Government Operations Committee on Sept. 21st, 2016

[Deepak Chopra]

I think those savings are the most difficult for us to assess right now, because if you're not delivering a product every day, is there a risk that people will not use it? Look in particular at our $1.2-billion marketing mail business. If you are having a sale on the weekend at your store, you want your marketing message to be in the mailbox by Thursday or Friday. All of those implications for small businesses or large retailers are very important, so it is an area of complex understanding not just from the mailer's perspective but from an operational perspective. If we deliver parcels every day and there's a separation of streams, that will add more operational complexity. This is an area that needs a lot more work.

[Nick Whalen, Liberal, St. John's East, NL]

Fair enough.

This is what we're trying to elicit. How much of these savings can be implemented all in one package and what would the effects of that be? Obviously it's a difficult issue.

If we look at implementing the first two, we still have a shortfall of about $123 million, if you look at what the report says. What about other areas? I was quite surprised to learn yesterday that Canada Post's back-end costs in management and executives were so high, $650 million. I am wondering whether or not the corporation has examined saving money and how much it could save by streamlining management-side labour costs.

[Deepak Chopra]

Management is less than 5% of our workforce and senior management is less than 1% of our workforce. In terms of the cost of that, in fact the $650-million number that you have includes overhead and other items. The number is in the range of $200 million.

[Nick Whalen, Liberal, St. John's East, NL]

Presumably if you reduce your management head count, you can also reduce your floor space and the back-end costs associated with that.

[Deepak Chopra]

Just to put that in context, our management head count is down by 20% since 2008. For the last 30 months, there has been a wage freeze. There have been no pay increases. We have implemented a defined-contribution pension plan for management. The management head count continues to reflect, in many cases, more than any other attrition; so if we have unionized attrition, management is—

[Nick Whalen, Liberal, St. John's East, NL]

Since 2008 you've achieved 20% savings. Do you think you could go an extra 17% to get that $100 million more that we need?

[Deepak Chopra]

It is a direct correlation to the size of the workforce. If we are able to implement plans that will allow us attrition, then obviously span of control, management oversight, can be reduced in proportion. So that would be a proportionate question.

[Nick Whalen, Liberal, St. John's East, NL]

In terms of corporate structure, at some levels it's fairly simple; at other levels it's a little more difficult to understand. Can you tell us who owns the other 9% of Purolator Holdings Ltd.?

[Deepak Chopra]

Purolator's minority shareholder is Kelowna Flightcraft.

[Nick Whalen, Liberal, St. John's East, NL]

Were they involved in the corporation before Canada Post acquired its 91%?

[Deepak Chopra]

They are completely involved with Purolator, not with Canada Post.

[Nick Whalen, Liberal, St. John's East, NL]

Right, but were they a prior shareholder of Purolator before Canada Post acquired its stake?

[Deepak Chopra]

This is a very old relationship. We can get the facts for you.

[Nick Whalen, Liberal, St. John's East, NL]

Okay.

What ethical controls are in place to ensure that Canada Post doesn't overly profit the private lines of business at Purolator Holdings, SCI Group, and Innovapost, to make sure they're not diverting profits to those entities, which are shared with private corporations, rather than retaining them within Canada Post, in those lines of business where Canada Post competes with its subsidiaries?

[Deepak Chopra]

Canada Post—

[The Chair, Conservative, Tom Lukiwski]

I'm going to have to cut you off with that, but I will ask if you can please supply that answer to the committee in written form.

We'll go to our next intervenor, who is Mr. McCauley, for five minutes, please.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you.

Welcome back. The five-point plan was implemented for a while before it got suspended after the election. What lessons did Canada Post learn from the implementation of the five-point plan?

[Deepak Chopra]

Any large-scale project that has $700 million to $900 million in savings, that impacts a national infrastructure, that impacts millions of Canadians, is going to have some bumps along the way. It is just the size and complexity of it.

One of the things we have learned in that process is that in the early stages, we needed to get our experience on where to locate boxes, how to do the accommodation, how to consult with Canadians, and as we implemented along the way, we have learned more and better best practices on how to engage Canadians. We had almost a million surveys, and 450,000 Canadians responded to those surveys with regard to locations, with regard to—

[Kelly McCauley, Conservative, Edmonton West, AB]

This was an issue that came up yesterday, the need to engage more with the municipalities, so that's nice to hear.

[Deepak Chopra]

In fact, almost 25% of the boxes were moved to the preferred locations of the communities. I think this has been a learning journey, which allowed us to achieve savings. We were really heartened to see the satisfaction level. Regardless of mode of delivery, door-to-door or community mailboxes...and in fact for community mailboxes we're talking 86%, 91%.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Chopra, I'm going to interrupt here, because I get only five minutes. We're short on time. I'm like the Canadian dollar; I get 35% off my timing

We also heard last night from the report that the five-point plan was a great start, but it wasn't enough. The task force was very clear that it was just not enough. What else is needed to get the job done?

[Deepak Chopra]

I think the first step would be to start. I think it's very important that we start somewhere, and then we can evolve. We are living in a world where things are evolving and changing at a much faster rate. Companies used to last a hundred years. Now the average lifespan on Dow Jones is 30 years. Products used to last 10 years. Now people change their smartphones every year.

We're living in a world that's rapidly changing, and that is why I think we have to build a flexible infrastructure, a nimble organization that can react to the changing realities of the marketplace. We think parcels is a great story, but it is a competitive marketplace. We need the flexibility and the nimbleness in our ability to react to the marketplace as things change. I think what needs to happen is that we move forward with a transformation agenda and allow flexibility so that we can adapt to a changing marketplace.

[Kelly McCauley, Conservative, Edmonton West, AB]

I'm almost out of time, so I'll ask this very quickly. We've heard a lot about disabled people having difficulty getting to mailboxes. I know there is a program. Can you tell us what the program is for those who are not physically able to get a community mailbox?

We have about 45 seconds, so please be brief.

[Deepak Chopra]

In fact, my colleague led the program personally. I'll ask her to elaborate on that.

[Susan Margles, Vice-President, Government Relations and Policy Framework, Canada Post Corporation]

Every person who was being converted received a number of communications that had a toll-free number that they could call. We had a specially trained team at the end of that phone line able to deal with every individual case in terms of what they would need, whether it was moving from a higher to a lower box, whether they needed a key turner because they had dexterity issues, or whether they really couldn't get to the box. In those cases, we did arrange to have mail five days a week delivered to their CMB, their community mailbox, but once a week it was taken to their door. We still have that program in place. It has served us very well. We're offering that to people, even if they have had community mailboxes for many years and something happens that changes in their lives; they have an accident or they fall—