11.16.2001 00:05
Longtime Postal Service critic now a supporter
• The head of Pawtucket's Paramount Cards has served on the Postal Service's 2001 Mailing Industry Task Force since last spring.
BY BOB WYSS
Journal Staff Writer
PAWTUCKET
-- For years, C. Hamilton Davison, who has battled raising the price of postage stamps, saw the U.S. Postal Service as an "ossified bureaucracy."
"I did not consider them to be actively committed people who could stretch to improve," said Davison, president and chief executive officer of Paramount Cards. "They did not seem to be very aware of customers."
But during the last six months Davison has had a unique opportunity to study the $65-billion-a year business that delivers mail six times a week to 135 million addresses. Now, he says, "some of my judgments have been wrong."
Further, Davison is supporting the Postal Service's request last week to Congress for $5 billion to stem losses it says it suffered from the terrorist attacks and the contamination of postal facilities from deadly anthrax spores, which so far have killed 4 people and sickened 13 others.
"If Congress says no and puts these costs on the ratepayers, I don't know what we are going to do," he said. "I think at that point we're not going to have a $65-billion post office, we're going to have a $20-billion system with services far different."
Davison's education of the postal system began last spring when he was invited to serve on the 2001 Mailing Industry Task Force, composed of 12 representatives from businesses that depend on the mail.
He was representing the greeting-card industry, which is dominated by two major players, Hallmark Cards Inc. and American Greeting Corp., which control up to 89 percent of the market. The privately held Paramount, which employs 425 people in Pawtucket and more elsewhere, is a distant third in market share.
The 12 task force members had been competitors, fighting each time the Postal Service needed more money to contain the inceases to other rates.
"All of the different constituencies historically have been locked into these adversarial positions," Davison said.
That includes the greeting-card industry, which fought to protect the price of stamps because two-thirds of cards are mailed.
But once on the task force, the executives focused on the postal system's needs. This is a business that handles 208 billion pieces of mail every year. That works out to an average of five pieces per household every day.
An assumption that the Postal Service was indifferent to customers was wrong, Davison realized, because otherwise it would not have created the task force.
The task force had spirited discussions about the postal system and how the various constituencies needed to work together more.
The task force also discussed the need for the Postal Service to press ahead with new technologies.
"There is a lot of technology out there that is already deployed and the anthrax situation is a perfect example of why we need it," Davison said. "We need a Caller ID piece for mail."
Caller ID is used by the telecommunication industry to allow customers to see who is phoning them. Davison said the Postal Service is exploring using bar codes that could be placed on stamps or pieces of mail and could be used to identify the sender.
Privacy concerns would be the biggest concern of such a system.
The task force announced its first set of recommendations in September, calling for more emphasis on the customer, working to make the mail more competitive, and the need for members of the greater industry to work more cooperatively in the future.
Postmaster General John E. Potter immediately acted on that last recommendation, summoning task force members hastily to a brainstorming session after the anthrax attacks began.
One of the ideas that came out of that session, Davison said, was the plan that was carried out to send a post card to every address explaining what could be done about the anthrax attacks.
Task force members also recommended that a wider pool of executives be consulted in the future. On Nov. 7, about 30 business leaders were briefed by postal officials in Washington, D.C., about what steps have been taken.
"They are operating on the assumption that they should do anything prudent to assure the safety of Americans," said Davison, who has been impressed by the response of the Postal Service. When concern was at its peak it was not unusual, he said, to get calls early Saturday morning and late Sunday evening from postal officials keeping him abreast of developments.
The day after the meeting with the executives, Postmaster General Potter delivered to Congress the request for up to $5 billion. Potter said that the attacks cost $3 billion to $4 billion in damage of facilities, medical treatment, facility testing and the purchase of new equipment. In addition, he said that the volume of mail has been down 6.6 billion pieces in the month after the attack and up to $2 billion was needed to offset those costs.
The request has been likened to the recent bailout of the airline industry, with critics saying that at least some of the Postal Service's deficit occurred before Sept. 11. A 3-cent increase in postal rates had already been on the table.
Davison says Congress needs to address not only the issues of Sept. 11, but more long-standing grievances. Issues such as the government's franking powers, which allow it to mail without reimbursing the Postal Service.
"You can't have it both ways," Davison said. "Either you are going to wind up with a business that delivers four days a week, or you are going to have a public agency."
The debate in Congress will also test the task force and it could threaten the new sense of cooperation it has created in the industry.
Davison is optimistic, but he knows the unity could unravel.
"It has not happened yet, but it might happen," Davison said. "No one is happy with a rate increase and unless we get relief, rates will have to go up higher."
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