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March 14, 2005 01:00 AM

Post office picks metal over plastic

Bill Bregar
Senior Staff Reporter
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    The U.S. Postal Service is returning to all-metal cluster mailboxes, which means the plastics industry is losing a groundbreaking application - a polycarbonate version of the centralized, locking mailbox used at apartments, condominiums and housing developments.

    While industry observers say the first-ever plastic cluster box from American Locker Group Inc. did perform well, the aluminum version is better at preventing mail theft, which is important because of growing concerns about identify theft.

    American Locker's contract expired Feb. 28. The company will continue to supply the Postal Service units through May. Losing the contract means the Jamestown, N.Y., firm is taking a big hit.

    Plastic locker sales to the Postal Service, developers and distributors accounted for 58 percent of the company's $37.9 million in sales through the first three quarters of 2004. In a March 4 filing with the Securities and Exchange Commission, the company said its two top executives have agreed to take 25 percent pay cuts.

    The bloodletting is all out in the open for American Locker, since it is publicly traded on Nasdaq.

    GI Plastek of Newburyport, Mass., injection molded the product for American Locker.

    ``It's certainly a significant customer to us,'' said GI Plastek President Randy Herman. But he said his firm will make up the loss with work from a new customer.

    ``I think plastics can win back this product in the marketplace, but it's going to take some engineering time to do it,'' he said.

    However, it's clear for now, at least, that the cluster box is returning to metal. The company that won the exclusive seven-year Postal Service contract, Auth-Florence Manufacturing Co. of Manhattan, Kan., makes cluster boxes and outdoor parcel lockers of powder-coated aluminum and stainless-steel components, said spokeswoman Stacy Kohlmeier.

    A Postal Service spokesman declined to give the dollar amount of the new contract, but the Buffalo News reported it is worth $145.6 million.

    ``Plastic has served us well, and plastic is a good product,'' said USPS spokesman Jim Quirk. But the Postal Service significantly changed its specification, and the polycarbonate boxes could not meet the new security requirements, he said.

    "In terms of best value in what we asked for, and the price, the winning contractor provided that," Quirk said.

    With the help of GI Plastek, American Locker had managed to break metal's domination of the postal cluster box. Under the expired contract, American Locker also included aluminum cluster boxes and another plastic product, the outdoor parcel locker.

    Postal Service contracts mean high-volume business. According to American Locker's 2003 annual report, the company has shipped more than 171,000 plastic outdoor parcel lockers to the USPS since 1989.

    In 1994, American Locker negotiated the USPS contract for plastic cluster boxes, using components manufactured by outside vendors and assembled by its wholly owned subsidiary, American Locker Security Systems in Jamestown.

    The new emphasis on mail security is spelled out in American Locker's third-quarter report last year. After noting that the Postal Service had pre-qualified it and four other companies to bid on the cluster box units, American Locker said: ``The USPS has also indicated that it will upgrade the specification that CBUs are designed to meet, to increase resistance to mail theft.''

    In the third-quarter report, American Locker said it was working on new designs to meet the requirements.

    In a Feb. 8 news release, American Locker said the lost business is likely to hurt the firm.

    ``The company is actively exploring the development of new markets and strategies to mitigate the effects of this development,'' it said.

    The company also makes partitions, shelving, and store fixtures.

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