Canada Post—Present Successes and Future Challenges
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Speaker
Moya Greene, Speaker
Media Type
Text
Item Type
Speeches
Description
Canada Post and the changes to be seen on the horizon. The vital role played by both the city (Toronto) and the province (Ontario) in driving the Canadian economy. Canada Post’s major presence in Toronto, with some numbers. Taking the audience back to the era of Canada Post’s transition into a Crown corporation. A brief history, with more numbers. Successes since then. Making great strides with the brand. Results of a survey. Celebrating the 25th anniversary as a Crown corporation. The state of affairs 25 years ago. The political context at the time. Setting the financial house in order. Generating first profits – remaining financially independent ever since. Relations with CUPW. Modernizing the company. What still needs to be done. Canada Post as a part of Canada’s infrastructure, with some analogies. Canada Post’s important role in the area of economic communications. The need to update Canada Post’s physical and electronic network. Comparisons with other postal administrations in industrialized countries. Changes that need to be made and why. Facing the competition. How to advance further and transform into a modern post office. An opportunity. Plans for the near future. Challenges to be faced. Technological change and globalization and their effects on the postal market. Exclusive privilege and what that means. Trying to remain relevant in the future and what must be done to do so.
Date of Original
Oct 24, 2007
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English
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The speeches are free of charge but please note that the Empire Club of Canada retains copyright. Neither the speeches themselves nor any part of their content may be used for any purpose other than personal interest or research without the explicit permission of the Empire Club of Canada.
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Fairmont Royal York Hotel

100 Front Street West, Floor H

Toronto, ON, M5J 1E3

Full Text

October 24, 2007



Canada Post—Present Successes and Future Challenges



MOYA GREENE

President and Chief Executive Officer, Canada Post Corporation



Chairman: Catherine S. Swift

President, The Empire Club of Canada



Head Table Guests:



Diana Conconi: Senior Vice-President and Partner, Fleishman-Hillard, and Director, The Empire Club of Canada

Eliza Leitch: Grade 12 Student, Parkdale Collegiate Institute

Rev. Bill Middleton: Minister, Armour Heights Presbyterian Church

Marc Courtois: Chairman of the Board of Directors, Canada Post Corporation

John Prato: Managing Director, Equity Capital Markets, TD Securities

Verity Craig: Principal, Hays Executive, and Director, The Empire Club of Canada

Dr. Barry Carin: Associate Director, Centre for Global Studies, University of Victoria

Ken Smith: Managing Partner, SECOR Consulting.



Introduction by Catherine Swift:



In doing a bit of research on Canada’s postal history, it was surprising to find that the first recorded instance of someone being paid to transport letters in Canada was in the late 1600s as one entrepreneurial individual started up a business delivering mail. By 1723, a regular service between Québec and France was created, and letters were sent free at that time. In 1753, Benjamin Franklin and William Hunter were appointed the first Deputy Postmasters General in North America and the following year saw the establishment of the first Canadian post office, located in Halifax. In the late 1700s mail was delivered by stagecoach every two weeks, and the first postal convention between Canada and the U.S. was struck, with each country agreeing to accept the prepaid correspondence of the other. By the mid-1800s, mail was being delivered by train and service became more frequent, and stamps were introduced. In 1874, red was adopted as the standard colour for mailboxes in the British Empire, with the colour known as royal red. It wasn’t until 1908 when rural mail service was introduced for the first time.



In recent years, postal services around the world have undergone enormous change to adapt to technology and especially the advent of the Internet. While expectations might have been that postal services would be much less in demand in an Internet world, that has not been the case.



Our speaker today, Moya Greene, has had a varied career in both the public and private sectors. She started her public service career in 1979 as an Immigration Adjudicator and went on from there to senior policy positions in the Department of Labour and the Privy Council Office. She has also managed a number of federal-provincial files in the capacity of Director of Inter-Provincial Affairs in the Department of Consumer and Corporate Affairs and later in the Office of Federal-Provincial Relations. As Assistant Deputy Minister in the Department of Transportation, she was responsible for broad reform of the transportation system, the privatization of CN, the deregulation of the Canadian airline industry and the commercialization of the Canadian port system. In the private sector, Ms. Greene has been a senior officer of three of Canada’s largest multinational companies where she held the positions of Managing Director, Infrastructure Finance at TD Securities Inc., Senior Vice-President, Retail Products at CIBC and Senior Vice-President, Operational Effectiveness at Bombardier. She was recognized in 2003 by the National Post as one of Canada’s top-100 most influential women. Ms. Greene was appointed President and CEO of Canada Post on May 16, 2005. In this role, she sits on the Board of Directors, chairs the Strategy and Priority Setting Committee and is responsible for managing Canada Post’s vision, strategies, priorities, long-term goals and policy framework targets. She also chairs the Management Board, and sits on the Board of Purolator Courier, a subsidiary of Canada Post.



