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Sometimes is amazes me how many ways that are to play the competition game. I can understand tactics like “If you can’t beat ’em, join ’em,” new product offerings or slashing prices. But there is something very wrong when crying like a baby is the best card you have to play. Such is the case with the Royal Mail Group (LSE:RMG).
At about mid-morning the Royal Mail announced that it “has today made a formal evidence submission to Ofcom setting out the threat to the universal postal service posed by unfettered direct delivery competition. It requests that Ofcom commences an immediate review of direct delivery and determines quickly the regulatory changes needed to safeguard the universal service.” Given a share price increase of a meager 0.12% increase of 0.60 pence to 483.70, on a relatively meager volume of just over nine million shares, it would seem as though some investors are hoping that Ofcam may actually do something to help the privatized mail delivery system.
On the other hand, many investors may be unsettled by the company’s less than strategic whining tactics. We don’t have the space here to relate all of the details about the 72-page complaint that the Royal Mail sent to Ofcam, so suffice it to say that its concern can be boiled down to this: RMG can’t operate profitably because of the effectiveness of the competition.
That’s like Aresenal complaining to the officials that they need to have a smaller net to defend because the other teams score too often, then asking that the opposing team run on their knees because they are too fast. If you finish the RMG argument completely, they might ultimately ask for all competitors to be eliminated.
To be clear, RMG has been operating profitably. It is trying to set the table to gain a competitive advantage in the future where it sees itself coming into jeopardy as other private delivery services sharpen their efforts. Mention has been made that it could become necessary to suspend six-day service, at least in some locations.
This sounds eerily familiar. Oh. There is it, right there in The Washington Post. The United States Postal Service, also a private company, is crying the blues because it can’s seem to operate either competitively or profitably. They are considering dropping Saturday deliveries. That might save the USPS a few bucks, but it is estimated that about 80,000 part or full-time jobs could be directly or indirectly lost. And, at the end of the day (not just Saturday) the USPS will still not have addressed the real operational inefficiencies that driven it to its current position.
My greatest concern is my advocacy of the free-enterprise system. If you want to play the game, you get your team on the field with the competition and you make it you goal to win. Both the USPS and the Royal Mail, having formerly been governmental agencies have come onto the field to whine. If you can’t play with the big boys, don’t even step on the field. My concern as an investor is answering the question of why I would want to invest in a company that is operating so poorly that it whines when the competition is winning.
