Learn About The Issues Affecting the Printing & Mailing Industry
View our issue overview on the Postal Service's financial crisis and the Do Not Mail campaign by clicking here.
The Issue: Postal Service Financial Crisis
On July 28, the U.S. Government Accountability Office classified the financial condition of the United States Postal Service (USPS) as a “high-risk” federal area in need of substantial transformation. The USPS is expecting to report a $7 billion net loss for 2009, caused primarily by sharply declining mail volume that was compounded by the recession and an upcoming mandated payment to the Postal Service Retiree Health Benefit Fund. USPS’ worsening financial situation means tough choices for Congress and the USPS, and could affect the mailing industry that supplies most of its business – including International Paper, xpedx and our customers.
For the third quarter of 2009, mail volume was down 14.3 percent and is down 12.6 percent for the year to date. Mail volume for 2009 is projected to fall by 28 billion pieces of mail to a total of 175 billion pieces. At the same time, the Postal Service’s obligation to pre-fund the Postal Service Retiree Health Benefit Fund will require a payment of $5.4 billion on Sept. 30, 2009. In his recent testimony before the Senate Homeland Security and Government Affairs Committee, Postmaster General Jack Potter said that by making the entire fund payment, the Postal Service will not have the working capital reserves to fund operations or meet its payroll obligations.
Congress worked vigorously this summer to develop legislation that will address the USPS’s short-term financial struggles. The House Oversight and Government Reform and Senate Homeland Security and Governmental Affairs Committees each passed legislation that would permit the USPS to pay for its retiree health care obligations for current employees from the Retiree Health Benefit Fund instead of its operating budget. However, provisions added to the Senate legislation (S 1507) made its final passage more difficult.
On September 15, the House passed an amended version of HR 22 to reduce the payment due to the Retiree Health Benefit Fund by $4 billion-- from $5.4 billion to $1 billion. On September 30, the Senate passed the bill-- only a few hours before the payment was due.
International Paper's Government Relations team continues working through the Postal Coalition to encourage key Congress to support a viable Postal Service. We recognize that additional measures are needed to help the Postal Service operate more like a business and to deter new postal rate increases as the sole solution, and will work with industry leaders and legislators to achieve these goals.
The Issue: Do Not Mail
In an effort to reduce the solid waste stream, a number of environmental groups are targeting the direct mail industry with legislation that would make it a crime to send a consumer a piece of direct mail advertising without having a preexisting business relationship. This “Do Not Mail” movement at the state and federal level aims to block unsolicited direct mail unless customers choose to accept it. Mailers who then send mail to such individuals would be subject to harsh civil penalties and potential litigation.
The Truth
The truth is, advertising mail comes from a sustainable resource-- trees-- and provides consumers with a convenient marketplace and an easy connection to local goods and services. In a 2005 study, the U.S.P.S. determined that the environmental benefits of direct mail outweigh the negatives. In 2004, 334 million catalog purchases in the U.S. replaced 111 million shopping trips. After accounting for the energy used to produce and transport the paper and deliver the mail, these catalog purchases saved 75 million gallons of gasoline that would have been used to drive to retail stores. Perhaps of even greater significance, mailing related industries in the U.S. account for $1 trillion in annual sales and 8 million mailing industry jobs, of which direct mail accounts for roughly 50 percent. (Source: EMA Foundation's IPS Team). The Do Not Mail legislation would cripple an enormously important sector of the economy.
IP's Position
International Paper believes strongly that direct mail advertising is an efficient, sustainable and effective method of reaching target audiences about new products and services. At the same time, we support increased recycling efforts as well as improved industry initiatives to clean mailing lists and respond to consumer preferences. For example, the Direct Marketing Association’s Mail Preference Service is an important component in improving the efficiency of the industry and giving consumers the ability to tailor their mailing preferences on a voluntary basis. These initiatives can make direct mail advertising more efficient and effective, without the harsh civil penalties associated with the Do Not Mail legislation.
Legislative Update
International Paper is a founding member of the Mail Moves America Coalition and is a leader in the effort to stop Do Not Mail legislation, which was introduced in 15 states in 2007, 13 bills in 2008 and three states and San Francisco in 2009. Through the efforts of coalition members and employee grassroots initiatives that helped educate legislators about the positive environmental benefits of mail, the Do Not Mail legislation has not become law in any state. San Francisco's Board of Supervisors passed a non-binding Do Not Mail resolution in 2009 but it was not signed by the mayor, ensuring it did not become a formal city priority.
How Can You Help on Do Not Mail?
New legislation continues to surface across the U.S. To see if legislation has been introduced in your state, follow the Take Action link on our Web site. If there is an active alert in your state, as indicated by its green color on the map, please contact your state legislators in support of the mailing industry. Sending your pre-drafted letter only takes a few minutes.
*Direct Marketing Association
We welcome your feedback. Please contact julie.alsup@ipaper.com.