Please join me in welcoming Moya Greene.



MOYA GREENE:



Hello everyone, and thank you for inviting me here in Toronto today at the Empire Club. I always appreciate the opportunity to talk to you about Canada Post and the changes we see on the horizon.



I have been a resident of Toronto for many years and have a clear understanding of the vital role played by both the city and the province in driving the Canadian economy. Make no mistake, Ontario’s success is the foundation of our overall national success. Canada Post has a major presence in Toronto. We have two of our largest facilities where some 2.5 billion pieces of mail are processed annually. There are 14,000 employees in the GTA alone, and the province-wide total is 27,000. Among our commercial and retail customers, the province generates $2.9 billion in revenues. Clearly, the economic impact is dominant. I want to take you back to the era of our transition into a Crown corporation.



Since then, we have amassed as many successful achievements as the challenges now facing us in the future. First, let’s look at our remarkable transformation. From a government department operating in the red, with very unhealthy labour relations, we have evolved into a Crown corporation firmly focused on customer service. We have now earned a profit in each of the past 12 years and we have paid more than $900 million in dividends, capital returns and income tax over that same period, to our shareholder.



We have also made great strides with our brand. Nationally, a survey conducted earlier this year by the respected polling firm Strategic Counsel found that Canada Post is “the most trusted federal institution” in Canada. More trusted than Parliament, more trusted than the federal public service, more trusted than the military, more trusted than the Supreme Court of Canada. The president of that firm later told me that Canada Post was thrown in as an afterthought, as they were actually tracking public opinion about the RCMP.



Everyone was surprised. But as CEO of Canada Post, I was not surprised. I get thousands of letters every month from people all across this country telling me about the lengths the great men and women of Canada Post go to each day in all kinds of weather to get the mail out.



Earlier this year, the tenth Commerce-Léger Marketing poll ranked Canada Post third among the 150 most admired businesses in Quebec. We beat out such impressive companies as Toyota, Sony and Tim Hortons. We take great satisfaction in this ranking. I would welcome a similar survey here in Ontario. We have had a wonderful few years of recognition. And, for the second consecutive year, we have been named in a national survey by Maclean’s magazine as one of Canada’s top-100 employers. To see our brand regaining this high regard in such a short period of time is a tribute to the 72,000 men and women of the Canada Post group of companies.



We have garnered these distinctions just as we celebrate our 25th anniversary as a Crown corporation. The contrast between what we were back then and what we have now become could not be more striking. I am certain that some of you still recall the terrible state of affairs in which we found ourselves.



Let me remind you of the political context back then: when Canada Post Corporation was created in 1981, with the unanimous support of all political parties in the House of Commons and the union leaders of the day, the country’s postal service was an inefficient government department operating at a loss. The creation of Canada Post as a Crown corporation was a direct result of the political interventions required to settle a series of labour disputes and national service disruptions. And just as important as solving our problems with Canadian Union of Postal Workers (CUPW) was the need to set our sorry financial house in order.



It took eight years for the new management structure to generate our first profits, but we have been financially independent ever since. In addition to constantly improving our delivery service and performance, we have also made progress in our relations with CUPW. I am proud to tell you that this year, we managed to negotiate a new four-year contract with CUPW, which represents our operations employees. This new contract was signed without a service disruption, out of the media spotlight and with little publicity. The public and our customers, for the most part, were not even aware that the previous contract had expired.



This is a far cry from the negotiations of the past, which too often were ugly media spectacles. They cost Canada Post millions in lost business and respect and we were characterized as having the worst labour relations situation in the country. What we have achieved during these negotiations is a strong platform on which to modernize the company.



And much needs to be done in that domain. Let me explain. Every business day, Canada Post delivers some 40 million pieces of mail and parcels over one of the largest geographic expanses on the planet, with some of the most volatile weather conditions. We manage to do this at the third-lowest rate among developed countries, and we do this on time 96 per cent of the time, as monitored by an independent third party.



In many respects, our company is just as much a part of Canada’s infrastructure as its highways, bridges, airports and shipping lanes. Canada Post provides a vital communication link in this country. It enables businesses and organizations of every size to conduct transactions that promote their economic success. Early in the 20th century, the post office was the most essential link between individuals and families across Canada, but early in this century, much has changed. We are less crucial to these personal links now that most of these exchanges occur over the telephone and the Internet.



