Officials highlight concerns regarding USPS’s proposal to revamp Delaware’s only mail processing and distribution center
February 3,2012

WILMINGTON – Today, Sen. Tom Carper, chairman of the Senate Subcommittee that oversees the U.S. Postal Service, along with Gov. Jack Markell, Sen. Chris Coons and Rep. John Carney (all D-Del.) wrote to United States Postmaster General Patrick Donahoe urging him to review the U.S. Postal Service’s proposal that would revamp Delaware’s only mail processing facility, causing a significant negative impact on Delaware. Specifically, the Postal Service has proposed transferring the mail processing functions from the Delaware Processing and Distribution facility at Hare’s Corner in New Castle, Del., to another facility in Bellmawr, N.J.

The letter highlights several concerns with the proposal and the process the Postal Service has employed when considering revamping the Hare’s Corner facility. It includes statements from businesses and state and federal agencies noting that this proposal would negatively impact their operations. It also urges the Postmaster General to reconsider the Area Mail Processing study that led to the current proposal, explore the concerns raised regarding the proposal, and consider the possibility of consolidating other operations into the Delaware Processing and Distribution facility.

A copy of the letter follows:

February 3, 2012

The Honorable Patrick R. Donahoe
Postmaster General of the United States
475 L’Enfant Plaza, SW
Washington, DC 20260-0010

Dear Postmaster General Donahoe:

We are writing to express our concerns about the Postal Service’s proposal to transfer mail processing functions from the Delaware Processing and Distribution facility at Hares Corner to another facility in Bellmawr, New Jersey. While we appreciate the need on the part of the Postal Service to find efficiencies and to adjust to the changing ways in which Americans communicate, we fear that the loss of mail processing at Hares Corner could have a significant negative impact on Delaware and represent a missed opportunity to improve mail service in our region.

On September 15, 2011, we were notified by the Postal Service of its intent to begin an Area Mail Processing (AMP) study on Hares Corner. On December 20, 2011 while the AMP study was still evolving, we received a summary of the study with a letter notifying us of a public meeting on the future of Hares Corner on January 4, 2012. Due to concerns we raised that the amount of notice was not sufficient to inform the public and fully understand what was being proposed, the Postal Service agreed to postpone this meeting and move it to January 12, 2012, and then to January 19, 2012.

While we thank you for accommodating our request to delay the public meeting and appreciate the work of the members of your staff who were in attendance, we still do not understand how we or the public can be expected to articulate informed comments on a study we have not seen and which, according to Postal Service staff, has not been completed. We believe it would be in the best interest of postal customers, postal employees, and community leaders – and also of the Postal Service itself – if all interested parties were afforded an opportunity to review the final completed study, understand its potential implications for Delaware and the surrounding region, and then engage in a dialogue and exchange of ideas based on the known merits and demerits of what is being proposed.

Despite our inability to obtain the details of the Postal Service’s plans for Hares Corner and for mail processing in our region generally, we have a number of points to raise about this decision that we think illustrate the flaws in those plans. We hope that the Postal Service will reconsider its proposal in light of a number of factors that were, to the best of our knowledge, overlooked or possibly misstated during the course of the work that has been completed in the AMP study to date.

According to the Postal Service’s AMP Processing Guidelines, Handbook PO-408, the four objectives of an AMP feasibility study are: (1) evaluation of the impacts on the service standards for all classes of mail; (2) consideration of the issues important to local customers; (3) identification of impacts on Postal Service staffing; and (4) analysis of the savings and costs associated with moving mail processing operations. We will identify concerns in all four areas that have been brought to our attention and that we believe will demonstrate to the Postal Service that removing mail processing functions from Hares Corner fails to meet the Postal Service’s four core objectives of an AMP feasibility study.

Impacts on Service Standards

We recognize that the Postal Service has an obligation to use every authority available to it to find the operational savings necessary to preserve universal mail service during these challenging times. We are also aware that the proposed service changes that would allow for the consolidation of Hares Corner’s mail processing functions into Bellmawr are national in scope and would impact all postal customers, not just those in Delaware. That said, we believe it is important to share with you some of the concerns that have been brought to our attention by major postal customers in our state. These comments raise concerns that we believe the Postal Service should consider.

