Copyright 2000 The Atlanta Constitution
The Atlanta
Journal and Constitution
July 16, 2000, Sunday, Home Edition
SECTION: Business; Pg. 7F
LENGTH: 1002 words
HEADLINE:
UPS delivers forceful blow to Postal Service overhaul
BYLINE: Rebecca Carr, Cox Washington Bureau
SOURCE: AJC
BODY:
Last
spring, United Parcel Service drivers descended on Capitol Hill to make an
important delivery for their company: brown corrugated boxes filled with
materials attacking the U.S. Postal Service.
Every member of Congress
got one of the computer laptop-sized boxes. Tucked inside was a slick CD
entitled, "What the Postal Service Doesn't Want You to Know." There were also
negative news articles and a 16-page booklet that compared the nation's daily
mail delivery service to the CIA.
Spreading negative information about
political opponents is hardly a new game in Washington, where it's practically a
blood sport.
But the hand delivery of 535 boxes stands out because it
shows the length that the Fortune 500 company is willing to go to and the method
the company uses to keep a competitor at bay.
In this case, UPS wanted
to stall legislation introduced by Rep. John McHugh (R-N.Y.) that would overhaul
the way the Postal Service does business. At issue was a provision in the bill
that would have allowed the Postal Service to set its own pricing, which would
have made the service more competitive.
Postal Service officials dispute
that they are the "giant, uncontrolled monopoly" that UPS says they are,
claiming the service is facing a projected decline of $ 17 billion in
first-class mail service between 2003 and 2008.
But UPS contends that
the Postal Service is a monopoly because federal law prohibits other delivery
services from entering the daily mail service.
In addition, the Postal
Service is not required to pay local, state or federal taxes.
UPS takes
the offensive
So UPS went to war. In addition to delivering the boxes,
UPS successfully lobbied a number of state legislatures to pass resolutions
calling on Congress to rein in the Postal Service's "monopoly."
They
also launched a letter-writing campaign to persuade members of Congress to kill
McHugh's legislation.
"The Postal Service continues to abuse its
monopoly power," said Jim Kelly, chief executive officer of UPS, describing why
he opposes the legislation.
The legislation "would allow them to expand
that (monopoly) and use their monopoly to compete with the private sector,'' he
said.
Kelly thinks the Postal Service should be overhauled, but he
doesn't want it to have the flexibility to change its pricing.
Once
again, UPS' persuasion won. The legislation made it out of a subcommittee of the
House Government Reform and Oversight Committee, but it is doubtful that it will
even be brought up for a vote at the committee level.
Much of that is
due to the way the company reaches out to lawmakers.
"I am just in awe
and admiration of their lobbying efforts," said Robert Taub, McHugh's chief of
staff.
As the staff director of the subcommittee overseeing the Postal
Service, Taub has watched UPS' lobbying forces derail McHugh's legislation every
year for the past six years.
"We've got every delivery service on board
except UPS," Taub said. FedEx, Emory and DHL are supporting the overhaul, but
UPS refuses to support it. " They don't want to allow the Postal Service any
degree of flexibility."
Given UPS' influence on Capitol Hill, Taub is
doubtful that McHugh's legislation will pass.
"They have really cranked
this up," he said. "My view is that the amount of money they spent to stall HR
22 is about the same amount of money they would have lost if the Postal Service
were allowed to be competitive in the e- commerce market."
Part of UPS'
success on Capitol Hill is cranking out money to politicians, observers say. The
company's political action committee donated $ 613,210 to Republican candidates
this election season and $ 258,010 to Democrats.
That's only part of the
money spent. UPS shelled out $ 1.8 million to wine and dine lawmakers last year
on a host of issues, including the competition for the air route to China, in
support of funding the Federal Aviation Authorization and normalizing trade with
China.
In this high-stakes election year, UPS has given $ 913,409 to
Republican Party committees and $ 37,250 to Democratic committees. Those
contributions, known as "soft money," are intended for party building expenses.
But more often than not, they are used to pay for "issue ads," which are often
thinly veiled campaign ads.
"There's no question; they are an important
player on Capitol Hill," said Sen. Max Cleland (D-Ga.), who regularly meets with
UPS officials. "They are one of Georgia's finest companies."
A proven
deal maker
Few legislative issues reveal UPS' deal-making power more
than the delivery service's fight to keep the Postal Service out of the
e-commerce market.
Faced with a projected revenue decline, the Postal
Service is searching for other revenue-generating markets. But it is prohibited
from competing because of rules that were set three decades ago, well before the
Internet and e-mail became commonplace.
"You have to admire the job
they've done over the years," said Deputy Postmaster General John Nolan about
the way UPS has been able to stall McHugh's legislation.
However, Nolan
is less than pleased with the way UPS has, in his view, " distorted" the truth
in defeating postal reform legislation.
"We'd love to
pay taxes if we made money," Nolan said of the service, which had $ 63 billion
in revenue last year and a net income of $ 363 million. "We barely break even
every year.
''I think it demeans them to continue to take actions the
way they have to try to preclude us from having a level playing field and
allowing us to compete," he said. "To try behind the scenes to keep us from
doing the things we can do for the American people is just wrong."
Nolan
argues that UPS is actually the one with the unregulated monopoly since it
controls 80 percent of the ground delivery service.
"They are trying to
pawn themselves off as a private company," said Tad Segal, UPS director of
public relations in Washington. "They say they have an unlevel playing field?
That's a gross misuse of facts."
GRAPHIC: Photo
"The Postal Service continues to abuse its monopoly power," says UPS chief
Jim Kelly./ ALAN MOTHNER / Associated Press
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