Analysis

Canada Post cuts: Turnaround plan or beginning of the end?

Canada Post has announced a series of changes: cutting staff; increasing technological efficiency; more franchised post offices; a new pricing system. Is this the final nail in its coffin or the change that will turn it around?

Is this the final nail in the coffin for Canada Post or the turnaround the struggling service needs?

Canada Post plans to stop delivering mail to houses, the company announced Wednesday - a change that could make or break the mail service, which traces its history back 250 years. (Adrian Wyld/Canadian Press)

Is this the final nail in the coffin for Canada Post? Or is it the change that will turn the struggling company around? It could go either way.

On Wednesday, Canada Post announced a series of changes: cutting staff; increasing technological efficiency; more franchised post offices; a new pricing system. None will be easy, but the one change that could make or break the mail service, which traces its history back 250 years, may be the end of home delivery in cities.

Certainly in a business sense, the Canadian mail service has set itself a formidable task. Wholesale reinventions do not always work, especially when a company is losing money and carrying a staggering pension debt.

In its Wednesday announcement, Canada Post says it "will continue to bring the cost of labour in line with its competitors through attrition and collective bargaining over time." But without deep pockets, dealing with its powerful union may not be as easy as it makes out.

Getting rid of up to 8,000 employees will be expensive and disruptive.

The Canadian move echoes a similar transformation under way at Britain's Royal Mail, but without the cash infusion obtained by the British service's share issue when it became a publicly traded company earlier this year.

If the managers of Canada Post can be blamed for the hole they are in, it is only because they were unable to get ahead of that classic giant-killer of venerable companies: disruptive technological innovation.

Postal services are not alone in failing to keep up. It's the same process that crushed Kodak and the record industry. 

In the case of global mail services, the disruptive technology was, of course, email - the instant and virtually free way of communicating that exploded onto the scene in the 1990s. But the danger is that the process started by email will only get worse when the post office goes ahead with its latest innovations.

Faded respect

As a child I remember the people who delivered mail getting a lot of respect. I can still recite from the (apocryphal) U.S. postman's creed about all the things "that would not keep this carrier from his appointed rounds."  

Since that time the mood has changed.

Old urban neighbourhoods are populated by the elderly. How will my neighbours, who don't go out in slippery weather for fear of falling, get their mail?

Complaints about mail delivery are something we all have in common. Stories about the letter that arrives 20 years late send a thrill of righteous indignation through everyone who has ever waited a little too long for a cheque. And there are the daytime parcel deliveries to working households that result in a little card being left telling us to go line up at a distant post office, the nearby one having been closed. 

The latest common reason for hating Canada Post was an earlier innovation to try to deal with its shrinking business: Junk mail. At my house most days, this junk mail — including unaddressed flyers for pizza and storm windows — are the only thing the mail carrier brings.


While my friends from distant suburbs rubbed their hands on Wednesday morning in the spirit of "misery loves company," urban home owners will now have one more reason not to love the post office. In my crowded urban neighbourhood, where houses are only a few strides apart, which of us will get the unsightly group mailbox in front of our home? Or will it join the telephone switching box on the church lawn to make an uninterrupted wall of ugliness?

At existing group mail boxes, car-culture suburbanites pull up to get their mail on the home commute. I fear urban car commuters will create a new roadblock on our narrow streets.

Old urban neighbourhoods are populated by the elderly. How will my neighbours, who don't go out in slippery weather for fear of falling, get their mail? Will they have to wait for the thaw?

Risky strategy

Back in 2001 a friend and colleague had a bit of an altercation with Canada Post. For reasons too complicated to get into here, the place Canada Post had been delivering mail for three years was declared "insecure." Rather than going through the difficult process of getting a new mail location approved at his rental property, my friend decided on a boycott.

Although it was the early days of email and computer banking, he became an early adopter, converting all his bills and accounts to electronic methods. "I feel oddly liberated," he wrote at the time. "No more long-distance deals or credit card applications ... I am now guiltlessly removed from the Christmas card circuit."

As it turns out, Canada Post blinked first. Several months later a bag of mail was dumped as his door. But by then my friend and his roommates had found a better way to communicate.

And that's the danger for Canada Post, that it could alienate the customers who are still loyal.

Perhaps Canada Post's five-point plan for recovery will work. Perhaps this time the managers at the Crown Corporation will hit on a formula that makes money. Maybe the post office will be around for another 20 years, until the time when they can take away the ugly boxes and deliver our mail house to house with robots and drones.

But maybe instead, with this move, Canada Post has taken one more step toward irrelevance, to a future where everyone does everything electronically, and a private company like Fed Ex brings you parcels and the occasional bit of necessary snail mail.

I know my elderly next-door-neighbour does not yet use email. Maybe this will be the impetus to change. That way she can get her important business done, and let the junk mail accumulate in the ugly group mailbox till spring.

About the Author

Don Pittis

Business columnist

Don Pittis was a forest firefighter and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London. He is currently senior producer at CBC's business unit.

Comments

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to CBC/Radio-Canada's online communities (except in children and youth-oriented communities). Pseudonyms will no longer be permitted.

By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses. Please note that CBC does not endorse the opinions expressed in comments. Comments on this story are moderated according to our Submission Guidelines. Comments are welcome while open. We reserve the right to close comments at any time.