ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, June 28, 1996 TAG: 9606280034
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: MICHAEL CROAN STAFF WRITER
AS THE U.S. POSTAL Service gears up for changes, these businesses are expecting a boom.
The postal service begins Monday what's being called its most sweeping change of the last century. Greg Ward is bracing for the impact, a likely business boom.
Ward, president of Automated Mailing Systems Inc. of Roanoke, and his competitors are expecting changes at the post office to prod more small businesses to their doors.
The U.S. Postal Service will offer discounted postage rates for businesses that apply bar codes on their bulk mailings, and charge more for items that aren't bar coded.
The changes are designed to increase the efficiency of the postal service and lower its labor costs.
"This classification reform change is the biggest change that has happened in the postal service in the last 100 years. It enables us to maximize the use of our equipment," said Deborah Yackley, a postal service spokeswoman for its mid-Atlantic area. The changes are "a big part of us trying to hold our rates down."
Consequently, the post office needs more mail to arrive with bar codes already applied, saving workers the time and effort of applying the codes. Bar codes are electronic versions of the printed address that allow computers to sort mail mechanically. They are similar to pricing information printed on many items on supermarket shelves.
To encourage more mail with bar codes, the postal service is increasing the discount for delivering mail ready for sorting.
Doug Spadaro, owner of Premier Communications, a Roanoke mailing company, explained that discounts will increase for people who apply bar codes to their bulk mailings. If mailers don't add bar codes to the mail but still presort it, meaning they divide their mailings by zip codes, they still will get discounts, but not as much as they got in the past, he said.
"The discount for bar-coded mail increases by one cent to almost four cents per piece of mail, depending on what category it falls into," Ward said.
People who process their bulk mailings by computer will benefit more from the changes than people who use mailing labels, Spadaro said.
Spadaro said he suspects that in the future, if people don't add bar codes to their mail, the postal service may not process it as quickly as mail with the coding. Yackley disagreed.
"Their mail will be handled like others'," she said. "They won't receive the discount, but it should not make the mail any slower."
The problem for many bulk mailers - and the opportunity for mail processing companies - is that few companies have bar-coding machines.
While the postal service is urging companies to invest in newer mailing equipment, Ward said many bar-coding machines can cost from $300,000 to $1 million. "Machines that are much smaller that operate at much lower speeds" are available for $150,000, he added. In addition, an operator spends another $7,000 a year for each bar coding machine to keep bar codes updated.
Ward's company, which processed more than 111 million pieces of mail last year for companies including First Union Corp., Trigon Blue Cross Blue Shield and American Electric Power Co., has four bar-coding machines.
"We've got over 1,000 customers on our mailing list and we provide services to 200 of them every day," said George "Deke" Summers, who manages Automated Mailing Systems' certified mail and distribution systems.
Although he declined to say exactly what his company's services cost, he said the fee is based on how much of a discount the client gets from the postal service.
"If they don't save any money, we don't make any money," Summers said.
Because the bar-coding process is so expensive, "the new regulations are going to force or preclude mailers from doing things themselves," Ward said.
For example, the discount for presorting a first-class letter costing 32 cents will be cut from 4.6 cents to 2.5 cents. "There's just not enough discount anymore for them to afford to do it manually," Ward said.
As a result, Elizabeth Emmett, job coordinator for Best Mailing Service in Lynchburg and Presort Express in Salem, said she expects many smaller companies soon will turn to businesses like hers to do their mailing, rather than taking the time and expense to retrain their workers.
"We're picking up a lot of customers July 1 who previously presorted their mail," Summers said. "The burden now is more on the customer to clean up their addresses."
"They need to have readable mail," Ward said. "If they don't ... they're going to have to pay 32 cents to mail that letter."
Staff writer Greg Edwards contributed to this story.
LENGTH: Medium: 89 lines ILLUSTRATION: PHOTO: PHILIP HOLMAN/Staff. Greg Ward (right) president ofby CNBAutomated Mailing, explains his processing system to Doug Norris and
Peggy Nixon of First Union's
Commercial Loan Operations. color.