We heard the following from local officials from the Internal Revenue Service:

“Proposed closing of the only United States Postal Service distribution facility in Delaware would definitely impact our ability to provide timely services to the public. The proposed closing of the only United States Postal Service distribution facility would delay the IRS’s ability to process incoming correspondence and payments. It would also delay the delivery of time sensitive correspondence to taxpayers where information concerning adjustments to taxes owed, audits, and payments are being requested to satisfy accounts.

The IRS is the one federal agency most Americans interact with every year, meaning that to a significant extent, their perception about the federal government “is shaped by their experience in dealing with the IRS.” Nearly half of all taxpayers who now write the IRS on tax adjustment issues “must wait more than 6½ weeks for a reply.” In 2004, 11.5 percent of writers waited that long for replies. If taxpayers experience unnecessary hassles in trying to do their civic duty, their cynicism about the competence and fairness of the government will increase. Greater workload plus fewer resources may also damage tax agency efforts to catch tax scofflaws. The most recent IRS estimate of the tax gap, based on figures from 2001, posits that at least $290 billion goes uncollected annually.”

The State of Delaware Office of Management and Budget made the following comments:

“Should Hare’s Corner close, Delaware addressed mail originating from State Agencies will be transported to the South Jersey USPS processing plant to be sorted, processed and returned to Delaware local post offices or a USPS center for delivery within Delaware. This creates an expected 2-3 day delivery timeframe for First class mail from the current 1-3 days delivery, effectively adding a delay to First class mailing that will not be avoidable.

State of Delaware Agencies generate approximately 3.2MM pieces of presort mail annually. Heavily impacted State Agencies will be Corporations (standing policy is all Division of Corporations mail goes First Class to shorten mailing time) and the Courts collectively (impacts to timelines of hearings, Court Dates and notices). The State uses a Pre-Sort vendor in processing mail. Currently Pre-Sort mail generated by State Agencies is processed by the contract vendor and delivered to Hares Corner for delivery. The presort process service has mail delivered in a 2-3 day timeframe. Presort mail achieves a 6.5¢ per piece savings. Presort mail possessing a Delaware address would be affected by the closure of Hares Corner that would move the presort delivery time standards to 4-6 days (2-3 for the presort process plus the USPS delivery standards of 2-3). State Agency customers will likely raise concerns over timeliness of using the presort process should this occur.”

A local bank, Wilmington Savings Fund Society (WSFS), indicated the following:

“WSFS uses a mail presort house to consolidate and process the majority of outgoing mail. Our current presort provider is locally based in New Castle, less than one mile from Hares Corner. The advantages that we have with this relationship is a liberal daily cut off time for us to render and ready our statements/notices for delivery to the presort house. The vendor in turn is able to process our mail and deliver it to the Hares Corner USPS processing site before the 8:00 PM cutoff that same day. This results in a large percentage of our outgoing mail being delivered to the end customer the following day. Likely impact of the closing of the Hares Corner USPS processing site would be:

Cutoff time for WSFS to deliver mail to the presort house would be moved to an earlier time during the day. This may result in carry-over of processing until the following day. Estimate is an average of 10% – 15% of daily volume on statement cycle days. Potential for added expense if the presort provider levies a fuel surcharge for delivering mail to a site outside of Delaware. Potential for extended delivery time of mailings to customers if the USPS out-of-market mail processor is unable to provide next day delivery.

This impact is not factoring the proposed increase in postal rates or the reduction in mail delivery days, as these are likely to occur regardless of the outcome for the Hares Corner USPS processing site closure.”

J.P. Morgan Chase, a national bank with significant operations in Delaware has indicated that the elimination of the Hares Corner mail processing facility could:

“[I]mpact our ability to process customer’s payments in the quickest fashion. Redirecting mail to New Jersey creates transportation and processing delays. The estimated impact of delays could be approximately 700,000 pieces of mail per month. These payments will be posted upon their receipt utilizing backdating which is not a good experience for the customer.”

Another bank with significant operations in Delaware, and a customer of the Postal Service that sends tens of millions of pieces of mail each year and hopes to have a mail processing center nearby its Wilmington location, made this comment:

“For redundancy purposes we would like to have a mail processing facility nearby in case of terrorist issues or natural disasters. Closing Hares Corner would not provide a nearby facility.”

As you may recall, mail processing facilities in New Jersey and Washington, DC were closed for an extended period of time a number of years ago after the postal anthrax attacks. If something of this nature happened again at a facility this or other banks currently use, consolidating Hares Corner’s mail processing function into Bellmawr would not provide the backup facility they would need in Delaware.

