Canada Post to phase out home delivery; eliminate thousands of jobs
Published Wednesday, December 11, 2013 1:45PM EST
Canada Post is saying goodbye to the door-to-door postal carrier as it looks for new ways turn around its money-losing business.
The national mail service says rising costs and falling mail volumes have made it impossible to continue its traditional operations, so it plans to put a five-stage plan into action that will help save up to $900 million a year.
The federal Crown corporation will phase out home delivery within the next five years by replacing delivery by foot with community mail boxes, raise postal rates and cut thousands of jobs.
Canada Post spokeswoman Carley Smith noted that most postal carriers are concentrated in urban centres, where businesses in particular receive letters delivered directly to their offices.
Canada Post says about 6,000 to 8,000 positions will be eliminated over the same time period, mainly through attrition. The postal service expects nearly 15,000 employees to retire or leave the company in the next five years.
The staff cutbacks are not factored into its financial projections, though Canada Post said those savings will be "significant."
About a third of Canadian homes still receive mail to their door, it said.
The Canadian Union of Postal Workers called the cost-cutting decisions by Canada "short-sighted and foolish".
"If this happens, it would be the end of an era for Canada Post," said Denis Lemelin, CUPW national president. "We recognize that Canada Post needs to change, but this is not the way," he said.
The announcement comes in the midst of the busiest time of year for postal outlets, which handle a dramatic rise in both letters and packages for the Christmas holiday.
But the company says its business model is unsustainable, and it will start making the changes next year with the first neighbourhoods being converted to community mailboxes in the last half of 2014.
"Canada Post has begun to post significant financial losses," it said in the announcement.
"If left unchecked, continued losses would soon jeopardize its financial self-sufficiency and become a significant burden on taxpayers and customers."
On Wednesday, Ottawa announced that it would bring in new regulations that will give pension relief from the need to make special payments to reduce the Crown corporation's $5.9-billion solvency deficit. Canada Post would have been required to make $1 billion in solvency payments next year.
"This measure will address the immediate need for additional liquidity by mid-2014," the company said.
"During the relief period, Canada Post will act with urgency to restructure the pension plan in order to ensure its long-term sustainability."
Other planned changes include a tiered pricing structure for letter mail sent within the country.
The price of stamps will also rise by 35 per cent to 85 cents per stamp when purchased in a booklet, starting on March 31. Stamps that are purchased one at a time will cost $1 each. The changes require approval by regulators.
The popularity of stamps has been on the decline with the average Canadian household buying less than two stamps per month, Canada Post said.
Aside from the reduction in employees, the postal service expects to save $700 million to $900 million each year through the changes.
The reaction from other political leaders has been mixed.
"Conservatives are destroying Canadians' long-treasured postal services," said New Democrat MP Olivia Chow. "These job-killing and service-cutting measures will isolate seniors, the poor and the disabled living in urban areas."
Transport Minister Lisa Raitt said she supports the changes planned by Canada Post.
"In today's digital age, Canadians are sending less mail than ever," she said in a statement.
"I look forward to seeing progress as Canada Post rolls out its plan for an efficient, modern postal service that protects taxpayers and is equipped to meet Canadians' needs now and in the future."
The postal service has faced intense competition from couriers, as well as technology that has led to a growing popularity of consumers paying their bills and communicating online.
A study from the Conference Board of Canada released in April said that the postal service will be losing $1 billion a year by 2020.
In the third quarter, Canada Post reported an improved, but still big, pre-tax loss of $109 million for the period ended Sept. 28. The pre-tax loss in the comparable period a year ago was $145 million.