Chattanooga's postal center safe until spring '14

Chattanooga's postal center safe until spring '14

May 18th, 2012 by Carey O'Neil in Business Around the Region

A customer leaves the post office at 6050 Shallowford Road on May 9. Officials have delayed closing the distribution center until spring 2014.

A customer leaves the post office at 6050...

Photo by Ashlee Culverhouse /Times Free Press.

The U.S. Postal Service said Thursday it will close 140 mail processing and distribution centers by February, cutting 13,000 jobs.

The Postal Service will close another 89 centers in spring 2014, and has indicated the Shallowford Road center will be among that group.

When all 229 centers have been closed, about 28,000 post office jobs across the country will be eliminated, including more than 250 in Chattanooga, saving the service $2.1 billion annually.

"We simply do not have the mail volumes to justify the size and capacity of our current mail processing network," Patrick Donahoe, postmaster general and chief executive officer of the Postal Service, said in a statement. "To return to long-term profitability and financial stability while keeping mail affordable, we must match our network to the anticipated workload."

The Postal Service announced last year it might close the Shallowford Road Processing and Distribution Center. Since then, employees have been given several expected closure dates that have been pushed back.

"It really is stressing the employees out. You don't know if you have to put your house up for sale or if you can afford to take a vacation this year," said R.J. Hoffman, an area state vice president for the postal workers union. "Morale has gone down. We're trying to keep them up there, but it's kind of hard to do because you never know day to day what's going to happen."

The closings will be accompanied by a drop in first-class mail service standards from one-to-three-day delivery to two to three days in 2014. Hoffman hopes Congress will mandate delivery standards stay the same, which could require the Postal Service to keep the Chattanooga processing center open.

But the Postal Service lost $3.2 billion in the last quarter alone, compared to $2.2 billion during the same quarter last year. Year-to-date, the postal service has lost $6.5 billion following a $2.6 billion loss the year before.

In the next year, the service expects to lose $14 billion.

Overhead costs such as fuel prices are rising while people turn to email at the expense of first-class mail.

But losses wouldn't be so severe without a unique congressional ruling requiring the federally mandated but not federally funded service to prefund retiree health benefits. Without those and similar requirements, losses in the last quarter would have been $486 million.

After receiving strong backlash on its initial plan to close processing and distribution centers, the Postal Service enacted a voluntary moratorium on closures until May 15 to give Congress time to act. A bill that would infuse $11 billion to the organization has passed the Senate but stalled in the House.

"We're just trying to move ahead by making decisions that are going to help us financially but at the same time not really have an effect on customers," said David Walton, spokesman for the Postal Service. "There was a time when we were building post offices and couldn't keep up. Now we're doing an about-face on that."

Several of the 461 distribution centers across the country operate at a fraction of total capacity. These consolidations are expected to put an end to idle workers and machines to create fewer but fully operational sites.

"We're trying to be more efficient," Walton said. "That's just good business sense, and that's what we're trying to do here."