The Conference Board of Canada’s Review of Canada Post

CBOC_3An analysis of The Future of Postal Service in Canada, published by the Conference Board of Canada, April 2013, authored by Vijay Gill, Crystal Hoganson, and David Stewart-Patterson.

It is a concept that is a good start, but is too limited in scope.

The identification of the problems and solutions outlined by this report are not surprising at all, as these have been known and discussed for well over a decade. The Conference Board is simply reiterating Canada Post’s present mantras and does not look outside the corporation’s present mindset for identifying the challenges or possible solutions.

The key problem to this report is the lack of of coverage on the postal transformation project and its associated high risk financial gamble. It was initially proposed in 2008 to be self funding project based on annual forecasted positive growth. Canada Post had absolutely no debt at that time. However, there were no cash reserves in case the plan failed. The market crash of 2008, negative growth, a pension shortfall and a financial commitment to the postal transformation spiraled Canada Post into an economic crisis that has led into a negative equity position and straddled them into billions of dollars of debt.

See the article, A Brief History of Canada’s Postal Transformation for more information on this.

The Conference board failed to make any sincere look at Canada Post’s business plan, which is severely wanting. Neither has the business plan been critically reviewed by any significant public or private entities. Canada’s Modern Post published an article called Questions in early 2011 which asked the single most important question about Canada Post’s economic blueprint that still remains unanswered:

“Why is Canada Post spending so much money on new buildings and infrastructure when mail volumes are declining 1% per year? If Canada Post was publicly traded, would investors infuse two billion dollars for a sales base forecasted on declining volumes or would they just want management to “sharpen the saw” with the least capital possible in the existing infrastructure?”

It is not surprising that Canada Post would lose significant money by investing heavily in new equipment and infrastructure for a product that was known for well over a decade to be declining in sales.

Canada Post nor the Federal Government has yet to definitively answer this key question. This significant omission by the Conference Board severely impairs their independence of thought on the subject and therefore the report does not pass critical judgement.

It is hopefully the start of a difficult discussion and will encourage more comprehensive reports in the future.

The major points forwarded by the Conference Board of Canada are reiterated at Canada Post’s website.

The Conference Board of Canada is a private not-for-profit applied research organization. It is a branch of the Conference Board, Inc. New York. Canada Post had engaged the Canadian branch to undertake this study. The financial terms between Canada Post and the CBOC are unknown.

The president of Canada Post Corporation, Deepak Chopra, has been revealed by the National Post as a board member of the Conference Board of Canada.

Advertisements
This entry was posted in Financial and tagged , , , . Bookmark the permalink.