Shake-up needed for An Post: ThePost.ie


TCH Archives > Sunday Business Post > 2004/12/12 > Shake-up needed for An Post

Shake-up needed for An Post
Sunday, December 12, 2004 - By Niamh Connolly
The spectacle of 8,000 postal workers marching to the Dáil last week must have been a rude awakening for minister Noel Dempsey in his new communications brief.

But after spending time as education minister dealing with the minefield of teachers' union disputes, the Meath TD will be no stranger to industrial controversies over pay and work practices.

A number of Dáil deputies recalled that a prolonged postal strike in 1979 proved a milestone in exposing An Post's courier network to competition from private companies.

The strike that closed 93 post offices last Wednesday sparked indignation about An Post's continuing monopoly over mail delivery and counter services, and the delay in the opening of the postal market.

The message was clear from the PDs - an early shake-up of An Post is preferable to a further five years of on-off stoppages, during which time the EU market will be fully liberalised.

Independent delivery companies believe the pace of reform is neither fast enough nor far-reaching enough compared to competition in the telecoms and energy sectors.

They argue that the market should be opened immediately on mail weighing more than ten grams, to spark competition, particularly because the bulk of domestic and business mail weighs between ten and 20 grams.

The British, German and Dutch governments will be opening their postal markets fully in 2006 - well ahead of the EU directive on full liberalisation, which comes into force in 2009.

Dempsey has similar powers to fast-track market opening. Next year, letters weighing more than 50 grams and costing more than two-and-a-half times the price of a standard letter will be subject to the EU directive. This is not fast enough for some.

“The market will be liberalised by 2009 anyway, but the biggest obstacle to reform is the government employees themselves,” said PD senator Tom Morrissey.

Morrissey and others believe that the Communications Workers' Union (CWU) is leading its membership down a blind alley of strikes in opposition to inevitable market reform.

Mail volumes have fallen with the rise of e-mails and mobile texts. An Post's courier firm, SDS, failed to survive international competition and lost €12 million last year.

The good news is that An Post will come close to break even this year, and is on track for profitability by the end of next year.

The company's bottom line losses after exceptional items will be between €2 million and €9 million this year - a marked improvement on a forecast loss of €30 million if the company had been forced to pay national wage rises.

The bad news is that, despite an upswing in its finances, the company's plan for 1,450 voluntary redundancies and work practice changes remains behind schedule.

An Post admitted that its restructuring programme was 18 months behind schedule in August last year. In its 2002 results, the company set aside a restructuring charge of €52.5 million for the redundancies. Instead, the workforce grew by 200 that year.

Public confidence in An Post was dented by its acknowledgement of “inadequate'‘ financial reporting earlier this year. Not surprisingly, the CWU has used this large stick to beat those pushing change.

Former An Post chief executive John Hynes told a Dáil committee in January last year that An Post's operating loss would be “a shade above breakeven, at plus €1million'‘.The same committee was told a year later by the company's new chief executive, Donal Curtin, that operating losses of €46.4 million were predicted.

Amid the confusion, former communications minister Dermot Ahern expressed concern that An Post had failed to give early indications about its worsening finances.

The CWU's obduracy has done the union no favours in the political arena. It refused to appear before a Dáil committee last January, as it was unhappy at the order of business and that it had been asked to speak before management.

“They were trying to dictate to the chair how one should run the committee,” said Noel O'Flynn, chairman of the Joint Oireachtas Committee on Communications.

“We're not in the business of sorting out the labour problems at An Post.

“But we are concerned at the state of the national postal service and that ayear has passed since the last appearance of the company.

“The survival plan has not been implemented in full and this requires changes to the work practices.”

Last week, O'Flynn asked An Post management and the company's unions to appear before the committee next month in light of the stoppage.

The unions have suspended any further action before Christmas, and they and management are due to meet minister Dempsey this week.

The company's restructuring plan has been stalled in third party talks for at least a year.

An Post is still something of a state monolith. The postal network spans every village in the country and still retains a civil service culture.

“The cold winds of economic reality hit Aer Lingus straight in the face, and it was either change or go under,” said Morrissey. “An Post is also facing market changes.

“But they are still the remnants of the old P&T and their reaction is ‘we'll go on strike rather than meet the challenge'.”

An overtime bill of €38 million on collections and deliveries is under attack, as is the legacy of outmoded work practices, such as paying overtime for hours not worked.

Thousands of businesses which are members of the Small Firms Association (SFA) were affected by last week's strike.

“If An Post restructures to meet market requirements, then there will be proper competition with an incumbent that is able to perform in the market,” said SFA chief executive Pat Delaney.

“But if we bring competition in now, An Post would face wipeout and we'll have cherry-picking, with a very good system in Dublin, but not in Donegal or Sligo.”

Employers are supporting the management's bid to streamline the business before the market opens, but not a price increase.

An Post secured a stamp price increase of 17 per cent but has failed to deliver on the 96 per cent next-day delivery target set by the Commission for Communications Regulation (Comreg).

Another increase of 14.5 per cent was sought in August to return the firm to profitability, but this is expected to be rejected by Comreg as the company continues to fall short of efficiency targets.

“The business community was asked to underwrite the restructuring of An Post in a price increase, but we didn't get any efficiencies,” said Delaney.

“In the last year we have not seen changes but serious delays and disruption.”

Business groups have argued that further price increases will drive postal volumes down.

According to one of Ireland's largest bulk mail companies, Tico, An Post's most valuable asset is its delivery network.

Tico's chief executive, Alex Pigot, said An Post should consolidate its local delivery with market opening, as private companies would then enter the collection and sorting sectors.