Tuesday, March 24, 2009

False claim of unfair competition could limit in-prison work programs

The Texas Department of Criminal Justice has very few reentry programs, but one of its more successful ones is under fire at Thursday's House Corrections Committee meeting in the form of HB 1914 by committee chairman Jim McReynolds (with a companion bill in the Senate filed by Sen. Robert Nichols), aimed at further eliminating most prison industries programs on the false assumption that they take jobs away from people in the free world.

The Prison Industry Enhancement Certification or PIE program was created 15 years ago - designed to give inmates work skills and provide inexpensive labor to industry participants. PIE has 200-300 working inmates at any given time - only five companies participate currently.

Among other things, HB 1914 would require TDCJ to reject prison industries contracts "if the board determines that the contract has negatively affected or would negatively affect any employer in this state." That's so broad, it's inevitable somebody will come forward to complain. I'm told by those involved with prison industry programs that, if this bill passes, they fear it will soon eliminate PIE programs entirely.

By all accounts, PIE has a pretty good track record as reentry programs go - recidivism is low, inmates help pay for their incarceration, pay into the Crime Victims Fund, and contribute to supporting their families in the free world. PIE graduates frequently are employed upon release by their in-prison employer, helping overcome the biggest barrier to success for ex-prisoners: finding a job.

But Chairman McReynolds and state Sen. Robert Nichols are seeking restrictions that would likely choke off PIE as it currently exists. Why, you might ask?

Last year, a company called Lufkin Trailer (in McReynolds' and Nichols' districts) cried foul claiming that a PIE-based competitor, Direct Trailer, assumed an unfair advantage because they used inmate labor and paid minimal rent for their in-prison manufacturing facility. Sen. Nichols rode to their defense, convincing TDCJ to end Direct Trailer's contract. (Even so, with this supposedly unfair competition gone, Lufkin Industries continues to lay off more employees.)

The idea that in-prison manufacturers have some great advantage is a myth. For starters, Lufkin Trailer's 2008 10-K form filed with the SEC notes that "any labor disruption could have a significant impact on Trailer’s ability to maintain production levels," however think about the labor disruptions in prisons, where lockdowns, disciplinary actions, and any number of other problems free world employers never have to deal with may significantly impact labor availability.

Further, PIE programs must comply with byzantine prison rules that simply dont' affect free-world industries - for example, elaborate systems for counting and accounting for tools at the beginning and end of each shift to keep inmates from smuggling weapons or contraband.

For that matter, all existing PIE programs are relatively small endeavors that are unlikely to directly affect other Texas' businesses. Tellingly, in their official 2008 10-K statement, Lufkin Industries announced its decision to close Lufkin Trailer but didn't once mention competition from in-prison labor as a significant factor. Instead, the company blamed
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.
Indeed, the 10-K's specific discussion of "competition" never mentioned their PIE-based competition as a serious factor:
The trailer market is highly competitive with relatively low barriers to entry. The majority of the cost of a new trailer comes from purchased materials of aluminum, steel, tires, axles and wood flooring. Since there is minimal product differentiation in this market, price is the key driver. 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. The Company does not have a significant market share in the trailer market.
By that account, any minor, extra competition from a small PIE outfit didn't have nearly as much to do with Lufkin Trailer's closure as macro trends in the global trailer market and competition from larger producers. Direct Trailer isn't even mentioned in the company's 10-Ks as a significant source of competition.

So the prime example being trotted out to restrict the PIE program is a false one. International market conditions and competition from larger economic players were the reasons Lufkin Trailer closed, by the company's own assessment, not some penny ante prison industries operation.

Still, Sen. Nichols in particular continues to attack the PIE program as some villainous activity while painting Lufkin Trailer as an innocent victim of a prison jobs program. What Nichols neglects to mention is that Lufkin Industries recently lost a class action racial discrimination lawsuit brought by African American employees of Lufkin Industries (Lufkin Trailer was specifically named in the suit.) The conservative Fifth Circuit Court of Appeals in February of 2008, affirmed (pdf) most of the lower court's ruling against the company, particularly related to the "discriminatory impact of [the company's] subjective promotional policies." If Nichols and McReynolds are concerned about Lufkin Trailer employees, maybe they should be seeking remedies for those problems.

I wish the Corrections Committee was looking for ways to expand the PIE program, not restrict it beyond its current, minimalist presence in Texas prisons. After all, who would you rather have released from prison - the guy who sat around the whole time working out and swapping techniques with other cons, or the guy who went to work every day at a PIE facility and learned job skills to become a productive citizen upon release?

We need more initiatives like PIE and the Prison Entrepreneurship Program to prepare inmates for success upon reentry, not less. Efforts to restrict in-prison jobs programs IMO are misguided and counterproductive to public safety.


Anonymous said...

Assuming Direct Trailers is a private business and not some tax exempt non-profit organization, the lawmakers are correct.

Just as county inmates cannot be used except for work for non-profits, the same should apply to state inmates.

The prison industry programs like leather crafting and office furniture manufacturing should continue since those programs are operated by the prison system, not private industry.

Anonymous said...

What a crock.. We send (as a country) millions of jobs overseas to those that are economically more advantageous to business yet people are crying about 300 inmates stealing jobs? What a load of it.. How about getting government to be more responsible about jobs that are being sent to Mexico, India, China and stop worrying about some guys in the Prison system trying to learn a trade.

Gritsforbreakfast said...

8:38, we have public-private partnerships for all sorts of purposes - from real estate developments to entirely privately owned and operated prisons. What's wrong with a public private partnership to train and employ inmates (on a voluntary basis, it's not forced on them)?

