely, a sale involving cash up front plus a formula-driven back-end payment over an extended period.

With online shopping continuing to proliferate, it seems clear that a thoroughly reconstituted postal service could flourish under leadership that has the freedom to reimagine its business and redeploy its assets.

It would be great to read how.

2. Investment bankers in panic mode:

In the wake of the collapse of the merger between advertising holding company giants Publicis Groupe SA and Omnicom Group Ltd , this story  on the website Moneynews.com reports that a group of investment bankers — chiefly from Rothschild and the boutique firm Moelis & Co., but also Morgan Stanley and Bank of America — will lose out on all but a fraction of the $70 million in fees they would have gotten had the deal gone through.

I’d like to know more.

We’re used to reading stories about triumphant bankers raking in millions when their deals happen.

But what about when they fail? As the merger foundered and kept being delayed following its announcement last July, what were the bankers doing to keep these obvious Hatfields and McCoys from breaking the engagement? Was the fiasco in part their fault, because they didn’t recognize or downplayed the various issues — from taxes to culture — that eventually caused the breakup?

After all those months of trying to make the deal happen, there was so much money at stake for the bankers that I’d love to be a fly on the wall — especially in the final days, as they tried to keep the deal from slipping away.

I particularly want to know what Moelis founder Kenneth Moelis was doing. Was he a statesman, confirming to his client Omnicom that the split was for the best? Or was he trying to keep it together until the end?

As this New York Times article points out:

When Moelis & Company began wooing prospective investors for its initial public offering earlier this year, one of its main talking points was its presence on big deals.

Now, one of the biggest of those transactions, the $35 billion merger of the ad agency giants Publicis and Omnicom, has fallen apart, leaving the investment bank with a little egg on its face.

When the deal was announced, it became not only one of the biggest mergers of 2013, it also served as a showcase for the rise of boutique and independent investment banks…

Former U.S. vice-president Dick Cheney leaves after attending the funeral service of former British prime minister Margaret Thatcher at St Paul's Cathedral, in LondonWhether it’s in the locker room or the conference room, getting the players to talk about a big loss is always difficult. But it’s worth a try.

3. Ukraine and interviews I’d like to see:

As Ukraine continues to fall to the Russians, can’t someone put a microphone in front of former Vice President Dick Cheney, former acting U.N. Ambassador John Bolten or other fierce critics of President Barack Obamaand ask them about Russia’s invasion of Georgia during the years of the Bush administration, and what they would have done in the case of Ukraine — in light of the fact that they did nothing in Georgia?

Postcript: I have since discovered that Charlie Rose was on this case on March 9, when he guest-hosted Face the Nation. His discussion with Cheney is here.

 

PHOTO (TOP): U.S. postal service trucks sit parked at the post office in Del Mar, California November 13, 2013. REUTERS/Mike Blake

PHOTO (INSERT): Former Vice President Dick Cheney leaves after attending the funeral service of former British Prime Minister Margaret Thatcher at St Paul’s Cathedral, in London, April 17, 2013. REUTERS/Olivia Harris

7 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Privatization of the USPS (even to Amazon) would be a disaster. Americans want everything to be dirt cheap, then they can’t understand why service is terrible. Millions of items a year get to where they are supposed to go, simply because a human-being knows their job well enough to make corrections, when the system fails. Complaining about USPS has become a national past-time. The fact is, they’re one of the best… if not, the best service, out of all the shippers. I run a sales business. We ship thousands of packages. On the rare occasion something gets lost with USPS, the destination station for where it was going, can be contacted. I have actually had people at stations remember our package, and correct a situation. What do you get from FedEx or UPS in that situation? “I’m sorry sir, tracking shows this package was delivered”. No effort to find it… Claim denied.

Order anything from Amazon lately? Last thing I ordered was two cases of canned food, and then assorted CDs and other breakable items. They threw the 30 pounds of cans loose into a large box with all the other breakable items, with zero packing. Every can was dented, and many broken open. It leaked everywhere and I got a giant, soggy, smelly box full of broken items. Amazon’s new in house delivery service is operated by people making minimum wage, many of whom barely speak English. I’ve had them throw boxes up onto a porch one story up, because they’re too lazy to walk the stairs. This is how you’d like the American postal service to be run?

I think it’s funny that so many Americans want to turn the country into some sort of socialist utopia… But then when something actually costs money, they’re outraged. Running a country properly takes money. People need to get over it.

Posted by dd606 | Report as abusive

“congressionally mandated payments into a future retiree health care fund”
That’s your problem with the Postal Service. Not the operating cost. Not the payment for current and retired worker’s benefits. Not the public demand for the usage of post office service (It actually went up?).

Best and effective way to shut the post office is to force them (by Congress, paid by UPS and FedEx) to pay for FUTURE retiree health care fund. Joke is, no other federal agency is required to do so.

But again, most entertainment news outlets will blame the lack of demand for mail for the current USPS financial woes.

Posted by wintdkyo | Report as abusive

Who the hell cares what Dick Cheney would have done in the Ukraine? That evil bastards time has past.

Posted by holterltd | Report as abusive

I couldn’t care less what Cheney thinks about anything.

Posted by Jim1648 | Report as abusive

Here’s a better one for you, Stevie boy…. go around to all the fortune 500 companies you can get access too, and ask them if they think funding full retirement benefits to cover the next 75 years, on a highly accelerated payment schedule is doable.

The most egregious lapse of business common sense that the 2004 congress heaped onto the USPS is the reason that they’re “loosing” money, and there is no business in this country who could, or would even ever consider, matching this requirement on the USPS.

Privatizing another sliver of society is not the answer, and unions are not the boogeyman… incredibly inept congressmen and women in 2004 were. All privatization does is transfer more taxpayer money into the hands of some corporations that can’t, and won’t, do the same job for less than it’s already being done for.

Posted by taggert | Report as abusive

Stories we will never see by Greg Brill. Why? Because he and all the other supposed “journalist” won’t get off their duffs, stand up to the owners, and actually do some investigative reporting.

Posted by tmc | Report as abusive

“One way to cut postal costs….. Have the Jehova’s witnesses deliver the mail.” -George Carlin

Posted by AlkalineState | Report as abusive