Home' ProPrint : ProPrint March 2015 Contents BUSINESS FOCUS INDUSTRY INSIDER
20 ProPrint March 2015
ail is in danger of being
destroyed in this country
by mismanagement and
a lack of political will.
Volume is down 30 – 40
per cent and little is being done to
realign the business with commercial
We have had the chairman and the
CEO of Australia Post publicly talking
down mail with headlines announcing
the end of mail. These people are well
paid to run the business, not denigrate
it. If a young marketing person reads
the newspaper (or blog) and sees the
head of Australia Post saying that mail
is finished, what are they going to
promote to their clients? Mail would
not rate a mention because even
Australia Post has said it is all over for
The CEO Ahmed Fahour is employed
to run one of the largest logistics
companies in Australia. Why are five
out of the top nine executives at
Australia Post ex NAB bankers ? This is
a logistics business not a bank. Is
Fahour honestly telling us that those
people are the most appropriate people
in Australia for those roles – and it is
just coincidence that they used to work
with each other at NAB?
By raising prices Fahour is essentially
saying that he has exhausted all
avenues of cost saving – he is also
implying that Australia Post is the most
The biggest issue in print today is Australia Post and its unfathomable attitude
to mail. Our industry insider tells it like it is and says mail is in danger of being
destroyed in this country by mismanagement and a lack of political will.
efficient logistics business in Australia.
Surely he would not raise prices if he
felt there were some efficiencies to be
gained or cost savings to be made?
Seems to me that Fahour is being paid a
lot of ta xpayers’ money while avoiding
making the hard decisions and taking
on a bloated, heavily unionised work
The introduction of Priority Mail and
Reg ular Mail is a good concept, but it
only works if you cut the head count of
the business. The idea is to smooth out
the peaks and troughs of mail volumes
and allow for a more efficient
processing system. What is the point if
you don’t reduce your head count in the
mail processing area? Fahour has
effectively reduced his sales revenue
but has not taken advantage of
improved processes by cutting heads.
According to their annual reports
Australia Post has seen 6.5 to 11.5 per
cent of staff leaving annually of their
own accord. You do not even need to
make anyone redundant – just wait for
them to leave. Of course, you would
have to replace some of them but if you
lose 2,000 people at an average wage
cost of $70,000, over a couple of years
that is $140m in annual wages.
Do we need daily delivery of mail
and alternatively, could the public have
mail delivered every second day? With
ever y second day deliver y, each Postie
could deliver mail to two areas, simply
alternating each day. If the decline in
transactional mail continues then that
would mean that the local Postie will
be delivering the same as he was eight
There are more than 6,000 Posties
working for Australia Post. If we
assume that not all delivery areas can
be shared let’s say we lose 2,000 of
them. We will assume posties earn a
little less than the average $70,000.
Roughly another $120m saved. So in
fairly quick time we can save $260m a
year if the Unions can accept the fact
that the business volumes have
declined. According to my contacts at
Post there is still plenty of fat in
management. So additional cost
savings are there to be had.
Australia Post has recently sold its
mailing business. It invested millions
into this business to compete directly
with its clients. Fortunately they were
not a particularly competent
competitor. Having friends working in
operations at Post Connect was an eye
opener. Their tales of government
department bureaucratic waste were
legendar y. Why was Australia Post
even in this market ?
Australia Post has a joint venture
with China Post called Sai Cheng. You
can lodge mail in China with an
Australian return address and Postage
Paid Australia indicia. Australia Post is
a government owned ser vice provider
giving Chinese mailing companies the
ability to compete directly with
Australian mailing companies with
the obvious cost savings. I am sure my
Work Cover insurance would be a little
higher than my Chinese competitors.
The Australian government sets
expensive (and worthwhile)
safeguards and then has one of
its agencies actively working
to hurt our industry.
This is another example of Australia
Post overstepping its boundaries and a
blata nt exa mple of empire building.
Australia Post is not going to generate
extra mail volumes by helping Chinese
mailing companies – they are just
going to move the work offshore.
Foreign competition is not something
new to the print and mail industry. But
I would have thought the Australian
government would not be actively
assisting foreign companies win work.
What is the overall employment and
tax loss to our government by Australia
Posts joint venture in China?
The New South Wales Waratahs
Rugby tea ms welcome packs were
printed and mailed in China. There is a
printing company in Sydney who does
not print them anymore and there is a
mailing company in Sydney who does
not process the mail. It is all on the Sai
Mail at the crossroads
The Government – needs to deregulate the market
or allow a change in delivery standards.
Australia Post management – putting up the price
without cutting costs is weak management.
Volumes continue to fall. We do not need small
adjustments, we need radical surgery.
Australia Post Board of Directors – Employing senior
management with a logistics background would be
a good start.
Unions – need to realise that if a business has a
reduction of thirty to forty per cent in volume then
that business will need to reduce staff levels. What
is the union proposing?
Users – mail houses, printers and others – we need
to accept that service levels will change. If there are
tangible benefits to our industry we need to assist
with change, even if it adds some costs to our
Hard decisions for Stakeholders
Why are five out of the top nine
executives at Australia Post ex NAB
bankers ? This is a logistics business
not a bank.
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