As reflected in the comments above, some of Delaware’s largest postal customers have stated on the record that moving the Hares Corner processing facility could double delivery times, not to mention increase costs. As a result, we believe removing mail processing functions from Hares Corner facility would have a profound impact on service for both public and private enterprise in Delaware.

Impacts on Postal Service Staffing

It is our understanding that, if the Postal Service’s proposal for Hares Corner is implemented, there will be approximately 173 positions at Bellmawr available for the 494 individuals currently working at Hares Corner, including 31 management positions. However, before those eligible Hares Corner personnel can bid on any of those positions, the personnel currently working in Bellmawr may have an opportunity to bid for them first. This could eliminate the seniority advantage any Hares Corner personnel might have and may require them to take less desirable and ultimately lower-paying jobs. We have also heard that approximately 101 employees will continue to work at the Hares Corner facility to handle various jobs, leaving approximately 220 employees– almost 50% of the current workforce – without identified positions. Given the information that we have been provided to date, then, up to 50 percent of the Hares Corner workforce could be without a job or put in a situation in which they have no choice but to give up their careers. Such a potential outcome is very difficult to accept, as it would have a significant and detrimental impact on the dedicated men and women who have worked at Hares Corner. Before the Postal Service moves forward with finalizing the AMP study, the Postal Service must make clear what the staffing plan is and provide those who will be most affected an opportunity to comment on such a plan.

Potential Savings

Based on the limited information we have been provided, it seems the total projected savings from the Postal Service’s Hares Corner proposal are estimated to be as high as $19,667,703. However, we have seen other data that point to $17,505,255 in savings. The fact that these savings totals are still in flux at this late date when the Postal Service could be making a final decision on Hares Corner within a matter of weeks is troubling.

Our staff has found other problems with the savings projections related to the Hares Corner proposal:

• The Postal Service is apparently expected to generate $9,028,965 in savings due to the elimination of 194 craft positions at Hares Corner. Meanwhile, we have been told that the consolidation of mail processing functions from a similar facility in southeastern Pennsylvania into Philadelphia would generate $6,962,011 due to the elimination of 252 craft positions. If one were to compare the average cost savings per employee at these two facilities there is a significant and unexplained difference. The Hares Corner proposal would achieve $46,541 in savings per craft employee while the southeastern Pennsylvania proposal would only achieve $27,627 in savings per craft employee, a difference on average of $18,914 per craft employee. We do not understand why there would be such a difference.

• We have seen two numbers related to transportation cost savings. The potential move of mail processing functions from Hares Corner to Bellmawr will either save $1,708,076 annually or cost $193,148. Again, we have no idea how these numbers were calculated and which one is correct. Hopefully, you can shed some light on the process for determining these cost savings estimates.

These questionable savings estimates presented in summary form call into serious question the basis for the Postal Service’s plans for mail processing consolidation in our region.

Discriminatory Impact on Delaware

If the Postal Service’s Hares Corner proposal is implemented, Delaware would be the only state in the nation without a Postal Service mail processing facility. This situation could potentially make it significantly more difficult to attract jobs that rely on convenient access to the Postal Service, giving all of our neighbors a Postal Service-created economic development advantage. Our concerns in this regard were confirmed by Alan Levin, the Director of the Delaware Economic Development Office. At the January 19 public meeting, he stated that:

“Providing good service to businesses in Delaware is tremendously important and if you take away the Hares Corner mail processing facility Delaware will not be on an even playing field to compete among states for economic development. Also, one of the factors the financial services industry evaluates when making location decisions is mail service. The loss of this facility could have drastic implications for Delaware, a financial industry hub for credit card banks.”

Furthermore, some small businesses and charities that currently receive discounts for having their mail presorted are concerned that they may lose those discounts if they are unable to get their mail to Bellmawr. If those discounts were lost, it would give charities in other states an advantage over those located in Delaware. It would also give businesses and charities an incentive to relocate their operations – and the jobs that those operations create – to another state. This is a real concern and something which needs to be considered by the Postal Service before any final decision is made.

Better Serving the Region at Hares Corner

We believe that there is a better way for the Postal Service to cut costs in our region without losing the valuable work that occurs daily at Hares Corner.

