Dick Strasser, CFO of the United States Postal Service

This is a partial transcript from Your World with Neil Cavuto, January 10, 2002. Click here for complete access to Neil Cavuto's CEO interviews. 

NEIL CAVUTO, HOST: Are you ready to pay more to mail a letter? Well, get ready. If the postal service has its way, a first class stamp will go up three cents to 37 cents effective June 30. The service says that since the terrorist attacks and the slumping economy, mail volume is down and a lot of workers are nervous. But is this the time for a hike?

With us now, the chief financial officer of United States Postal Service, Dick Strasser. Mr. Strasser, welcome.

DICK STRASSER, CFO, UNITED STATES POSTAL SERVICE: Thank you.

CAVUTO: Why do you need this money?

STRASSER: Well, actually we have a very delicate business model. We are designed to break even. We don't have any provision for profits or retained earnings that would cushion any kind of a situation that we're now in right now.

We continue to expand the delivery network of the postal service. We add 8,000 new deliveries every day to the network, and that those drive the costs up. So in a situation when your volumes are substantially down due to the slowing in the economy as well the terrorist attacks, it causes the need for increasing the revenue.

CAVUTO: You're making a 12 percent hike here though. That dwarfs what's happening with inflation.

STRASSER: Well, unfortunately, it is a function of how long it takes. We are not talking about increasing rates until this summer at the very earliest. The original filing had been anticipated in October of 2002. That would be almost a two-year period. And, of course, while we're talking about that, it's really only two or three cents for every piece of mail.

CAVUTO: But, you know, I understand that, Mr. Strasser, but these two or three cents and these kind of hikes — I mean, as we look at a history of these hikes over the years, they do add up. I'm just wondering what the deal is here? Where does it stop? I mean, they seem to have picked up a pace, certainly over the last couple of years. What do you tell people who are finding this a bit of a crimp?

STRASSER: Well, actually, we are doing everything we can to save costs. We have taken $500 million in costs out of the system in the last four months. We have shed over 16,000 career employees over the last 15 months. And we have plans in place to shed another 10 to 15,000 employees in an effort to be more efficient.

But as I mentioned, we do add over a million deliveries a year to the delivery network. We deliver whether it's 5 or 6 pieces of mail a day, it makes a big difference to that delicate balance. When we talk about a three percent drop in mail volume, on an annualized basis, because we are so large, that equates to $2 billion.

CAVUTO: Let me ask you about just the mood in postal facilities today. Of course, after the anthrax scares, there were reports that a lot of your union members were upset. They felt that they hadn't been adequately notified and warned and safeguarded against some of these attacks, and that there was a lot of bad blood between, not you particularly, but management and the workers. How is that now?

STRASSER: We have an outstanding workforce of 800,000 very, very committed individuals. And they have come through this entire crisis just admirably and done an outstanding job...

CAVUTO: Well, they were not saying as many nice things about you and management. So those days are gone? Everyone's getting along now?

STRASSER: No. There were a couple of instances of communications. There was, quite honestly, we went through a period of time where we were dealing with the scientists who were the experts. We're a little bit frustrated because it was difficult to pin down exactly this unknown, unseen spore that was infesting a couple of our facilities. It was a difficult time, but our employees have come through admirably and our service has retained its side levels during this entire effort.

CAVUTO: All right. Dick Strasser of the U.S. Postal Service, appreciate it. Thank you, sir, very much.

STRASSER: Thank you, Neil.

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