Analysis from IBIS World lists the top 10 industries going the way of the buggy whip. The Wall Street Journal‘s “Real Time Economics” provides the full list with Wired Telecommunications at the top, followed by Mills and then Newspaper Publishing. As you would expect, renting tuxes and videos is a losing bet, as well as, selling records and photofinishing.
First class, government monopolized mail delivery did not make the list but should have. After all, deliveries by the Postal Service have declined by 43 billion pieces in the last five years, according to USPS spokeswoman Sue Brennen.
“We have nearly 32,000 post offices and only 19% cover their costs” says Brennen.
Brennen’s blue brigade lost $8.5 billion for its fiscal year 2010, which ended last September 30th, after a $3.8 billion loss in ’09.
It’s taken time, but technology has turned the USPS into a dead monopoly walking. First it was the fax machine, then email, now social networking.
Reportedly the law prevents post office closures on purely economic grounds. So, the USPS goal of closing 2,000 branches in 2011 is considered to be aggressive. After all, 491 closures are in process. Next, we’ll hear that the Constitution requires stations in the west to still have freshly watered ponies and fearless riders at the ready in case the trucks break down and the Harry & David Easter catalogs have to be delivered.
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I assume that by selling records, they are simply referring to outlet stores. From what I’ve seen, record production is up, as is sales. Personally, the bulk of what I spend on music is spent on acquiring it in vinyl.
Vinyl is a niche product with a loyal following. CDs don’t have the kind of emotional attachment as vinyl does. 2.5 million vinyl sales isn’t anything to be amazed with, but it’s capable of surviving on its own. Everyone else that just wants music to be portable will continue on with digital music. Vinyl will stick around until someone invents a portable music format that’s capable of equaling the fidelity of analog music.
I was just clarifying, because I heard that vinyl has been doing relatively well as of late. I guess the specialty stores that carry aren’t, which makes since to me since i buy most of my vinyl online.
For what it’s worth, I view vinyl records more as collector’s items. Maybe it’s because I have a lower-quality record player, but I actually prefer the sound quality of digital over analog.
That’s probably it. I’ve heard vinyl on a high quality player and the sound quality is just far and away better than even the “lossless” BluRay format. I really don’t care enough about sound fidelity to take up the necessary space for vinyl and the players, but I can appreciate it from time to time.
Maybe we could add dead-tree economics book publishers to the list, what with mises.org cranking out all the free epubs! If only!
Formal wear sellers/renters? The author/s must have not gone to a wedding recently. Trying getting 5 bridesmaids and 5 groomsmen to respectively get into properly fitted identical attire. I believe the rental part maybe be dying but the sales seem to me to be rather strong.
And wired communications companies have their property, their transmission lines for the internet, threatened with confiscation by regulators in the name of “Net Neutrality”. Clearly these companies would be better off being able to charge according to their own pricing models instead of one from a government agency.
And I think Textile Mills (I think that is what they are referring to) are doing rather well. Clearly in the making of clothing the west is mostly uncompetitive but in making giant rolls of fabric it is extremely competitive.
And manufactured homes, how is a company that makes homes cheaper an issue. Now the depression from low interest rates has hurt business and there will be fewer of these afterwards but I see no reason why the business is in trouble?
I suggest that if you are an investor that you go to Peter Schiff or some other Austrian oriented firms and learn who is really in trouble.
The table indicates a 50% revenue decline over the past 10 years for textiles, and forecasts another 10% decline through 2016. That’s not exactly inspiring.
What is the decline in other industries? How about passenger air travel with the TSA probing and xraying around? How about book publishers? How about Newspapers?
And just because there is a decline in revenues does not mean that the business is completely dead. The competitive will survive.
Bogart, would you really want to live in a trailer when prices for real houses are low?
I think that Manufactured Home Dealers will eventually rebound. I expect the population of this country to increase, and although there is a massive surplus of housing now, housing stock doesn’t last forever. In twenty or thirty years, when demand picks up, manufactured homes will likely be an inexpensive and popular choice.
In the mean time, the going will be tough, though.
Creative destruction in the Schumpeterian sense, with the results being anything but surprising.
