3. TFP: 2002 AND THE FUTURE PLAN
The Postal Service's 2002 TFP growth of 1.1 percent marks three consecutive years of positive growth. Output per Workhour growth was 2.2 percent. This TFP result is equivalent to $700 million. Cumulative from 2000, TFP growth measures 5.0 percent, equivalent to $3.3 billion in expense reductions. Output per Workhour over this same period grew 5.9 percent.

When compared to years with strong positive TFP growth prior to 2000, the achievement of 2002 is significant. In previous years, strong TFP growth was fueled largely by workload (mail volume and delivery addresses) growth. During the 1990s, TFP grew 0.2 percent annually, on average, while workload grew 1.9 percent annually, on average. In 2002, however, strong productivity growth was fueled by a substantial restraint on resource usage growth. TFP growth of 1.1 percent was achieved in spite of a 1.9 percent decline in workload.¹ The Postal Service effectively managed its use of resources to achieve a 2.9 percent reduction in total resource usage.² Labor and Materials usage declined by 4.0 percent and 0.9 percent, respectively. This achievement was in addition to the significant 2001 reductions in labor usage of 2.3 percent and materials usage of 5.6 percent.

The Postal Service plans to continue to improve TFP over time. The objective is balanced against the need for service improvements to enhance customer satisfaction and remain competitive in the marketplace.


¹ This is the second largest decline in Postal Service History. In 1976, workload declined 2.6 percent and TFP declined by 0.5 percent.
² This is the largest decline in resource usage in the history of the Postal Service.