USPS expects new facility to aid bottom line

Logistics, equipment to provide efficiencies

Dec. 31, 2008

With the U.S. Postal Service reporting a loss of $2.8 billion in fiscal year 2008 and projecting another difficult year in 2009, building an 870,000-square-foot mail processing and distribution center might seem counterintuitive.

But plans for the facility at College and Pennsylvania avenues in Oak Creek are on track and should not be impacted by the daunting economic outlook, said Marge Oehlke, USPS spokeswoman.

A rezoning request for the facility was approved by the Common Council in December. Construction is expected to take 24 to 30 months and would not begin until after improvements to Pennsylvania Avenue are completed in 2009.

Officials are hopeful the new facility will help USPS achieve its financial goals as it looks to cut its losses in 2009 and beyond.

“In mail processing, most cost savings will result from increasing productivity, reducing fixed costs and consolidating operations,” Oehlke said, all of which would be achieved at the Oak Creek facility.

For example, the new facility would house Oak Creek’s existing postal facility at 7620 S. 10th St., as well as a warehouse and processing and distribution center in Milwaukee, and would use more modern and energy-efficient equipment, she said.

“Much of the efficiency comes from the logistics of the building itself,” which will be on one floor, versus the four-floor Milwaukee facility, she added.

For city officials, one of the most important benefits of the facility is keeping jobs in Milwaukee County and Oak Creek. Some residents, however, questioned whether some of the more than 2,000 jobs that will come with the development could be lost through automation in the future.

All USPS facilities already use optical character readers and bar code sorters to sort and dispatch mail to delivery offices, and USPS plans to install equipment to automate the sorting of oversized envelopes, newspapers, magazines and catalogs at its facilities beginning in late 2009, Oehlke said. But that is not expected to reduce jobs.

“We’re still going to need employees to work the automated equipment, and most of the same (job) functions will be at the new facility as were at prior facilities,” she said.

Building the new facility meets the USPS goal of making capital investments that will provide a return on investment, Oehlke said. Based on a 40-year economic study, owning the new Oak Creek facility rather than leasing separate facilities would be to the postal service’s advantage because of the reduced operating costs and improved service, she added.

Oehlke declined to provide estimated costs for construction of the Oak Creek facility, as a contract for the project has not yet been awarded.

More USPS financial information can be found at usps.com/financials.

— Julie Becker, Staff Writer

AT A GLANCE

Other steps USPS plans to take to address its financial shortcomings include:

• cutting administrative positions

• reducing non-personnel costs

• reducing capital spending

• increasing retail sales

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