The bill was spawned after claims by Sen. Robert Nichols and an East Texas company Lufkin Trailer when they claimed one of the prison industry programs had undercut their price and put them out of business. As I wrote the when the bill was heard in the House, however, this turned out to be an entirely false representation.
Unlike grandstanding statements to the newspapers, public companies must make statements to the SEC, in this case their 2008 corporate 10-K filing, for which they suffer criminal penalties if they're not truthful. And in those corporate filings, where they're required to list their primary competitors, the PIE-involved company wasn't even on the list:
The companies with the highest market share are Great Dane and Wabash, along with several other large manufacturers like Utility, Stoughton, Fontaine, Vanguard and Hyundai. [Lufkin Trailer] does not have a significant market share in the trailer market.So Lufkin Trailer's competitive disadvantage wasn't really with a small shop working out of a Texas prison, it was with international manufacturers participating in an utterly globalized market. Blaming the tiny bunch of trailermakers in the PIE program was nothing but a PR excuse for a publicly unpopular decision that the company really made for other reasons. Contrary to their claims in the press that competition from prison labor had caused their demise, in their official SEC documents, the company blamed the closure of their trailer division on:
reduced activity in the home and road construction markets as well as reduced profitability from higher fuel prices. In 2007, industry order rates and backlog for flatbed trailers decreased over 40% and for dump trailers over 25% compared to 2006 levels. In the fourth quarter of 2007, industry order rates and backlog for flatbed and dump trailers decreased almost 50% compared to the fourth quarter of 2006. Due to these market conditions, in January 2008, the Company announced the decision to suspend its participation in the commercial trailer markets and to develop a plan to run-out existing inventories, fulfill contractual obligations and close all trailer facilities during 2008.No mention of competition from prison labor at all, though if it's really that big a deal they are required by law to disclose their competitive disadvantage. I just don't buy it. If this was as big a problem as Sen. Nichols and Lufkin Trailer claim, the company would be legally obligated to disclose the issue in their SEC filings. But they never did.
The only silver lining in the bill is that it mostly leaves alone current PIE program participants, but it places fairly radical restrictions on any new programs. That probably means we won't see Texas' program expanded any time soon. According to the Cherokean Herald:
Those so-called "sweetheart deals" are being misrepresented. TDCJ gives employers low rent in the PIE program to entice any employer to work there at all. Working in a prison involves its own discomforts and anxieties for the free world workers who participate. Plus, their employees' work is subject to disruption by lockdowns, disciplinary actions, and any number of other common prison occurrences that are entirely out of the control of both the worker and the employer. For example, last fall's lockdown searching for cell phones resulted in immediate, unplanned work stoppages for PIE units that free-world companies don't have to face. So by eliminating incentives, only charities, not businesses, would ever consider working with the PIE program.
H.B. 1914 will help stop job loss and unfair competition by:
- eliminating sweetheart deals and requiring businesses using prison labor to pay a fair market value for use of facilities
- moving oversight of the program from the Prison Industry Oversight Authority to the Texas Department of Criminal Justice (TDCJ) board
- preventing TDCJ from approving contracts resulting in job loss anywhere in Texas
- allowing employers to submit a sworn statement that their business would be hurt and jobs could be lost by approval of a specific prison industry contract
- requiring job and product descriptions be specific so employers can recognize a prison industry contract that would unfairly threaten their business
- creating notification for area businesses and posting information about programs online
- notifying the state senator and state representative in whose districts the project would be located
Meanwhile, the "notification" requirements are an attempt to drum up opposition. But a "sworn statement" that a PIE program might harm their business is not remotely the same as demonstrable proof that's the case, though the bill seems to imply it should be accepeted as such. As shown above, in the example spawning the rule, the claim about this program putting Lufkin Trailer out of business was demonstrably false, at least according to the company's sworn statements to the SEC.
Personally I wish they would scale this bill back in conference committee or else the Governor should veto it outright - not that I'm holding my breath. HB 1914 is a solution looking for a problem and it harms a (small) program with a solid track record of improving inmate behavior and reducing recidivism for its participants.