WASHINGTON (CNNMoney) -- The U.S. Postal Service announced on Thursday new plans to consolidate or close 223 mail processing plants, putting 35,000 jobs at stake starting in late May or June.
The processing plant consolidations would save $2.1 billion and are a part of the agency's broader effort to save $20 billion in the next three years. The Postal Service is in debt due to declining first-class mail volumes and a congressional mandate to prefund retirement health care benefits.
The agency was reaching out to impacted employees on Wednesday, officials said. Not all impacted workers will lose their jobs. Many will be offered jobs at other processing plants miles away or even in other states. Some will be urged to retire.
"This is an important part of the network consolidation," Postmaster General Patrick Donahoe said in an interview with CNNMoney. "Some employees will retire. A mail clerk may want to become a letter carrier. . .We know how to move people and find landing spots."
The plant consolidations are the latest in an array of controversial cost-cutting measures under consideration at the Postal Service including: Slashing Saturday service,delaying delivery of some first-class mail, closing post offices and hiking the price of a first-class stamp by a nickel to 50 cents.
The Postal Service says that, if nothing is done, it faces $18 billion in losses by 2015. The Postal Service can't close anything until May 15, after the moratorium on closures ends. The agency originally agreed to the moratorium to give lawmakers time to pass legislation to save the agency. But so far, those efforts have been slow going.
Donahoe said he would like to complete most of the consolidations, including job cuts and changes to 30,000 full-time positions and 5,000 non-career employees, by October 1st. Nearly every state is impacted and would lose a mail processing plant, according to the Postal Service list, which includes 14 in California, 12 in New York and 9 in Illinois.
Mail processing plants closures can yield a particularly devastating toll on communities. A plant in Tulsa, Okla., slated to be consolidated, employs nearly 600 employees. System wide, the Postal Service employs 150,000 employees at 461 mail processing facility plants.
The Postal Service will give employees 120 days notice before their job is cut or moved, Donahoe said. Employees eligible to retire may be offered an incentive package, although the postal service said it had nothing to announce on that yet.
"This is a disaster, not just for postal workers, it's a disaster for the American people," said Sally Davidow, spokeswoman for the American Postal Workers Union, whose members will be particularly impacted. "Cutting the postal service's mail processing network is not the solution to its problems."
The unions have decried moves to cut Saturday delivery, downsize networks, slow delivery and cut jobs.
They point out that almost all of the $3.3 billion in red ink the Postal Service recorded in the most recent quarter resulted from the $3.1 billion owed to pre-funding future retiree health benefits. The union wants Congress to dispense with the 2006 mandate that required prefunding those benefits.
Most of the plants on its initial list of 264 plants up for closure needed to be closed. Only 35 on that original list up for closure ended up surviving as is and 6 more will be studied further. Separately, the agency is also studying some 3,700 postal offices up for closure. Donahoe said the process for reviewing postal offices is very different from the process for reviewing plants slated for closure.