Why is it that all these blogs only look at the decline in mail volume when predicting the demise of the USPS? Yes, there has been a great decline due to many factors. Some are due to electronic diversion and some just because of the recession and companies mailing less. There is also the opt-out options that credit card offers have that helped as well.
Although there was a decline in overall volume of around 43 billion pieces, there were still over 170 billion pieces mailed and delivered. The workforce has been reduced by over 100,000 positions and consolidations and closures are next in line.
Every one of the little villages that currently have a Post ffice should be aware of this little maxim. Use it or lose it. However, many larger Post Offices are also money losers, in the strict sense of the phrase. You have to realize that there is no financial “credit” given for delivering the mail. Only the Post Office that collects the postage gets that.
The office I work at has expenses of around $15 Million. There are around 100 clerks/Mailhandlers and 75 or so carriers, 15 supervisors, a vehicle maintenance staff that all are paid. Two retail outlets and on Business Mail Entry Unit generate only around $9 million.
So we are a money loser overall. This would be a reason to not use the losing money propisition as the only measure of a Post Office. It also comes to walk in revenue. If an office has little foot traffic and a Postmaster spends hours doing crossword puzzles, hours can be shortened or alternative outlets for USPS products can be asked for. Like a Contract Postal Unit or APC kiosks.
I hope the free-market as Gospel crowd has the honesty to rejoice when FedEx and UPS decide to maximize their profit margin and stock value and the cost of mail becomes unseemly. Free market in a small, local, competitive economy can be very good for the consumer. That is certainly not the modern US economy (and has not been for a very long time).
Without the monopoly of the USPS new companies would be free to challenge the current package services on price and services.
Hello … Newman!
I love all of these geniuses like Doug……………They have no clue what they are talking about, but that doesn’t stop them from writing 3 paragraphs about it. “Hey, I don’t get any mail, so lets just do away with the post office……….”. Do you know what USPS stands for??? United States Postal SERVICE. Get that last word???…………….SERVICE ???? FEMA, The Coast Guard and the Bureau of Alcohol Tobacco and Firearms are all government services. Do we require them to turn a profit??? We are required to deliver to every house every day. That is called universal service. UPS and Fed Ex don’t do that, and couldn’t turn anywhere near a profit if they did. In fact we deliver a ton of packages for UPS everyday because the addresses are out in the boondocks and since we are going there anyway, its cheaper for them to give us the business. We’re not going anywhere Doug……………get used to it.
I would expect better from someone writing for the Monitor. Very unprofessional.
Kevin,
I had originially wanted to to indicate that he was an idiot, but your comment is succinct.
Thanks
Really…173 billion pieces delivered last year..Dying? the USPS deliveres more in one week than UPS and Fedex combined for an entire year. Also 1 million NEW deliver points are added each year. How is that dying. Why does Fedex Smartpost and UPS basic/surepost get delivered by the USPS. Why would they pay the Post Office to deliver parcels for them? The PO for the last ten years has actually made a profit each quarter but one. The problem is that Congress takes 5.5 billion each year from them for a trust fund for FUTURE health benifets. This is addition to current ones. No other company in the entire worl public or private is required to do this. Congress has also OVERCHARGED the USPS 75 billion for civil service and 6.9 Billion for Fers retirement pensions. Congress is on pace to overcharge the USPS 142 billion dollars by 2016. This is a fact. Senator Collins and Carper have bills to remedy thias pending. Do you think it will pass. No way. Why would Congress who has taken so much money even think of giving it back.
It’s dying because only 19% of those delivery points make a profit. It’s dying because 173 billion pieces delivered are junk mail fliers that garnar something like $0.41 per unit (this is a high estimate as the USPS provides discounts to bulk mailers). It’s dying because the system is being destroyed by pension costs, excessive salaries, and a strange insistence that a daily delivery to every single home address is vital.
If you think the USPS is doing fine, repeal all the mail carrier laws that ban UPS and FedEx from carrying letters and cut all federal support and protections, then we’ll see how well it really does (hint: it’ll just collapse even faster).
Do you know the definition of the word SERVICE??? It isn’t “only deliver to those houses where you can make a profit”…………if that were the case 80% of the Mid-West would get no mail.