However, Canada Post now plays its most important role in the area of economic communications. Approximately 75 per cent of our revenues today come from the commercial sector. As with all infrastructures, success is dependent on revitalization and modernization. There is now a pressing need to begin updating Canada Post’s physical and electronic network.



In fact, this upgrade should have been done a long time ago. In recent years, most postal administrations in the industrialized countries have invested in their system to serve customers better and provide a safer, healthier and more efficient work environment. In the developed countries where this renewal was carried out in the normal course of operations, profits have grown, relations with employees have become closer and success in a more competitive environment has been assured. Three such countries are Austria, Sweden and Germany. In countries that have failed to update their postal system, just the opposite is true.



In the United Kingdom, the post office is operating at a loss, plagued by almost constant labour disputes, cannot keep pace with competitors in its market, and worst of all, lacks the capacity to modernize. We at Canada Post have a truly outstanding opportunity at this very moment. Most of our sorting plants are obsolete. A few have been in service for 40 years and some actually go back as much as 70 years! These plants are located in busy downtown cores, near railway stations that no longer handle the mail, and far from the highways and airports that do move the mail. Several of these facilities are poorly adapted to handling mail. They resemble multi-storey office buildings more than processing plants. They are poorly adapted to ideal logistical streams. In 2007, we continue to sort a lot of mail by hand. Our equipment dates back five generations. The technology designed to facilitate our activities is not integrated and is actually prehistoric. In many cases, the computers used by our employees have software no longer supported by the manufacturers, what I might call “state-of-the-ark” technology. The equipment and technology available today can sort every piece of mail right down to the specific point of call: your address.



Yet our letter carriers hand sort the mail they must deliver that same day. We are losing the ability to maintain this equipment and technology. These plants were designed before the era of ergonomics and environmentally friendly buildings. We therefore are far removed from the ideal situation in terms of health, safety and environment. So in some ways, getting out and delivering 40 million pieces a day represents something of a small miracle, given the current state of our plants and equipment.



It requires our 72,000 employees—the sixth-largest work force in Canada—to at times perform some super-human feats to get the mail to more than 14 million addresses. And it comes at a cost, including more than 8,000 injuries a year and one of the highest modified duty and absenteeism rates in the country.



When I joined the Canada Post team in 2005, I had a clear goal in mind: to create a modern post office, a flexible business firmly focused on the customer, and thus become a leader in postal efficiency. We reorganized our business to focus entirely on our three key operating sectors: Transactional mail, which includes invoices, notices and statements, Parcels and Direct Marketing. The new structure placed our customers at the centre of all our operations.



One thing that has changed since our conversion into a Crown corporation is the fact that most of our operations now face competition. We must vie against the world’s largest logistics companies, such as FedEx and UPS. In direct marketing, our competitors are telecommunications giants such as Bell, Rogers and Quebecor. To advance even further in its transformation into a modern post office, Canada Post must now invest much more in its physical and electronic network. The people of Canada deserve an unmatched postal infrastructure, and we can only achieve this if we invest in efficient, safe, environmental and sustainable infrastructure, in sophisticated technology and in new, ergonomic equipment. This investment, which entails $1.9 billion in expenditures, will place Canada Post on par with virtually every other postal administration transitioning to the industry’s best practices, including sequential sorting and fully automated mail-handling systems. This change will also support renewal of Canada’s largest corporate fleet. We operate almost 7,000 vans and trucks.



During modernization, we will have the opportunity to capitalize on other modes and technologies that are fuel-efficient, environmentally friendly, and more ergonomic for mail delivery by our carriers, especially in rural areas. Canada Post will not only remain competitive, it will also become a supplier of preferred logistical and messaging solutions to Canadian customers, by offering competitive rates and better products and services.



In the very near future, we hope to tell you about our plans in greater detail. One thing is certain, however, we must move forward! If we did not, we would fail in our responsibility to our customers and all Canadians. We have a unique opportunity to do this now. We are facing the challenges of an aging work force. More than one-third of our employees will retire in the near future. We therefore will synchronize our plans with the pace of retirements. We know our challenges also come from the marketplace. Just think for a moment about the rapid evolution of technology, the role of the Internet, and its impact on the communications market worldwide. To deal with globalization and evolving technology, virtually all industries have had to adapt their business models. Postal and delivery services are no exception.



Our future includes keeping ahead of the curve, and in many cases, ahead of the virtual curve online. Did you know, for example, that when you type in the words “direct mail” on Google, the second reference to appear leads you to the Canada Post Web site? I can also tell you that Canada Post will soon be launching “Maple Grove,” a virtual city in the existing online community of Second Life. This is the popular virtual community inhabited by more than eight million registered users worldwide and is part of a new social networking trend that has caught the attention of marketers.



