Canada Post Corp. chief executive Deepak Chopra might be wishing he was the other, more famous, Mr. Chopra – the New Age guru.
The postal boss could use some inner peace right now, as the Crown corporation embarks on a dramatic, and controversial, five-year overhaul that could see him at the helm of a smaller and more marginal business when it’s over.
Canada Post broke the news Wednesday that it will become one of the first postal systems in the developed world to fully eliminate home delivery within five years. It’s also slashing up to 8,000 jobs, raising postal rates by 35 per cent in March and privatizing more postal stations.
Those unpalatable moves almost certainly will lead to further erosion of revenue from its core business – letter mail – and hurt the product lines that are its future, such as advertising mail, parcels and e-commerce. But if there is anything Mr. Chopra has learned in the nearly three years since he came to Ottawa, it is that doing nothing would be far worse.
“I don’t want to spend the rest of my life simply surviving,” Mr. Chopra acknowledged in a 2012 interview with the Globe.
Managing a declining business is not necessarily the vision Mr. Chopra had when he came to Canada Post in 2011 from Pitney Bowes Inc., where he was CEO of Canada and Latin America. The New Delhi-born accountant promised to find and exploit new revenue sources and work cooperatively with the company’s 68,000 employees to remake Canada Post for the digital age. He talked of the post office as a “national treasure.”
The version of Mr. Chopra the company got is less a visionary and more a disciple of Ottawa’s austerity push. Denis Lemelin, the President of Canadian Union of Postal Employees, said Mr. Chopra and his executive team seem to be carefully following the lead of the Conservative government as they unveil job and service cuts.
“There is a very close relationship between the government and the management,” Mr. Lemelin said. “They don’t move if they don’t have the okay from the government. The two are much closer now than in the past.”
Promised regular meetings with union leaders have also become increasingly rare, Mr. Lemelin said. Those duties are now typically delegated to Jacques Côté, president of the post office’s physical delivery network.
At first, Mr. Chopra, who earns nearly $500,000 a year plus bonuses, promised not to make changes on the backs of workers, according to Mr. Lemelin. “Now, it’s more like, ‘I am a bulldozer and I will bulldoze everybody,’” he said.
Unless the CEO can secure new wage and workplace concessions from employees, while carefully managing the expectations of individual and business customers who are receiving less service at higher prices, the next few years could prove to be bumpy ones.
The post office has begun posting large and steady losses, and without changes will be bleeding nearly $1-billion a year by 2020, according to a Conference Board of Canada study for the post office. It is running out of cash.
“The reality is that the business has been shrinking and will continue to shrink, no matter what Canada Post does,” explained David Stewart-Patterson, the Conference Board’s vice-president of public policy and lead author of the report.
To deal with that, Mr. Chopra is steering the post office towards a business-to-business model. The Crown corporation, for example, is ending home delivery to roughly 5 million urban Canadians, instead serving them through community mailboxes. An alternative would have been to move to three-day-a-week home delivery – but that would have gone against the wishes of retail and advertising mail customers who all want delivery on specific, but different days. Canada Post is also moving towards pricing that favours bulk mailing over individuals.
Mr. Chopra has continued to dabble in digital products, including the rollout of ePost, which allows consumers to consolidate their bills, shopping and other services on a single secure web platform. But so far ePost is generating little revenue.
But it is parcel delivery that is the future of Canada Post – the one piece of its business that is growing in the digital age, thanks to online shopping. Parcels offer the “only real growth prospects” for Canada Post, said Mr. David Stewart-Patterson.
Canada Post estimates it will generate up to $900-million a year in savings and additional revenues as a result of the plan disclosed this week. That’s close to the $1-billion hole predicted in 2020. At best, Mr. Chopra will have a marginally break-even business. But there’s no guarantee he’s out of survival mode.
“If things keep deteriorating, if physical mail falls further, do you face additional choices down the road? That’s quite possible,” Mr. Stewart-Patterson said.