Pitney Bowes–Another Warner & Swasey?

Pitney Bowes, the postal management company, is a hated name at my office, and probably yours too, if like us you are stuck with a machine and a contract you no longer need. And trust me, you are stuck if you have signed a contract with this fat old company that has a mighty big problem. Their business, their wonderful cash cow of a business, is rapidly going down the drain.

They share the Eastman Kodak problem; the U.S. Postal Service problem. What do you do if the market for your core business is shrinking? We’ve seen this story in machine tools. Remember National Acme, Kearney and Trecker, Warner & Swasey and the not-to-be-forgotten, Rockford Shaper?

What we learned in the last few weeks while complaining about our contract with Pitney Bowes, is that we are bound for 3.5 years by a noose of a contract we signed without much thought in 2010. Our lawyer, Russell Ethridge, read the fine print of the legal document and lamented our plight. He said he’s never seen a more ironclad contract.

So this is what companies like Pitney Bowes do. They hire astute lawyers to draft airtight contracts and then they stonewall anybody who wants to wiggle out, because – well, how many stamps does one need today? We found out the same thing when we wanted to alter our Aramark contract for uniforms. They laughed at us. Made us feel like the suckers we were.

I ask myself, and you. Is it great policy for a Pitney Bowes to irritate and alienate its clientele? The clear signal Pitney Bowes is sending is that they no longer care about goodwill.

From an investment standpoint they have chosen to try to prop up their stock by paying a huge dividend – almost 8%. Some of the telephone landline firms have taken the same approach. They are saying that their best idea is to reward the people who are gutsy or dumb enough to hold the stock of a fading company. People who buy Pitney Bowes stock are hoping to get out before they run out of money or start to cut the dividend.

Some big firms can bring in leadership to deal with a change in core business. Corning Inc. is one that comes to mind. Eastman Kodak spun off its chemical business that has done well to focus on the photography and film business that has been a disaster. It appears that Pitney Bowes is going to ride stamps into the grave. And they won’t be nice about it.

Question: Is Pitney Bowes the next Warner & Swasey? What would you do if you ran Pitney Bowes?

Videos clips from the Seinfeld episode in which Kramer wants to cancel his mail

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10 thoughts on “Pitney Bowes–Another Warner & Swasey?

  1. Avatarmatt

    Pitney Bowes tried to jam a contract down our throats for 51 months….they dropped it in half when I called them on it…..

     
    +1
  2. AvatarJoe Leslein

    I guess I’m missing the point of your comparison, Lloyd. I’m aware Warner & Swasey went out of business, but I proudle set up and run 4 old girls every day! Two 5 spindle and 2 six spindle Warners! In today’s shrinking order quantity, just-in-time envirnment, these Warners can be flipped faster than an Acme. I’ve worked with both in my 30 years in the biz. I guess i’m taking exception to you likening a W & S to a lame business machine sham.

     
  3. AvatarJim Goerges

    The fact is you signed a contract, you had a choice, in life becareful what you ask for because you may just get it! Regardless of the obvious frustration and the theatrical writing, a good point is legacy products and companies, technology changes everything and that maynot be good for you or me, a lot like socialism that way. If I ran Pitney Bowes, I would see if our product was usable elsewhere, adaptable to other countries, maybe used in KIOSKS, maybe used in other metering functions, ect. I would look at engineering and see if we have any valuable new products in the pipeline, if not, review sales and profit projections and at the same time, I would streamline the business and look for potential suitors ASAP!

     
  4. AvatarMACLYN HARRISON

    Your ignorance is showing, Warner & Swasey did go out of business they were bought out by Bendix because they were cash rich and poorly cash managed. Then Bendix was bought out by Allied. Then Cross and Trecker and now the Germans. So alot of the machine concepts are still around, just with a side of kraut. An ex owner of Warner & Swasey.

     
  5. AvatarDavid Marcus

    Lloyd, thanks for bringing this up. The business owner must always beware of these sorts of things. Smart (and fair and honest!) vendor management is sometimes one of the few advantages one has in business.

    Regarding Pitney Bowes, I have received those offers and advertisements frequently over the years, but never signed up. My thinking was that for less money, I could add the postage management to an hourly employee’s work load – the employee gets more hours, and the company saves money. Scales are inexpensive and we purchase stamps through the mail direct from the US Postal Service, so the employee managing postage doesn’t even have to go to the post office. We even order custom amounts in odd denominations (Canada, overseas air mail, etc.). The internet can give the exact postage for unusual weights/sizes (www.usps.com). Plus, we purchase only the stamps we anticipate needing for the next few months. We are a smaller company and this works for us.

    Waste Management is another one, trying to impose long contracts. I have signed a few of them over the years, but recently I vowed to myself, “no more”. My last Waste Management contract has expired and I’m presently deciding to perhaps change companies.

    It’s hard to imagine, but some day, perhaps in our lifetimes, Google and Apple will be has-beens.

     
  6. AvatarMarc Klecka

    Lloyd:

    I also take offense (albeit minor in the scheme of things) to the W&S comparison. W&S was cash rich (as stated above) due to a little-known visionary investment in Wang Computer. However, one can never make an argument that they were not customer-focused. The rest of their story can be read here:
    Baracskay, Daniel; Rebar, Peter D. (2003), The Rise and Destruction of the Warner & Swasey Company: A Concise Case Study and Analysis

     
  7. AvatarJim Flaherty

    The number of times I’ve taken by vendors in my career is probably only 2 or 3. For a total of a few hundred dollars. The number times I’ve been taken by customers, ten times that, for thousands and thousands of ill invested dollars. If you can look at someone across a desk and lie to their face there is a future for you in Purchasing.

     
  8. Avatarjohn Otto

    Hi Lloyd:

    I understand the implication. Either stay with the changing times, or maybe in100 million years you’ll be dug out of the La Brea Tar Pits with the rest of the fossils. Maybe Pitney should hire a bunch of 50 lb heads to determine a course of action.

    This video of the future of Corning is inspirational. I was at the Corning glass works when I was a kid and never expected it to turn out like this.

    http://www.youtube.com/watch_popup?v=6Cf7IL_eZ38&vq=medium

     
  9. AvatarJk

    I understand the frustration of paying on something that made sense a short time ago when YOU agreed to the contract. What would you have companies who hold these contacts do? Should they just forfeited thir profit, let you cancel and leave them anyway? How many of you have been able to just stop paying on a 2 year old leased car, give it back and ride a bike home? I don’t see all of the negative comments about the auto finance companies! How about the cell phone agreements…or cable? If you owned a company who offered products and services bound by a contract, you wouldn’t just let them be cancelled either.

     
  10. AvatarDC

    To your question ” Is it great policy for a Pitney Bowes to irritate and alienate its clientele? The clear signal Pitney Bowes is sending is that they no longer care about goodwill.” At this point, no amount of goodwill will earn more business from you as you no longer need their services. They are in thier end game and are going to steadfastly take the money their clientele agreed to pay knowing they won’t be back anyway.

     

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