Postal Service plans to shutter nearly half its processing plants

The U.S. Postal Service is looking to shut down more than half of its mail processing facilities, a move that would eliminate tens of thousands of jobs.

USPS officials on Thursday announced plans to study 252 of the agency's 487 plants for potential closure, in addition to 61 locations already under consideration. Downsizing to fewer than 200 facilities by 2013 would cut $3 billion in costs, in part through terminating 35,000 positions.

Because 150,000 employees are eligible for retirement agencywide, USPS officials are confident the staff reductions can be achieved through attrition. Some workers might retire, while others could be moved to new locations or job functions, but USPS aims to provide a "soft landing" for those affected, Postmaster General Patrick Donahoe told reporters.

"Every mail processing employee will be touched by this change," USPS Chief Operating Officer Megan Brennan said. "We will do our best to accommodate them."

According to Donahoe, the job cuts are part of USPS' overall plan to eliminate up to 220,000 positions by 2015, a move that will require changes in rules governing the use of layoffs. Without active cuts, the Postal Service expects to lose 100,000 employees in the next three years, less than half of the reductions it needs.

Shuttering processing facilities would result in changes to service, officials said. First class mail, currently guaranteed within a one- to three-day window, would be processed and delivered in two to three days. Customers no longer would receive items the day after they were mailed. The public will have an opportunity to comment on the strategy in response to a Federal Register notice USPS plans to publish in the next few days. The agency will file the proposal with the Postal Regulatory Commission later this fall.

USPS also is in the process of studying more than 3,600 post offices for consolidation and closure, which could affect 3,000 postmasters, along with 500 station managers and up to 1,000 clerks. According to Brennan, decisions could be made this winter.

House lawmakers last week introduced legislation that would extend by 90 days the Postal Service's deadline to make a $5.5 billion contribution to its retiree health fund. USPS officials have said the agency will not have enough cash to make the payment by Sept. 30. Lawmakers plan to sponsor additional bills that would allow the Postal Service to offer retirement incentives and adjust its retiree benefits payment schedule, for example. The Obama administration could release its own proposal as early as next week.

The Postal Service already has asked Congress for legislative changes such as the flexibility to cut Saturday delivery, adjust the size of the workforce, receive a refund from its retiree accounts and end an obligation to prefund retiree health benefits. Officials in August announced they would seek flexibility to allow the agency to create its own health and retiree benefits programs. Postal workers currently are covered under the Federal Employees Health Benefits Program and the Civil Service Retirement System or Federal Employees Retirement System.

In total, proposed changes could save USPS $20 billion by 2015.