charlesasullivan, Author at Canada's Modern Post

Canada Post in a Financial Crisis: Who is to Blame?

The sudden financial meltdown at Canada Post; who caused it is a secret, but there are some clues.

Many postal employees would argue that Moya Greene, the president and chief architect of the transformation in 2008 is responsible for the present financial problems. However, no one, whether in Government, any board member of Canada Post, or any major newspaper reporter has ever made such a public accusation. It may be unfair to make such a portrait with so little substantive information.

The Conference Board of Canada’s Review of Canada Post

An analysis of The Future of Postal Service in Canada, published by the Conference Board of Canada , April 2013, authored by Vijay Gill, Crystal Hoganson, and David Stewart-Patterson.

It is a concept that is a good start, but is too limited in scope.

The identification of the problems and solutions outlined by this report are not surprising at all, as these have been known and discussed for well over a decade. The Conference Board is simply reiterating Canada Post’s present mantras and does not look outside the corporation’s present mindset for identifying the challenges or possible solutions.

Michael Warren’s Continued Call on Canada Post’s privatization

Michael Warren, a former CEO for Canada Post from 1981 to 1985 once again says yes, but with a twist.

His position was outlined in the CBC Radio program, The 180, on June 9th, 2013. The complete radio broadcast can be found at CBC’s website

The discussion goes beyond privatization and covers the present and future health of Canada Post. He provided a wealth of information.

He believes Canada Post cannot be sold because it is in a negative balance position.

“… Canada Post may be beyond privatization in the sense that its net worth is under water… its… I think would be very difficult to privatize right now.”

He also added a very important business insight at the end of the conversation:

“Once you get into a downward spiral, which I think Canada Post has been in and not seen to be in by man Canadians, cutting service, I know from experience in [jer..] business and some other fields, you gotta be careful when you cut service because you can put your business into a death spiral that you never recover from, particularly if you are not offering a leading edge service or product.”

How Canada Post can Save a Bundle

How a slight shift in ideology could save Canada Post over $18 million annually, and win the respect of its network of letter carriers across Canada.

Canada Post, since the fall of 2011, has been introducing new equipment, buildings, and delivery methods to its national distribution network.

One of the most controversial, and least cost-effective strategies is the two-bundle system. This idea was borrowed from the United States Postal Service where its letter carriers have been using this system for years. However, this name is a misnomer for Canadian Letter carriers because they are required to deliver flyers to a third of their routes every day. So it is actually a three-bundle system. Today, sorting and consolidating mail into a one bundle system at their workstations is not permitted, and can potentially lead to a suspension.

Michael Warren’s Call for Privatization

Michael Warren, a former CEO of Canada Post from 1981-1985, has been a protagonist of Canada Post’s modernization program since its inception.

The release of Canada Post’s 2011 Annual Report gives him more fuel for his fire.

In his Wednesday, May 9th, Toronto Star article titled, “Canada Post a growing burden” Mr. Warren builds a credible premise on the escalating financial problems that Canada Post has, though a number of his figures are not correct or substantiated. For example he stated that Canada Post lost $253 million last year. This is not correct. The Canada Post segment (which excludes Purolator profits) lost $327 million.

Then he went on to describe that Canada Post lost $220 million from the strike which is not substantiated. Canada Post has not yet officially disclosed any figures. Warren’s numbers are likely a simple math calculation made from Canada Post’s yearly revenue, broken down into revenue generated every week, which runs around $111 million. The lockout/strike was two weeks. He simply did $111 million x 2 and rounded off or something similar. This does not take into account permanently lost business due to the strike.

He cites company mismanagement has cost the company, using the Supreme Court award 0f “$150 million in a pay-equity dispute that management should have settled years ago,” as a prime example. This dispute began in 1983 while he was still president of Canada Post. His article does not address this aspect at all or defend why he didn’t do anything.(1)

Mr. Warren’s solution is that Canada Post should be privatized.

However, he recognizes the current financial problems at Canada Post is the largest barrier: “Stephen Harper may be avoiding privatization because it means contributing billions to CPC’s underfunded pension fund to make any sale attractive. Doing nothing is also a way of keeping Canada Post’s growing liabilities at arm’s length. “

——–

(1) Thank you Postie Paul for this insightful comment at the bottom of this Toronto Star article.