The announcement last year drew little notice: The long-troubled United States Postal Service was teaming up with equally distressed retailer Staples Inc. to offer mail services in 82 of its office supply stores.

Initially pitched as a modest public-private partnership, the deal has blown up into a major confrontation between the Postal Service and its main union. The postal workers contend the Staples deal amounts to privatization of a basic government function, and they have run protests outside the company’s stores.

“We have no problem with Staples staying in the office supply business,” said Mark Dimondstein, president of the American Postal Workers Union. “We have a big problem with Staples trying to become the postal service for the people of this country.”

Staples had a much simpler objective last October, when it first got involved in a Postal Service pilot project called the Retail Partner Expansion Program: new ways to bring more customer traffic into its stores.

Under the contract, Staples employees staff a counter inside the store that looks like a mini-post office. The counters are set up near the copy and print centers in the stores. They provide basic products and services such as selling stamps and processing Priority Mail and packages — about 80 percent of the services offered by a typical post office. Staples will not provide registered mail, money orders, stamped envelopes, or post office boxes.

“Customers like it because it’s more convenient and we’re open longer hours,” said Joe Doody, vice chairman of Staples.

In Massachusetts, Staples has six stores so far with postal counters: Auburn, Gardner, Shrewsbury, Sturbridge, Westborough, and Worcester.

Meanwhile the postal workers union views the deal as an attempt by management to escalate closings of post offices and privatize operations through a national retailer.

The union said the Staples counters should be staffed by postal service workers who are paid much better than store clerks, receive specific training in mail handling, and take an oath to protect the mail.

The Postal Service said it provides on-the-job training to Staples clerks when a store opens a new counter. The service also conducts so-called mystery shops to check that Staples employees are properly handling mail transactions.

The union said its clerks are paid an average of $25 an hour. Staples sales associates earn an average of $8.52 an hour, according to Glassdoor, a careers and employment website.

The company declined to discuss compensation of its workers.

The Postal Service tried a similar deal more than 20 years ago with Sears. That time, the postal workers union waged a successful campaign against the retailer, picketing Sears headquarters in Chicago and organizing a boycott of stores. A year into the partnership, Sears pulled out.

The Postal Service has about 65,000 existing partnerships with retailers that offer mail services of some fashion. Most are grocery stores or other businesses that sell stamps.

About 3,600 are contract postal units, which are similar to the Staples outlets and provide nearly all the same services as a post office. These outlets are inside independently owned businesses, such as pharmacies or gas stations. The Staples deal is the first time the Postal Service has teamed up with a national chain in more than a decade.

Staples gets a portion of revenues from postage sales and other services, and the possibility of additional office-supply sales from mail customers. The Postal Service will collect mail from Staples stores and send it through its regular system.

For Staples, the postal business is part of a broader effort to find additional ways to make money, because its core business of selling paper and printing products is either shrinking or moving to the Internet. For example, Staples experimented with providing lockers to Amazon.com customers to pick up web orders that weren’t delivered to their homes. That idea was scrapped last fall.

The Postal Service has lost money seven years running as electronic communications and commerce has replaced so many paper transactions. Its loss of $5 billion in 2013 was an improvement from 2012, when the service lost $15.9 billion.

Doody said the 82-store pilot program is going well, but Staples declined to provide financial details on the partnership.

The Postal Service also refuses to discuss financials. Postal Service documents about the project, obtained by the union, were heavily redacted with entire pages blacked out.

The Postal Service is pleased enough with the Staples contract so far that Postmaster General Patrick Donahoe would like to expand the program to all 1,500 Staples stores in the United States.

“We’ve chosen Staples because we think we can increase their foot traffic and our market share in the small business package market,” said Postal Service spokeswoman Darlene Reid.

Those expansion plans triggered the nationwide protests in April, particularly in California, the single largest market for Staples in the United States. Thirty members of California’s congressional delegation have asked Donahoe to end the deal, while the California Federation of Teachers has promised to get its 120,000 members to stop buying from Staples out of sympathy for the postal workers. The statewide teachers union in Michigan has also voted to join a boycott of Staples.

The Postal Service said it is not trying to privatize the US mail with the Staples contract. Spokeswoman Reid said customer traffic to post offices is declining and it makes sense for the agency to be located within retail stores that have small-business customers. At the same time, she said the postal service is looking to close some post offices.

Doody, the Staples executive, said the company does not want to get in the middle of the fight between the post office and its union, but acknowledged the issue could become a problem if more unions backed the postal workers. He said the retailer will continue to evaluate the situation to determine whether the negative backlash is worth the benefits of the partnership.

Liang Feng, an analyst at Morningstar, said the postal services probably won’t have any meaningful impact on Staples’ bottom line.

Feng said that if the pressure on Staples continues to mount, the company will probably pull out of the deal to avoid becoming embroiled in a controversy.

“It’s hard to tell if these protests will gain traction,” Feng said. “If there really is national outrage, Staples will go and tell the Post Office that this isn’t what they had in mind.”

via Postal Service, union in confrontation over mail service at Staples stores – Business – The Boston Globe.