Baltimore PCC Mailer’s Education Seminar

1. Baltimore PCCMailer’s EducationSeminar Capital Metro Area

2. Benefits of the PCC

3. Benefits of PCC Membership Goal of the PCC Network: A premier network for customer education and training, to facilitate growth for PCC members, their companies, and the Postal Service.

4. PCC Communication National PCC Web site • Primary communication for all things PCC • Intuitive and easy to navigate • Five main headings • About the PCC • PCC Education • Leadership Programs & Best Practices • Postal News & Communications • Mail Service Provider (MSP) Program http://www.usps.com/nationalpcc/welcome.htm

5. National PCC Events National Postal Forum – Premier Spring Event • Gaylord Opryland Conference Center Nashville TN April 11th – 14th 2010 • Four day event with more than 100 educational workshops and networking opportunities • Attended byPMG, Executives and Officers • Expansive Vendor Hall • Earn certificates by attending workshops, leadership tracks and symposiums • www.npf.org

6. National PCC Day – Fall Industry Event • 3rd Wednesday in September • Nation-wide live broadcast with PMG and • Executives • Nationwide PCC Events • Providing up-to-date USPS information, education • and networking opportunities • Recognition of top performing PCCs

7. Recognition Programs • Premier PCC Program • Benchmark for PCC excellence • Performance Levels: Bronze, Silver and Gold • Leadership Awards • Announced during NationalPCC Day Broadcast • Seven award categories • PCC Industry Member of the Year (1) • PCC USPS Member of the Year (1) • District Manager of the Year (1) • PCC of the Year (1) • PCC of the Year <500K population & Level 24 or below (1) • PCC Mentor of the Year (1) • Communication Program Excellence Award (3) • Education Program Excellence Award (3)

8. The Postal Service Future and What It Means To The Mailing Industry

9. Key Postal Legislation • 1971 – Postal Reorganization Act • 2006 – ThePostalAccountabilityandEnhancementAct (PAEA) • 2009 – One year relief on Retiree Health payment

10. PAEA Pricing • Inflation-Based Price Cap • Applied by class • Cap currently negative (modest deflation) • Escape Clause • “Extraordinary or exceptional circumstances…necessary to enable the Postal Service…to maintain…postal services of the kind and quality adapted to the needs of the U.S.”

11. Mounting Challenges • This fiscal year may end with a $7 billion dollar loss. • Potential for as much as $238 billion loss by 2020 if nothing is changed. • Volume dropping under 150 billion pieces before 2020

12. Four trends will worsen the problem to 2020

13. Volume Drop Affects All Classes • 2006 high volume equaled 213 billion pieces of mail • Internet and the economy • Standard Mail is the only class that may see minimal growth • Recovery of Volume is not likely

14. USPS Mail Volume (Billions) Total mail volume dropped by nearly 13 percent in FY 2009 and will likely drop further in FY 2010.

15. Annual Growth Chicago Annual Growth in the USPS Network is 1 to 2 Million New Delivery Points

16. USPS delivers a universal, affordable service

17. Cost Coverage - 2009 200% 143% 82% 76% Cost Revenue Cost Revenue Cost Revenue Cost Revenue Periodicals First Class Standard Standard Flats

18. FSS (Flat Sequencing System) Progress • 11 systems up and running • 24 under construction and in acceptance phase • 50 FSS units scheduled by July 2010 • 25 FSS units in the planning stages • 25 Final FSS units awaiting deployment decisions • Volume determines FSS locations

19. FSS – Capital Metro Area • 4 FSS machines processing mail at the Dulles P&DC • 2 FSS machines being installed at the Curseen Morris P&DC • Future deployments planned include the following: 1 FSS at Raleigh P&DC 8/2010 3 FSS at Richmond P&DC 9/2010 1 FSS at Greensboro P&DC 11/2010 1 FSS at Linthicum IMF 3/2011 1 FSS at Charlotte P&DC 5/2011

20. NDC Implementation(Network Distribution Centers) • BMC (Bulk Mail Center) network converted to NDC’s • 21 sites form new transportation and hub facilities • Better movement of surface mail • Reduction of redundant trips • Bypass unnecessary stops • Already showing time and money savings

21. Postal Closing and Consolidations • 32,000 existing post offices • Only 6,000 have revenue exceeding expenses • Closings blocked by communities and by political pressures • Some Station/Branches need to be closed or consolidated for postal survival

22. Personnel Reductions • Work force reductions through attrition, retirements and limited offers reduce the USPS complement. • 800,000 reduced to roughly 593,000 in past five years. • 300,000 eligible to retire over the next 10 years • Hiring practices on hold now and future hiring may be largely part-time.

23. Five Day Delivery Moving Forward • Saturday home and business delivery possibly will be eliminated. • Post offices will stay open for window and box services, processing will continue through weekend • Could become effective May 2011

24. Flexible Work Force • Work with labor organizations to create a flexible work force • Meet needs of mail arrival to minimize employee downtime • Consolidations provide more concentrated workforce where volume is heaviest with latest technology • Union contracts to be negotiated to meet needs • New arbitration rules sought

25. The Future Steps For USPS • Restructure Retiree Health Benefits to a “pay-as-you-go” system • Adjust deliveries to 5-days • Expand Access to multiple retail outlets including 24/7 availability • Build a flexible (part-time) workforce • Price market dominant products based on demand by product as well as use CPI index • Streamline and improve oversight process (simply put, make faster and better decisions) • Get funds restored from OIG findings (maybe)

26. Questions?