A decade ago, I wrote an article encouraging general commercial printers to expand into the mail-labeling business as a natural extension of their full-service print offerings. While the U.S. Postal Service continues to provide the bulk of distribution services for many printers, the Internet has eroded the Postal Service's volume just as it has hurt print volume. The Postal Service's response to this fall in volume has presented another challenge/opportunity that the sharp, forward-thinking printer will grasp hold of and use for its clients' benefit. Its response has been to become much more rigid in allowing discounts for mail that previously qualified for volume automation handling.

But first, let's go back and put these recent developments into historical context. The Postal Service's cost structure is immensely wage and benefit intensive to the extent of over 60% of total costs. With this reality and the power of this union, its only hope of cost containment rests with investment in technology for the automated handling of mail. But to optimize this workflow requires highly standardized product entering the system.

In order to squeeze the labor content out of mail handling, the Postal Service wisely choose to push labor costs upstream to its clients and their intermediary vendors. In 1996, the Postal Service initiated one of its broadest regulation reforms ever in offering "carrot" discount incentives for bulk mailings whose presorted addresses and physical specifications enhanced the agency's postal equipment automation capability.

The large publishers, because of their huge volumes and frequent mailings, had no problems in hiring the necessary design and IT expertise to meet these discount requirements. Small and medium-sized corporations with lower volumes and less frequent mailings either bought off the shelf solutions for their in-plants or turned to their full-service printers and mail vendors to provide the design planning and software manipulation for barcode labeling in order to qualify for some degree of discounts.

Toward the end of the 1990s, the Internet, as an alternative distribution means, began to adversely impact the Postal Service's real cash cow: First Class mail. Barry Meinerth, Time Inc.'s vice president of Production and the keynote speaker at GATF's TechAlert Conference 2001, described the Postal Service's dilemma by citing that "88% of all publications are distributed through the Postal Service. And yet 58% of the post office's current $60 billion annual revenue comes from First Class Mail."

When the First Class revenue stream began to feel the drought posed by the Internet, the Postal Service very naturally panicked and chose to implement a "stick" strategy to accompany the carrot approach for volume discounting. The stick is to become much more rigid about which mailpiece designs will be accepted to qualify for the volume discounts. And those pieces that are not accepted will be incurring a non-machinable surcharge. Printers and mailers will be hearing and experiencing more about this term non-machinable surcharge.

The print buyer will be made to pay the upcharge, or the mail won't go out. The Postal Service is acting in a classic "turn-around" mode, as it is trying to develop a business model for the future. The opportunities/

challenges for printers to help their clients to navigate through these dynamic times in the next few years are extraordinary.

The future for most printers is inextricably intertwined with that of the Postal Service. The Postal Service has been the preferred means of direct (bulk) mail distribution despite historical postage rate increases far in excess of inflation. The 2001 study on future volume increases by print product category conducted by the Electronic Document Systems Foundation projected that only direct mail marketing, packaging and marketing image printing would grow in terms of absolute paper tonnage by the year 2020. The actual cost of distribution (postage, freight, courier) typically exceeds the cost of print production for most medium- to high-volume print projects.

Whether general commercial printers choose to offer mail labeling and list maintenance services or to outsource this to other specialty vendors, the importance of in-house expertise for the printer in mailing regulations is becoming paramount.

So how do printers develop this expertise? Begin with an in-house library. The best source for information is naturally the post office. With but rare exceptions, you will find your local postal agents extremely willing to make you more aware of their guidelines for quicker and more cost-effective mail service. For example, the Domestic Mail Manual (DMM) Issue 57 and the Inter-national Mail Manual (IMM) are available online at or · from the Superintendent of Documents at 202-512-1800. There is a 12-page periodical entitled Memo to Mailers that is full of several short articles that address special interest and item issues. This free manual can be acquired by writing for subscription information to Editor-Memo to Mailers, US Postal Service, Washington, D.C. 20260-3122.

The continued importance of barcoding needs to be understood. The Postal Service now sorts over half its letter-sized mail to the carrier route or walk sequence. This processing is clearly intended to save the manual sorting at the last stop. A Mail Evaluation Readability Lookup Instrument (MERLIN) is one of the tools designed to help accomplish this objective.

MERLIN is intended to assist business mailing entry units with the barcode readability testing for mail. MERLIN units are now located in the Capital Metro, Eastern Areas and Chicago with deployment to the rest of the country planned to continue through 2003. Mailers can submit samples of First Class Mail, Standard Mail and Periodicals within size limitations for letters and flats (up to 12 inches by 15 inches by 3/4 inch and up to 16 ounces). Samples would be submitted to the MERLIN Test Center in Chicago, where tests would be conducted within 72 hours of receipt. Results would be returned to the sender so that any incompatibilities can be corrected before the actual mailings.

The Postal Service sponsors a combination conference and trade show for the business mailing industry called the National Postal Forum (NPF). An educational and networking venue, NPF has more than a hundred topical business sessions, an exhibit hall with more than 160 vendors and a keynote address by the Postmaster General. 2003's NPFs are scheduled for New Orleans and Kansas City. You can access a detailed listing of information free of charge by visiting the National Postal Forum's Web site at www.npf.org.

To suggest that every printer stay on top of these regulations may seem like a daunting task. To that end, it would be wise to consider joining a mailing industry trade association such as the Mailing and Fulfillment Service Association out of Alexandria, Virginia (www.mfsanet.org). In addition to newsletters and numerous other special publications, the association facilitates a very active Web site for members to discuss mailing concerns, interpretations of regulations and often help one another with case study solutions.

Monitoring MFSA's Web site has indicated that these specification issues of machinable and barcodable are currently more dynamic than the Postal Service, any of its clients or mail preparatory vendors would prefer. But within this temporary confusion lies opportunity. Despite escalating postage costs, the dependence of much of corporate America will continue to rest on the Postal Service. And the full-service printer will often be caught in the middle, either a contributor toward a passable design and compatible address list or the producer of a multi-thousand-dollar piece that is badly delayed for incompatibilities. While the incompatibilities may not be the printer's fault, this is an opportunity for the printer's technical consulting expertise to possibly save the day. And a workable solution certainly increases the probability of getting paid for the job; whereas, if the job is held up or is delivered too late, the client may want to place blame and not pay its vendors.

C. Clint Bolte is president of C. Clint Bolte & Associates in Chambersburg, Pennsylvania. For additional information, please call 717-263-5768 fax 717-263-8945 or send an e-mail to cbolte3@comcast.net.