This article was originally printed in Numismatic News.
>> Subscribe today!
What was the No. 1 customer service issue for the U.S. Mint in 2010?
According to U.S. Mint Deputy Director Richard Peterson, who is also acting director, it was being able to sell the proof collector versions of the 2010 silver American Eagle coins to collectors last November after it was not possible to make the proofs in 2009.
To make sure it happened, Peterson told Numismatic News in an exclusive telephone interview March 14, “We micromanaged that starting last March.
“We’re very proud of that fact ... Not only did we make them last year, we also got the law changed to reserve blanks for that program so we can make proofs this year as well and in future years.”
That is foresighted, because there is no telling how long elevated investor demand will continue for the bullion version of the silver American Eagle.
Peterson said the Mint’s ability to meet buyer demand for silver American Eagles in 2011 will be “in parallel with last year,” though the Mint is still seeking to procure additional supplies of blanks, the availability of which has been the ongoing bottleneck.
Last year the Mint sold 34,662,500 silver American Eagle bullion coins and 860,000 of the proofs.
Peterson referred to the history of annual silver Eagle production in recent years when he pointed out that the Mint has “gone from 7 to 8 million to 34 to 35 million,” a gain of 400+ percent.
He congratulated the West Point Mint that produces them and the suppliers that helped make it possible.”
Currently, the 2011 one-ounce silver bullion coins are on allocation to the Authorized Purchasers from the Mint. Last year this system of rationing was employed until supply caught up with demand at the end of August.
Other silver coins where demand has been outstripping supply has been the new America the Beautiful 5-ounce silver bullion coins.
When the 2011 coins go on sale, beginning in late April, Peterson said he saw that the Philadelphia Mint already has a supply of 125,000 on hand of the Gettysburg design and was busily turning out the Glacier Park design and the number stockpiled so far in the production process was 75,000.
In comparison, the Mint was able to strike only 33,000 of each design for the 2010 5-ounce bullion coin designs.
So this, too, is nearly a 400 percent gain, though Peterson said it was “too soon to call” how many might be sold this year.
He pointed out that the new 3-inch press can strike “north of one and a quarter million per year.” As with silver Eagles, the supply of blanks is the main concern.
“Let’s go with 125,000 of each and place them on sale,” he said.
Of the new bullion coin authorized by Congress in 2010 to be made of palladium, don’t expect it in 2011. Pencil it in for 2012.
“It’s not in our road map for 2011 as we need to execute the required market study first,” Peterson said.
As for being selected as the acting Mint director, Peterson said, “That was quite the surprise for me. I was humbled and honored.”
He explained that following Ed Moy’s resignation as Mint Director he was approached by U.S. Treasurer Rosie Rios to move up from his position of U.S. Mint associate director of manufacturing.
Peterson said that when his family sat down for their annual New Year’s Eve predictions, nowhere “was the possibility I would be deputy director of the U.S. Mint or the acting director.”
In his first six weeks of office, he has held a town hall meeting at each of the four manufacturing plants, Denver, Philadelphia, San Francisco and West Point.
He wanted all 1,800 of the Mint’s employees to know that 2011 is going to be a “back to basics” year. He made six points to them.
“The first is very basic if you will, make coins. We are the largest mint in the world. We are the best mint in the world. We need to stick to our knitting.”
He said the Mint needs to make what the Federal Reserve, Authorized Purchasers and collectors want and need.
To do this the Mint must be cognizant of safety, the quality of the coins produced, delivering them on time and in the right quantities and at the right cost.
His second point was to “work on the employee culture and employee morale through open and transparent data-driven decision making.” Once a decision is made, it needs to be communicated clearly.
Morale has been low for the last couple of years, he said, in making his third point, which is to take an employee satisfaction survey.
“The employees want to feel like they are part of the team. They are. We have to do a better job to engage them,” Peterson said.
“The fourth priority is to fix our customer-facing IT infrastructure.” In other words, this is the Mint’s website and the support behind it.
