Senior Government officials have delivered a fresh warning that An Post is facing a range of long-term financial and competitive threats.
In a briefing document prepared for the Minister for Communications, Mr Dempsey, senior officials warn that An Post's problems are not just confined to its current financial difficulties. While the company aims to return to profitability in 2005, the document warns that other pressures will soon start to exert themselves.
"The postal sector is facing further liberalisation in 2006 and the possibility of full liberalisation by 2009. This will increase the competitive pressure facing An Post from stronger postal operators. Again, the threats posted by electronic substitution are unlikely to decrease," says the document.
It was written for Mr Dempsey when he entered the Department in October. Among the authors were secretary general Mr Brendan Tuohy and deputy general secretary Ms Sara White. It sketches out the main challenges facing Mr Dempsey as Minister. It says returning An Post to financial health is a top priority, but warns this will not be easy.
"The reduction in the area of the market reserved to An Post may impact on the capacity of the company to fulfil universal service obligations, particularly in rural areas."
The document acknowledges the progress made by An Post management, but warns that cost reductions have to be implemented.
"An Post has a very high fixed cost base. If the company fails to restructure and improve productivity and if volumes continue to drop with a knock-on impact on revenues, company financials could be on a knife edge." It says the industrial relations environment at the company needs to be responsive and flexible.
Meanwhile, An Post yesterday reaffirmed its decision to close its parcels division, SDS, with the loss of 270 jobs, after a protest against the move by workers.
The protest, at the GPO in Dublin, was organised by the Communications Workers' Union, which claims the decision to close SDS was based on flawed financial figures.
It received support yesterday from the Labour Party, which called for the closure decision to be deferred pending an investigation of SDS's finances by Mr Dempsey.
About 100 SDS workers took part in the protest, which was held to coincide with a meeting of the board. They distributed leaflets claiming that the decision to close SDS was "unsound" and calling on Mr Dempsey to intervene. "The staff in SDS believe that with changes the SDS service could have continued and made a profit for An Post."
The CWU last week published a study commissioned from consultants LHM Casey McGrath, which questioned An Post's revenue projections for SDS.
Following yesterday's board meeting, however, chairwoman Ms Margaret McGinley confirmed the decision to close SDS in the new year and reintegrate its services into the main An Post group.
