Profits May Bring Other Problems to Canada's Post Office
THE post office made money in Canada for the second year in a row. And for the first time it will pay the federal government a dividend. Canada Post, as the post office is called, earned $149 million (Canadian) in the fiscal year 1989/90, up from $96 million the previous year. The federal government will receive $60 million.
``We have continued to improve customer service resulting in significant increases in volumes and a strong financial performance,'' says Donald Lander, president of Canada Post. Mr. Lander, a former president of Chrysler Canada, has been bringing private sector practices to the publicly owned post office since his appointment in 1986.
In spite of the profit, not all is rosy at the Canadian post office. It has been plagued by strikes. And the price of a stamp in Canada is 25 percent higher than it is in the United States. The profit may even cause more labor strife.
``The reality is that corporation's profit is smoke and mirrors,'' says Stephen White, president of one of the postal unions. He wants the dividends to go to the workers, and maintains that the profit figures are off by ``at least $55 million.''
Actual profit on postal operations was $107 million; the rest came from the sale of unneeded buildings in the high-priced Toronto market.
``The government is actually liquidating a significant portion of the assets of the Canada Post and converting that into government dollars through the dividend payments,'' said Liberal Member of Parliament Don Boudria. ``They're selling the furniture and calling that a profit.''
The post office says it made money by increasing volumes and being more efficient. There were 80 million more pieces of mail last year; the post office had total revenues of $3.5 billion on 9.1 billion pieces of mail.
``It is partly mechanization, but it's also cutting out waste and inefficiencies,'' says Canada Post spokesman Douglas Long. ``For instance, we spent $36 million to buy optical scanners and installed the first new machines in Toronto last December. And we moved the old machines to smaller cities where they were still sorting by hand.''
MR. LONG says there are also new services. Priority Post competes with courier services providing next day delivery for envelopes and large packages for $6.25, about half the price of private couriers. He also says more people are using the post office because its on-time delivery for regular letters is at 97 percent.
Other cost cutting measures include group post office for new suburban housing developments. That means no local delivery, just post office boxes. And rural mail service has been cut back as the post office closes unprofitable post offices, providing the same services from outlets in retail stores.
The Progressive Conservative government of Brian Mulroney wants Canada Post to continue making money. The finance minister, Michael Wilson, says there will be no subsidies. But politicians in Ottawa, pressured by their constituents, want the post office to provide more services. Mr. Boudria immediately called for an end to group mail boxes and the closing of rural post offices.
But the president maintains the success of the Post Office is running it as a company and not giving in to that kind of pressure. ``Since I've been here there's been no such thing as the government, or the shareholder, running Canada Post,'' says Lander. ``We've been given the authority to run the company.''