Deepak Chopra sighs wistfully as he walks through the grand lobby of the Royal Ontario Museum. Parents are wrangling their children, small groups are clustered around exhibits and security guards are chasing down stragglers who may or may not have paid to enter the nearly 100-year-old museum.
After decades of being a sleepy, second-choice tourist attraction, the place is busy. And as a student of history, the museum’s revitalization fills Mr. Chopra with hope: If a stuffy building full of skeletons and 500-year-old cutlery can reinvent itself for a digital age, he says, so too can the country’s embattled postal service.
“By any definition museums should be obsolete by now because of things like 3-D television and the Internet,” he says. “Yet here you see a museum going through a major renaissance. What is it that keeps certain institutions relevant? That is the most fascinating thing that attracted me to this opportunity.”
Alas, saving Canada’s postal system isn’t quite the same as saving a museum, even if both institutions have a particular obsession with the way things used to be. Mr. Chopra – who has only been on the job for a year – finds himself in a daily struggle to convince his employees (and more importantly their unions) that they are living in the past.
Mail volume to the average Canadian home has dropped 17 per cent in the last seven years. At the same time, its important parcel delivery service has faced heightened competition from nimble competitors anxious to steal business from the Crown corporation. If Canada Post is going to exist 10 years from now – something even Mr. Chopra isn’t willing to guarantee – he’ll need to drag them into the present with less-generous pension plans, more-flexible wage structures and greater flexibility around scheduling and delivery.
“We have an opportunity to create a window here and create the right conditions from a cost structure, work flexibility and pension perspective to free up some cash to invest in all the things we need to do that are not free,” he says. “If we can do this, then I see a future. But if we spend the next three years bickering over these issues, it won’t be easy to catch up with our competition. And it is already hard enough to catch up.”
Mr. Chopra’s appraisal of Canada Post’s fiscal situation could put many executives off their lunch, but in between bits of a chicken pot pie he enthusiastically rattles off his main concerns.
The mail service’s last reported annual pension deficit was $4.7-billion.
There are 200,000 new houses built in Canada every year, and he has to send someone to deliver mail to each new house whether they receive paper bills or not (most don’t). And those unionized employees are paid well (they top out around $24.94 an hour) and retire early – at 55-years-old or 25 years of service, whichever comes first.
“We can’t bring in people with the same golden packages we did when we were on a 40-year bull run,” he says, pausing only to take a small sip of his Coca-Cola. “Look, in the past we could do whatever we wanted and the money just kept on coming. All we had to do was sit back. Those days are over.”
Meanwhile, Canada Post started piling up losses last year for the first time in 17 years. The most recent quarter saw $163-million shortfall for the Canada Post Group of Companies, largely due to the costs associated with an employment equity ruling from the Supreme Court. The previous quarter saw a $35-million loss.
Mr. Chopra took over the top job last year after spending most of his career at Pitney Bowes Canada. Soft spoken and unfailingly polite, his voice rises as he outlines the way he hopes to transform the company through his five-year term. Assuming he can figure out the pension riddle and come to terms with his unions, Canada Post plans to invest heavily in a plan that would see the company essentially reinvent itself as a trusted digital storehouse. Every Canadian could have their own secure website where all of their mail was delivered – bills, digital magazines, flyers.
It tried something like this already with its ePost service, which still exists but is casually brushed aside as an underdeveloped misstep as Mr. Chopra outlines his new vision. Canadians want to visit one site to get all of their bills, Mr. Chopra insists, and right now they are forced to visit each company they do business with in order to access their statements.
“We have decided to place a bet on a business model that says Canadians are not going to sign up for 30 different websites,” he says. “I don’t want to go to 30 sites for 30 different letters. The next decade will see a lot of experiments, everyone is saying ‘Come to my site.’ But what people will say is ‘Is there someone out there with a peaceful, common-sense place where I can collect these things?’ And they will conclude that Canada Post is this place.”
The companies, meanwhile, would benefit from having a verifiable delivery system that ensures the correspondence ends up where it should. Customers wouldn’t waste their time trying to remember passwords, and they couldn’t claim the bill never showed up if they happen to miss a payment.
