Printers, mailhouses and the direct mail industry are having to come to terms with the latest Australia Post plan, which would reduce mail delivery days if approved by government.
They think the national mail carrier’s plan to axe 900 jobs and cut delivery days is a ‘typical Australia Post decision’ that will do little to improve the financial position of its letters division.
Australia Post says the job losses will mostly affect managerial, admin and support roles while frontline workers will not be affected, and that it is lobbying the government to relax its Community Services Obligation to deliver standard mail to homes five days a week.
[Related: More Australia Post news]
Blue Star print and direct mail general manager Matt Aitken says while it is too early to tell how potential changes to delivery could affect the industry because it is unclear how it would work, it would likely make things harder for some direct mail clients, just as the market was picking up again.
“There will definitely be some clients that need direct mail campaigns to hit letterboxes at particular times and this could make that more challenging,” he says.
“We are really seeing a direct mail renaissance because marketers are realising the return on investment is better than other mediums, and it’s really pleasing to see they are able to measure that.
“I think Australia Post needs to take that into account in decision making.”
Active Mail managing director Luke Pearsall says his business has just had its best two months ever but that continued uncertainty could scare advertisers away.
“Sure transactional mail is dying, but direct mail is making a big comeback because advertisers are realising that electronic campaigns do not work as well, and the public does not want digital mailboxes,” he says.
“Cutting delivery days will put more pressure on us and on direct mail providers to get things faster to ensure campaigns are delivered at the right time – there are many advertisers that rely on it.”
Horizon Print Management general manager Stuart Page says Australia Post will have a hard time getting any cuts to delivery days past the government as it is sure to be unpopular with the public.
However, he says it might increase the cut through of campaigns because people will pay more attention to their mail if it is delivered less often.
The industry has long thought Australia Post is deliberately denigrating mail in favour of its highly profitable parcel business, and see chief executive Ahmed Fahour’s comments to Fairfax yesterday, along with its plans to split the mail and parcel businesses, as proof of this agenda.
“We are shifting resources, capital and money from the declining area of our business [letters] to the growing part – our trusted services in stores and the delivering of packages,” he said.
Pearsall says Fahour is just looking at the numbers without considering how to improve the mail business.
“This is what happens when you have an accountant running the business,” he says.
“Australia Post built its parcel empire off mail and now they treat their customers badly and are trying to kill letters.
“Fahour won’t consult with anything, even the industries that drive his business.”
Page says Australia Post wants mail volumes to go down so it can justify transferring resources to parcels.
“Fahour’s statements are contradictory – letters drives a lot of revenue to parcels,” he says.
“This is a typical Australia Post decision, they’re chasing their tails while he collects a huge salary and lays off 900 people.”
Page says this is probably the first of many cuts but that targeting admin and managerial roles was the wrong move.
“It needs to look at inefficiencies in its logistics and distribution systems and they need to get better representatives to liaise with customers like us,” he says.
“We also negotiate mostly with their middle managers as we don’t know if they will be cut and if so if they will be replaced with anyone.”
Pearsall echoes these sentiments, saying the protection of frontline jobs is misplaced, and that postal workers will have to go if delivery days are cut anyway.
“The problem is the glut of delivery centre and sales roles. There’s four people doing one job and there’s a lot of sales people who don’t seem to do anything,” he says.
“My representative was made redundant weeks ago and I have no idea who the new one is or if we even have one.”
“The sooner Australia Post is privatised, the better.”
[Related: More direct mail news]
Aitken says Australia Post should have listened to the industry and increased the stamp price much higher than 70c so bulk mail would be more attractive and drive revenue, while at the same time increasing income from normal letters.
“Now they are decreasing services to save money but actually lose more money and come after business with more bulk mail prices rises,” he says.
“It’s a never-ending spiral.”
PIAA chief executive Bill Healey welcomes Australia Post finally cutting costs by laying off workers but says there is still a long way to go.
“As a monopoly, there has been no pressure on them to evolve and cut costs like a commercial business, and have instead just increased prices,” he says.
“The idea that mail is a millstone around its neck doesn’t take into account that the parcels business was built on being the government mail carrier.”
Healey says the PIAA will be meeting with top Australia Post executives soon and the mail carrier is keen to open a dialogue.
He says he is also in ongoing consultation with Communications Minister Malcolm Turnbull about reinstating the need for all bulk mail prices changes to be approved by the ACCC and is talking to the Productivity Commission about Australia Post’s lack of competitive neutrality in its move into printing.
“If we don’t come up with a fair system the channel will be unfairly undermined,” he says.
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