More than 282,000 Canadians already “reside” in Second Life. This holiday season, online shoppers will be able to visit the 3-D virtual stores of Canada Post’s retail partners, shop and order real gifts and merchandise. This is truly exciting. This adaptation has brought many challenges, but also a world of opportunities. Canadians are ready to compete in a global market, and need a strong Canadian postal service to help them succeed. Over the past 20 years, technological change and globalization have drastically affected the postal market. The value chain has become fragmented. Many private-sector companies are helping our customers prepare mail—and have entered the Canadian postal market in areas that were once the domain of Canada Post. Their business model includes exploiting postal rates of other countries and the contravention of Universal Postal Union rules and Canadian law.



In 1981, Canada Post was given a small and shrinking monopoly or “exclusive privilege” to collect and deliver letters less than 500 grams. What does that mean? Exclusive privilege is the market reserved, by law, for Canada Post, for one purpose and one purpose alone. And that is to allow the corporation to generate sufficient revenue to pay for the universal service and other policy obligations that we alone have in the Canadian market. “Re-mailers” collect mail in Canada destined for locations outside Canada. Many of these “re-mailers” are owned and operated by, or are closely associated with, foreign postal administrations. Many of these are now private-sector companies. They are now here in Canada looking for new markets and Canada seems to them like a good possibility. We are proud to take on the obligations that the Government of Canada has entrusted to us. Some of these restrictions and obligations do not apply to our competitors. A cap on our basic letter mail rate limits increases to two-thirds of the annual inflation rate. Our universal service agreement requires us to deliver mail to every address in Canada every day, and the number of addresses is growing by 240,000 a year.



At the same time, the average number of revenue-generating items delivered to each address is beginning to decline. Even today, most consumers still prefer to receive their messages through various channels, in both hard copy and electronic format. This creates a growing need for multi-channel solutions that address the needs of commercial customers and, in turn, of their own customers.



If we want to remain relevant in the future, we must forge solid links with senders and receivers, whom we connect through our physical and electronic networks. In the past, I have worked to deregulate other sectors of the economy. The economic literature shows clearly that where markets are open, consumers have more choice. Fair competition allows many new entrants to build innovative new businesses. It forces existing players to up their game, become more efficient or face a loss of their business to the new entrants. Within the postal world, deregulation has produced some successes and some disasters. The role of the incumbent post is to provide customer service to the people within the country it serves. People expect to get their mail on time. That is our responsibility as is the need to stay profitable. What are the differences between successful deregulation and failure? Only two.



Successful deregulation happened gradually, allowing the necessary time to adjust. And it was accompanied by new regulatory freedoms, which allowed the incumbent post to compete fairly. Canada Post now competes effectively in parcels and direct marketing. We can compete effectively in letter mail too, which is currently the area of exclusive privilege. But we need to modernize and to receive the same freedom to build a successful business that new players have when they enter our markets.



It is our pleasure to serve you as customers, and it has been my pleasure to speak to you today about a great company, Canada Post. Canada Post, a company that now generates $7.4 billion in income each year. These are the fundamental challenges we must meet on our path toward a modern postal service. You can rest assured that we at Canada Post will continue to play a key facilitating role in the Canadian economy by providing the best service possible to our customers and to all Canadians, through an efficient and affordable postal system and through products and services that always meet the needs of our customers. Thank you.



The appreciation of the meeting was expressed by Verity Craig, Principal, Hays Executive, and Director, The Empire Club of Canada.

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Canada Post—Present Successes and Future Challenges


Canada Post and the changes to be seen on the horizon. The vital role played by both the city (Toronto) and the province (Ontario) in driving the Canadian economy. Canada Post’s major presence in Toronto, with some numbers. Taking the audience back to the era of Canada Post’s transition into a Crown corporation. A brief history, with more numbers. Successes since then. Making great strides with the brand. Results of a survey. Celebrating the 25th anniversary as a Crown corporation. The state of affairs 25 years ago. The political context at the time. Setting the financial house in order. Generating first profits – remaining financially independent ever since. Relations with CUPW. Modernizing the company. What still needs to be done. Canada Post as a part of Canada’s infrastructure, with some analogies. Canada Post’s important role in the area of economic communications. The need to update Canada Post’s physical and electronic network. Comparisons with other postal administrations in industrialized countries. Changes that need to be made and why. Facing the competition. How to advance further and transform into a modern post office. An opportunity. Plans for the near future. Challenges to be faced. Technological change and globalization and their effects on the postal market. Exclusive privilege and what that means. Trying to remain relevant in the future and what must be done to do so.