He calls the next 10 years “the decade of duality,” as consumers slowly and awkwardly transition from paper to pixels for the bulk of their letters. But as letter volumes decrease, he expects Canada Post’s parcel service to make up for much of the lost business. The postal service is investing in hand-held devices to simplify door-to-door parcel delivery, and is working with border authorities to make it easier for parcels to clear customs.
“Look, we are the 90-per-cent market share owner for eBay in Canada,” he says. “Nobody knows that, but it is a huge number. So let’s read the tea leaves – where should I invest? Before I arrived there was a discussion about how we should be a bank. Well, what do we know about banking? If we must grow, we should at least be thinking of businesses that we know a thing or two about.”
It all sounds a little desperate as we eat our fancy lunches inside C5 Restaurant Lounge, which is tucked inside the Michael Lee-Chin Crystal. And just minutes earlier, Mr. Chopra summarized his company’s outlook by saying “if you look at the clouds, they are all dark right now.”
But he’s also a little fed up with my line of questioning, which centres around survival. Which isn’t entirely fair, since he’s the one who said Canada Post won’t exist if its unionized employees don’t cut it some slack when it comes to pensions and salaries.
So it’s slightly jarring when I ask him if he honestly believes the company will exist in another decade, and he doesn’t answer. The silence lasts a few seconds, and after taking a quick glance at the neighbouring tables he leans in to express his annoyance.
“If you were sitting with one of our competitors would you ask the same question?” he asks. “Would you ask them if they are trying to survive? Or would you ask the question about what they are doing to retool the business? I don’t want to spend the rest of my life simply surviving.”
The short answer is yes – I would ask them the same question.
But the moment has passed, and he’s regained his composure as he turns back to his history lessons. Benjamin Franklin opened his first three post offices 249 years ago, he says, and every few years since then someone has insisted the post office is doomed.
“You ask what will happen with the mail, and I see this is a natural question,” he says. “If you look at the mail’s 249-year history there have been at least a dozen times something major has happened and we keep reinventing. We are going through a change in shape and size. But can we win this war? Do we have the talent? Absolutely.”
* 48 years old
* Born in New Delhi
* Splits his time between Ottawa and Toronto. Married with two adult children.
* Shares a name with spiritual adviser-to-the-stars Deepak Chopra, and has occasionally found his hotel rooms upgraded because of the confusion.
* Fellow of the Institute of Certified General Accountants of Canada and has a bachelor’s and a master’s degree in business management from the University of Delhi.
* Spent most of his professional life at Pitney Bowes, where he rose to the rank of chief executive officer of Pitney Bowes Canada and Latin America. He also served as president of the mailing and communications technology company’s Asia Pacific and Middle East regions.
* Appointed to a five-year term as president and chief executive officer of Canada Post in February, 2011.
* Has been active with the Toronto Board of Trade, where he helped with proposals to reduce gridlock in the city.
* Worked with associations focused on creating business opportunities for aboriginal entrepreneurs.
* Served on the board of the Duke of Edinburgh Awards.
* Currently serves on the board of the Conference Board of Canada chairs the board of the Canada Post Foundation for Mental Health.
POST OFFICE WOES
Canada Post isn’t the only postal service struggling to remain relevant in a digital world.
Postal services in both the Britain and the United States face challenges that are far steeper than those faced by Canada Post chief executive officer Deepak Chopra. His biggest challenges (aside from declining mail volumes) come from labour costs and a pension deficit that hit $4.7-billion last year. His quarterly losses have been in the tens of millions, not billions.
Meanwhile, the United States Postal Service is expected to lose as much as $21-billion (U.S.) by 2016 despite massive cost-cutting. The British hired former Canada Post chief executive officer Moya Greene to privatize the Royal Mail and take the risk out of taxpayer hands.
Britons are just starting to understand what a private post office means – stamps have increased 30 per cent this week to 60 pence (95 cents Canadian).
The Royal Mail has lost about $1.5-billion in the last four years as volumes have fallen 25 per cent. That isn’t expected to get better any time soon – analysts expect mail volume to drop by 5 per cent a year for the foreseeable future.
“We know how hard it is for households and businesses when our economy is as tough as it is now. No-one likes to raise prices in the current economic climate. But, regretfully, we have no option,” Ms. Greene said as she announced the price hike.