The Gov’t offers a SERVICE……………..UPS and Fed Ex are only there to make a profit. HaHa…. I’m sure UPS and Fed Ex would be able of offer letter service right now. if you want to pay $5.99 per letter to send a birthday card or pay a bill, they’d be glad to take it. Doesn’t anyone here have ANY common sense????
Right, because service means I should get someone from Chili’s to personally knock on my door every day to ask me if I want ribs.
“If you think the USPS is doing fine, repeal all the mail carrier laws that ban UPS and FedEx from carrying letters and cut all federal support and protections, then we’ll see how well it really does (hint: it’ll just collapse even faster).”
Now that you mention it…cut all the subsidies for gas and oil…and watch green and solar energies… leave the fossil fuel industries in the dust…no pun intended.
I rather like 51+mpg… don’t you?
If you’re going to remove all of the support(which there is none) and protections, you also need to remove all the restrictions and laws that prevent USPS from directly competing with other commercial entities.
Not if you also repeal all the green subsidies, which get far more per dollar spent than oil and gas ever will.
damn, what’s with all the true believer trolls on here lately? defending the post office is like defending the DMV or TSA. Mises’ katastrophenhausse can’t come soon enough for these fools and their paper money houses.
What would we do w/out the USPS?
1. Mail less garbage; only what’s necessary; less garbage in landfills.
2. Create more and better jobs for poor ppl and kids, e.g. I personally may not deliver to rural areas but I know I could find someone NOT making $50K w benefits to do it.
3. Have mailing service 7 days per week.
4. Give $8.5B back to the economy for ppl to use wisely.
Funny. The Direct Mail industry is a TRILLION dollar boost for the economy. You need to be far less short sighted and consider all that goes in to getting that piece of bulk business mail to your mailbox. If you’re concerned about the landfill, take advantage of recycling bins in many post office lobbies to recycle mail you do not want.
Funny, I guess that you consider it a better job if there were a lower wage and lesser benefits. there could be more jobs for the same money but, do you really think that any person is really going to work for $10 an hour knowing that they are going to be outside in any sort of weather or, even working inside? Right now, where I live, we can not get people to take a job that pays $9.50 an hour which is a decent hourly wage here. They work for a couple of months and quit because these positions do not lead to permanent positions and these jobs offer no benefits. On the plus side, you can pretty much work as much as you can and collect overtime pay.
Forget about 7 day delivery. There is no company that can operate at that level.
I’m not sure how you would consider the repayment of a loan as giving $8.5 Billion back to the economy. That loan was spent on things that contribute to the economy like wages, and maintenance of infrastructure.
I think you need to do a little digging to see some of the facts. One of which is the required payment of around $5.5 Billion into an account to “Pre-Fund” FUTURE retiree benefits. What company could really sustain itself when it starts the fiscal year already billions in the hole? Without this requirement, USPS would have actually shown a profit over the past few years. The USPS is the ONLY company, public or private, that has been required to pay in to such a fund.
One other issue is that because of a flawed formula, the USPS has overpaid the retirement funds for its employees for 40 years. Estimates put the overpayment at $55-$75 Billion for the Civil Service Retirement System and almost $7 Billion into the FERS. How about just refunding the overpayments and the USPS deficit goes away as well as having the retirees benefit fund fully funded.
On top of that, the USPS is STILL overpaying because Congress doesn’t see fit to work on the formula so the payments are still based on the flawed model and the amount owed as a refund grows by the day.
Randy, It sounds as if you’d like to compete in this industry as well….oh wait, you can’t. That’s the whole point of this post and free markets overall.
Opportunity cost and “mal-investment” are rarely understood by most people including your above citing of $8.5B. The point is not all spending and work contributes equally to or is good for an economy or the overall well being of people. If I pay someone to dig a ditch then refill it (or drive around delivering junk mail), it’s not the same as if I pay someone to teach others how to read and understand economics (or only deliver relevant, pertinent and permission-based snail mail). One has a much higher ROI (return on investment) than the other…well maybe that’s not the case if the teacher is a Keynesian:-)
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