Peterson said the Mint received a black eye with the proof 2010-W silver American Eagle offering last November when customers received sellout notices before the program had even begun.
He expects the website to be fully upgraded by the spring of 2012, but added, “We’d like it to be sooner. We let the custmer down and we are taking action to get it fixed.”
His fifth point centers on carrying out the mandate of the Coin Modernization, Oversight and Continuity Act of 2010 to study alternative metallic coinage materials and report its findings and make recommendations to Congress.
Of this research and development initiative, Peterson said, “There’s a lot of work there. The requirment of the law is we restrict ourselves to metals only.”
He explained that the law says the Mint must minimize and mitigate any impact on the vending industry to the greatest extent possible. In short, future coins need to be the same size, diameter and weight and have the same electro-magnetic signature.
Peterson feels a sense of urgency. The law requires the Mint to report back in 2012 with its findings and recommendations.
The Mint is “trying to get it done in the next 12-13 months to get it to Congress before they go on summer holiday and election campaigning in the fall.”
Is that speed possible?
He said he expected the metallic composition possibilities to “rapidly boil down to five or 10 that we will be looking at.”
The sixth point that Peterson made to the Mint’s employees is the necessity to “fill some key vacancies in the organization structure.”
He listed his old job of associate director for manufacturing, chief engraver and the legislative affairs staff as being vacant.
Peterson elaborated at length on safety, which was one of his four points that comprise the basic job of making coins.
“The thing I am most proud of is how our plants score on safety.”
He said this boils down to the question, “what percentage of your workers have been injured on the job in the last year? The metal stamping industry benchmark is 8.0.”
The Mint’s plants were coming in the range of 0-4, though he did not break out the individual results.
What he did do was mention that the Philadelphia Mint is Voluntary Protection Plan certified, which is an Occupational Safety and Health Administration designation and award.
How is coin quality?
“We listen to our customers. We think it’s pretty good.” He joked that he had read comments in the hobby papers that there aren’t enough errors.
He said Philadelphia and Denver were pretty even (in quality) for uncirculated coins.
For the issue of delivery, internal Mint metrics show that when it comes to delivery to the Federal Reserve, the Mint is meeting “99 percent of requested deliveries on time or ahead.”
For numismatic items, the ship complete on time rating “is somewhere in the 97-98 range.”
As for costs, “we operate the Mint very cost efficiently as you would expect. We think we’ve done a nice job controlling overhead.”
Though it depends on the economy, Peterson said that in the next three years he does not expect Mint production to reach the 10-12 billion annual range of the last 50 years.
He projected output to run at 7-8 billion coins for the next three years.
The drastic drop in fiscal year 2009 to the 5 billion area was due to people breaking into their piggy banks, he said.
As for the 2000 production of 25 billion pieces, Peterson said it was an anomaly.
If coin demand and the production to meet it would rise faster than projections, that would help the Mint keep its unit costs down. “Absolutely, you can cover overhead less per unit. That’s manufacturing 101,” he said.
One thing that might push the Mint’s production numbers higher is a need for more dollar coins if Congress should decide that a Government Accountability Office report showing that $1 coins are cheaper than $1 bills over time is a good enough reason to abolish the $1 bill.
“We are very aware of that report ... It’s a little too soon to call,” Peterson said, deferring to Congress.
Near the end of the interview, Peterson said, “I just want to say three words that I have mentioned at all my town halls.
“Integrity. That’s all you have at the end of the day when you go home.
“Customer. Focus on the customer in all that we do. We want to do what’s right for our customers.
“Teamwork. We have got to show how everybody fits in.
If all goes according to the acting Mint director’s plans, 2012 will be a milestone year with a new website, a new palladium bullion coin, a report to Congress on circulating coin compositions and a more engaged employee base.
Will it all work out as hoped?
For the answer, he will not be able to rely solely on internal metrics.