MESSAGE FROM THE POSTMASTER GENERAL & CEO, JOHN E. POTTER

In early April 2002 the United States Postal Service submitted to the President and the Congress a Transformation Plan that analyzed both the challenges facing the Postal Service and its future. Since that time, the Transformation Plan has served as the blueprint for every aspect of Postal Service business. This blueprint has focused on what the Postal Service can do in the near-term, under existing legislation, to fulfill its legislative mandate to "bind the Nation together through the personal, educational, literary, and business correspondence of the people."

The Transformation Plan Progress Report (November 2004) details specific developments and successes of transformation efforts since publication of the Transformation Plan Progress Report (November 2003). Additional information about transformation initiatives was also included in the 2003 Comprehensive Statement on Postal Operations (February 2004). Together the annual progress reports and the comprehensive statements, as dynamic documents tracking strategies and initiatives as they evolve, allow the postal community to monitor and participate in the transformation process. They will continue to provide a full record of Postal Service transformation. The success of transformation is visible today throughout the organization. Some strategies identified in the 2002 Plan have been completed. Others are now ongoing and have been integrated into normal organizational processes and procedures, while a few were analyzed and discontinued. The transformation strategies have helped the Postal Service in the accomplishment of its transformation goals: foster growth through customer value, increase operational efficiency, move toward a performance-based culture, and restructure enabling functions.

The Postal Service is on track to meet and perhaps even exceed its $5 billion savings commitment made in the 2002 Transformation Plan. Through 2004, the estimated incremental annual savings totals $4.3 billion. Cumulatively, that equates to $8.8 billion for the first three years of the Transformation Plan. At the same time the Postal Service has achieved record-breaking service nationwide and historically high employee satisfaction scores on Voice of the Employee surveys. Enhancements to core products and services helped mitigate the decline in revenue associated with the loss of First-Class Mail volume. In addition the Postal Service has furthered its 2002 Transformation Plan commitment to reduce its outstanding debt from $11.3 billion at the end of fiscal year 2001 to $1.8 billion at the end of fiscal year 2004. These transformation achievements, along with five years of increased productivity, have allowed postal customers to enjoy one of the longest periods of rate stability since Postal Reorganization in 1970.

Transformation of the Postal Service is succeeding and will continue to drive further improvements. This report provides a summary level update on how the Postal Service is progressing on its near-term strategies that support the transformation process.

John E. Potter