Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, December 2, 1994 TAG: 9412020039
SECTION: BUSINESS PAGE: A13 EDITION: METRO
SOURCE: FROM STAFF AND WIRE REPORTS
DATELINE: WASHINGTON LENGTH: Medium
While most Americans ponder spending a few more pennies to mail a letter, businesses are facing millions of dollars in added postal charges. Many said Thursday they were disappointed. Others are breathing a sigh of relief.
New rates approved Wednesday by the Postal Rate Commission increase the cost of business mail more than the post office had suggested, while reducing some proposed raises in first-class rates. The commission's decision still has to be approved by the governors of the Postal Service, an action expected before the Jan. 1 implementation date.
``The early returns are that those who got a higher rate, of course, are not happy about that,'' said Arthur Sackler of the Mailers Council, a Washington-based coalition of major mailing groups.
But he said the changes the rate commission made in the Postal Service's original plan were not severe.
``Nobody is either jumping for joy or jumping out windows,'' Sackler said.
In the Roanoke Valley, businesses that are large mailers have been prepared for the rate increases because the Postal Service announced early this year that it would seek to increase revenues.
Hanover Direct Inc. and Orvis Co., two mail-order companies that have distribution centers in the valley, say catalog mailings may be affected by the increase but the impact will not be great.
Joe Cassidy, spokesman at Orvis' Manchester, Vt., headquarters, said his company will mail the same types of catalogs and probably as many next year as in 1994. But it might have mailed more without the increase, he said.
Linda Heinberg, director of investor relations for Hanover Direct in Weehawken, N.J., said it is unfortunate the commission didn't go along with the Postal Service's proposal for an across-the-board 10.3 percent increase. In deciding to raise rates for some postal customers more than others, the commission raised the third-class rates for catalog mailers 14 percent.
Hanover Direct operates a distribution center in Roanoke County for its Tweeds catalog and plans early next year to open another warehouse for its Domestications catalog.
Heinberg said the company already had factored a 10.3 percent postal-rate increase into its plans. The rate increase may affect mailings but ity won't employment, she said.
Appalachian Power Co., based in Roanoke, mails more than 10.5 million bills a year. The commission proposed increasing postage for utility bills from 23.3 cents to 25.8 cents, which could cost Apco more than $250,000.
Apco spokesman Don Johnson said the utility would take the increase "in stride as a part of operating costs."
Doug Spadaro of Premier Communications, a Roanoke direct-mail advertising company, said he doesn't think the rate increase will hurt his business, because direct mail still will be an effective form of advertising. It may slow growth a little, he speculated.
Premier specializes in advertising that doesn't have the appearance of junk mail; therefore, 80 percent of its mailings are sent first class, which fared better with the rate commission than some other types of mail.
For some large companies, the increase could mean more than $20 million in extra spending on postage next year, estimated Tom Shimko, vice president of Pitney Bowes Mailing Systems.
The commission ``has penalized what has been a profitable sector of postal business,'' complained Jonah Gitlitz, president of the Direct Marketing Association.
The decision ``will cause a drop in expected third-class mail volume that will hurt the Postal Service and all postal customers,'' Gitlitz said.
Advertisers may have to find other ways to deliver their message, he said.
While agreeing to the basic 32-cent first-class price, the commission refused to raise the price of heavier items to 25 cents per added ounce. Instead, the commission wants the added weight to remain at 23 cents per ounce.
That will save money for folks who pack envelopes full, but the primary benefit will be for businesses such as banks, insurance companies and brokerages, which tend to send heavy first-class mail.
Staff writer Greg Edwards contributed to this story.
by CNB