Catalogue Exchange Condemns All Parties in Postal Strikes

Tuesday, 18 August 2009

Trade body the Catalogue Exchange, which supports businesses in all areas of the UK catalogue and online retail industry, says confidence in Royal Mail services has once again been shattered as a result of the current strikes.
 

CatEx, a not-for-profit organisation with two hundred member companies, says it’s time for unions and management to recognise the ‘immense damage’ the current postal strikes are causing. In a statement issued today, the organisation says all those involved need to acknowledge it’s the eleventh hour for Royal Mail and if it doesn’t adopt the same working practices of its competitors it could ‘cease to exist’ in its current form.
 

CatEx says many of its members who use bulk mail are turning to alternative carriers to protect their workers jobs. In many cases, trade customers are deserting Royal Mail altogether.
 

Reacting to the latest strikes, and following concerns raised by its members, the Catalogue Exchange has issued the following statement: 

“The mood among Royal Mail’s trade customers is fast turning from one of frustration, to one of anger. Members of the Catalogue Exchange and other high-volume users of bulk mail are once again turning to alternative carriers to protect workers jobs in their own fast-growing industry, that of direct and online retailing. In many cases, the bulk mail trade customers now deserting Royal Mail will not be returning to the Royal Mail fold after the strike. Confidence in the reliability of the service provided by Royal Mail postal workers is once again shattered, and it could not come at a worse time for Royal Mail.

 

Judging by the calls and emails coming in from members of the Catalogue Exchange, people are no longer just frustrated by the damage that these strikes are causing to consumer confidence in the mail. There’s a new mood of anger and incredulity developing as Royal Mail customers watch the corporation tearing itself apart yet again and wrecking what is left of its reputation. Royal Mail claims that it has repeatedly urged the CWU to stop blocking modernisation. The union claims that it is working towards modernisation. Whatever the respective positions of the management and the union however, both need to recognise the immense damage caused by these strikes. They both need to recognise that it’s already the eleventh hour for Royal Mail. Its bulk mail market is not collapsing, it has already collapsed.

 

The Board of the Catalogue Exchange is critical of both sides in the dispute and regrets the permanent damage being inflicted on the Corporation by these latest strikes. Royal Mail and the CWU need to recognise the commercial reality of the current position.

 

·        Letter volumes are falling by around 10% each year in the UK.

 

·        Lower volumes of mail necessitate changes in structure and methods of working.

 

·        There is evidence that postal workers employed by Royal Mail’s competitors are receiving lower levels of remuneration than Royal Mail employees in almost all cases.
 

·        Downstream access operators and other Royal Mail competitors are achieving higher levels of productivity than Royal Mail.
 

·        This higher level of productivity is only partly due to higher levels of investment in capital equipment within these organisations. Working practices in these organisations are clearly more flexible and more efficient.

 

·        Very few postal workers employed by Royal Mail’s competitors enjoy the benefit of an occupational pension. Royal Mail is already paying-in £800 million a year to help finance its pension deficit. The signs are that the £3.4 billion deficit announced three years ago may now have risen to around £9 billion.

 

·        All of these factors – along with the heavy regulatory framework imposed by Postcomm – help to explain why Royal Mail is no longer able to compete on price for most postal services.

 

·        The vast majority of all members of the Catalogue Exchange have already switched their bulk letter-mail business (under 100g) to alternative carriers. Every month sees more online and catalogue retailers switching packet traffic away from Royal Mail’s Packet Post. Strike action is bound to accelerate this process.

 

·        Several of the same competitors to Royal Mail who are currently using Royal Mail for delivery over ‘the final mile’ are well-advanced with their preparations to offer their own end-to-end delivery solutions. Once their distribution networks have been completed, Royal Mail stands to lose even more of its wholesale traffic.

 

Catalogue Exchange member companies account for over £10 Billion in direct-to-consumer sales in the UK and CatEx is one of the largest user groups of postal services in the country. In the face of mounting hostility towards the Communication Workers Union in the current dispute, the organisation’s Advisory Board is counselling moderation and recommending that members consider all the circumstances before jumping to conclusions.  It is all too easy for CatEx members and other Royal Mail customers to blame the CWU for trying to cling on to outdated working practices in the face of a fast-shrinking market for their services. It is the regulator Postcomm however, who should be shouldering a very large proportion of the blame for the current situation.

 

No one can doubt the good intentions of Postcomm, but as is so often the case when government departments attempt to regulate industry, there appears to have been a serious failure on their part to understand all of the commercial issues involved. In their efforts to create a level playing field, Postcomm has arguably tipped the balance of advantage too far in favour of Downstream Access providers. The regulator has applied such severe restrictions to what Royal Mail can and cannot offer, and to what it can and cannot say, that the Corporation is no longer able to operate its business and market its services in the same way as if it were a normal commercial organisation. Meanwhile, Royal Mail’s competitors are not subject to any such restrictions and are reaping full competitive advantage from the situation. From a bulk mailers perspective, nimble Downstream Access providers now appear to be locked in a rather one-sided battle against the lumbering incumbent giant that is Royal Mail. Royal Mail has sharpened up its act considerably in recent years, but ‘lumbering’ is still an apt description as with the regulator’s shackles restricting its commercial mobility and with one arm tied firmly behind its back by regulatory red tape, the noble giant appears to be having great difficulty even maintaining its balance in the fight, and is losing ground fast.  

 

It is, nevertheless, hard for any customer of Royal Mail to understand how the leadership of the CWU could possibly believe that its current action is serving its members’ best interests. One has to wonder whether the much-loved Royal Mail ‘Postie’ is receiving a balanced account of the devastating effects of these strikes. Every strike staged by the CWU results in the loss of more jobs at Royal Mail as every new strike causes more trade customers to move business away from Royal Mail. Mail strikes cause ordinary members of the public to use the post less too, as they fear delays and losses in the post. Mail strikes cause marketing managers across the country to divert advertising monies that were due to be spent on Direct Mail to alternative media. And every mail strike causes businessmen and businesswomen across the UK to consider alternative media to Direct Mail for the first time – email marketing; online advertising; online publishing; social networks like Twitter, Facebook and Digg; and of course Press and TV advertising.

 

Royal Mail has to adopt the same efficient working practices as its competitors very quickly or it will cease to exist in its current form within a couple of years. Unless the CWU leadership is prepared to embrace modernisation and start supporting the need for changes in working practices, unless it is prepared to start working constructively with management to reduce costs, and unless it abandons the habit of tabling unrealistic demands like the recent call for a 35-hour week, then the CWU is navigating a course towards redundancy for its members rather than doing what is needed to ensure job security for the maximum number of Royal Mail employees.“

ENDS

For further information please contact Naomi Dymond, Head of Communications, on 0871 855 5545 or email naomi@catalogueexchange.co.uk