When the Postal Service first proposed changing the manner in which mail in the Philadelphia area is processed, the initial plan was to consolidate mail processing functions currently performed in Hares Corner, Bellmawr, and southeastern Pennsylvania into a much larger facility near the Philadelphia International Airport. On December 20th, however, we learned that that the proposal had been changed and that, due to concern that the Philadelphia facility could not handle all of the region’s mail, the Postal Service was proposing that Philadelphia absorb the mail processing work performed in southeastern Pennsylvania but that the Bellmawr facility remain open to absorb the mail processing work performed at Hares Corner. Based on conversations that members of our staff have had with Postal Service staff, we understand that no analysis was done that involved Hares Corner remaining open.

We understand that Hares Corner, due to its size and to transportation challenges in the region, would not be able to absorb the mail processing work performed in southeastern Pennsylvania or in Bellmawr. However, we have been told by Postal Service officials that a processing center could process three times as much mail with less equipment if the service change the Postal Service is proposing is implemented. Furthermore, as the southernmost plant in the Philadelphia area, we believe that Hares Corner could play a key role in more efficiently processing mail coming out of communities on the Delmarva Peninsula, nearby communities in northern Maryland, and even communities west of Philadelphia along Delaware’s northern border. Preserving processing functions at Hares Corner could be even more important if you consider the fact that Delaware has had significant population growth, is the fastest growing state in the northeast according to Census data, and is expected to continue to experience growth well into the future.

In addition to the proposal related to Hares Corner, the Postal Service is considering consolidating work performed at a mail processing facility in Easton, Maryland into a processing facility in Baltimore. Members of our staffs have visited both facilities. They have heard that after Baltimore began accepting mail processing work from Frederick, Maryland, the facility experienced a number of difficulties and delays. With the planned consolidation of a Martinsburg, West Virginia and the Easton facility, Baltimore could have some issues absorbing the additional mail.

Transportation could present another challenge that argues for the preservation of mail processing at Hares Corner. Travel between the Eastern Shore of Maryland and Baltimore involves driving over the Chesapeake Bay Bridge. We believe that Hares Corner could easily absorb Easton’s mail and avoid the problems associated with traffic and weather situations that could make travel across the Bay Bridge challenging. In addition, mail from Cecil County, Maryland that currently travels to Baltimore for processing may be more efficiently handled at Hares Corner. For example, the largest population center in Cecil County – Elkton, Maryland – is about 17 miles from Hares Corner. Elkton is more than 50 miles from Baltimore. Finally, if the Philadelphia facility truly cannot handle all of the mail from surrounding communities, Hares Corner may be able to more efficiently process mail from communities in Pennsylvania such as Chadds Ford, Kennett Square, and Oxford that are close to the Delaware border and have strong transportation links to Hares Corner.

In conclusion, with the number of questions we have raised concerning this potential consolidation and the serious proposal we have set forth above, we ask that the Postal Service take the time it needs to fully vet its proposal and our own to be certain that whatever is ultimately decided is the right decision. Based on the summary of the ongoing AMP feasibility study that has been provided to date, it is clear to us that consolidation of Hares Corner’s mail processing functions into Bellmawr does not meet the Postal Service’s very own core objectives of an AMP feasibility study. Conversely, for the reasons mentioned above, we believe preserving processing functions at Hares Corner – a facility that has received internal Postal Service quality scores higher than most other mail processing facilities, including Bellmawr – would actually make Hares Corner an even more important part of the Postal Service’s logistics network in our region. It would prevent the unfortunate and discriminatory possibility of Delaware being the only state without a mail processing facility and enable the Postal Service to better serve growing communities in our state and the region that would likely not be well served if their mail were sent to far-off facilities for processing.

We sincerely believe that the Postal Service must act to solve its financial issues, but doing it in ways that do not improve service and are not cost effective are not the answer. Given the number of serious questions we have regarding the merits of this proposal and without being able to evaluate the final AMP study in a thorough, fair, and transparent way, we will be unable to support the Postal Service decision to consolidate the Hares Corner Mail Processing Center to the Bellmawr, NJ facility at this time.

Please explore the issues we have raised and consider the possibility of consolidating other operations into Hares Corner.

With best personal regards, we are

Sincerely yours,

Thomas R. Carper
U.S. Senator

Christopher A. Coons
U.S. Senator

John C. Carney
U.S. Representative

Jack A. Markell
Governor

cc:
Thurgood Marshall, Jr., Chairman, USPS Board of Governors
Cheralyn D. Morton, Manager, Consumer & Industry Contact, U.S. Postal Service South Jersey District