Anonymous said...

I like the old model. Prison farms to grow their own food. Chain gangs to maintain state highways. Stamping license plates. Those types of things offset the costs of incarceration while taking care of state-run duties.

Anonymous said...

I think the Texas Correctional Industries is a good program that teaches inmates job skills they can used in freeworld reintegration.

McReynold's bill is not bad. PIE certification programs are taking over TCI programs with little or no oversight, leaving TDCJ with a black eye.

PIECP take inmates who are already productive, but screens out those who are not productive, because profit is the overall goal.

TCI and Wyndham takes inmates without skills and who may not be productive. They teach these inmates skill they can use upon reenty.

In 2007 Unique Performance filed bankruptcy leaving the State of Texas to foot the bill for inmate wages. The company was involved in fraudulent title washing and bilked customers out of millions of dollars.

The system Dr. George Beto created with TCI and the Wyndham School District teaching inmates job skills should be carried on. Expanding Wyndham and TCI industries should be a priority. The only lesson inmates received from Unique Performance was "grand theft auto 101."

I hate to disagree with you on this one Scott, but McReynolds is correct on filing this bill. There is too much fraud in the Texas PIE program.

If Direct Trailer's goal was to teach inmates job skillS for reentry, why was there only ONE Direct Trailer employee in the factory and what was he teaching these inmates (OR WAS HE SUPERVISING THEM). Why were they hiring inmates with LIFE SENTENCES?

Might ask John Nelson (FORMER TDCJ Texas Correctional Industries DIRECTOR).

Or ask John Nelson (Current Direct Trailer President).

Anonymous said...

Why doesn't industry that make use of prisoners just pay them the fair wage?

The State will manage to get a huge hunk, if not all of it, back anyway.

Why use them like slaves. They get even better benefit of the industriousness if they are paid and treated fairly.

Our society... our government, has turned into a nasty greedy thing.

Anonymous said...

"What's wrong with a public private partnership to train and employ inmates (on a voluntary basis, it's not forced on them)?"

Using convict labor for private industries is not ethical, especially when it is run on the "company store" principle.

Since inception of the program, some $14,000,000 has been paid to TDCJ while only $5,000,000 has gone to dependent support.

11:06 and 12:55 about summed it up.

Anonymous said...

300 to 400 program participants out of 160,000 inmates? What's the big effin deal?

Anonymous said...

Scott: Do your research on this"New" company (and also look in on the Window Factory that went out of business in Tyler County about 10 years ago).

You will find that both have very interesting connections with former TDCJ Directors. I know, I know; Just one hell of a coincidence.

TDC/TDCJ did have some great programs that taught inmates a trade; most have fell by the wayside.

Retired 2004

SB said...

"After all, who would you rather have released from prison - the guy who sat around the whole time working out and swapping techniques with other cons, or the guy who went to work every day at a PIE facility and learned job skills to become a productive citizen upon release?"

Not everyone can get into a PIE project but all prisoners except the disabled work 5 days a week. The laundry, kitchen and hoe squad are very physical jobs, especially in hot weather.

TxBluesMan said...

Why don't we let them work in rock quarries, with hammers?

Anonymous said...

What about the Second Chance Act that was passed in 2007 and just renewed...lots of dollars are coming to Texas to ensure that folks who have been convicted will be provided training and remove the roadblocks to reemployment? Funding was granted to the States (Texas, too) in March for the funding of these efforts and can be viewed on Recovery.com.....this site/associated links will even track the funds allocated to individual counties and has a dollar amount associated per person. From what I have read, the national effort is to step up the efforts to remove roadblocks
that prohibit reentry into society.
Legal Assistance center provides info on passing of the law and provides model laws and programs for implementation.

Unknown said...

As a follow on post - reentry information is available at the following link under the Second Chance Act. The home page also outlines several other funding initiatives (such as Corrections programs) that track the program and the money. It also provides a link to the state initiative and funding on this page.

Anonymous said...

The legal slavery in TDCJ is the real root of the problem. As plantations were very prosperous in the olden days, Prison industry is today. The entire set up is a sham. All prisoners should be given skills, but being forced to work for free, for a for-profit company is not a good life skill. TCI and the Texas Entreprenuer program are two very different things. The latter is an educational program to learn how to work in business and run a company. There need to be programs like this on every unit. Inmates who work in a private industry need to be reimbursed. Money can be saved in an inmate account. This would be a huge help for reentry success. Tossing people out with $50.00 and no skills only insures that the big business of criminal justice thrives.

Anonymous said...

So tell me what the world is an inmate going to do when released when he can only do leather craft, grow crop and make license plates. Please let's get serious with letting some of these people maintain so degree of "nolmancy". One of the condition of release is to find a job...so what go to work at Jack in the Box and make 5.75 hour, pay rent, buy food, pay electic off that, I don't think so. Dang the people made a mistake, they got caught, they did the time with the citizens supporting them while they did the time. I say let them give back, give them job, pay taxes just like everyday citizens, and let the State of Texas keep their fingers out of the pot.

Anonymous said...

"Why don't we let them work in rock quarries, with hammers?"

or better Yet, Let's put chains around their necks and make them work the cotton fields.. Or hey, we can get them to work INSIDE the plantation house if they are really really good. Then at the end of the day, they can gather 200 or 300 to a shack and sing negro spirituals...

Are you REALLY from this time or are you a ghost from the 1860's? You enjoy degrading people that want to work through and find skills that might actually help them integrate into society on release and actually make the productive?

Anonymous said...

Please continue to investigate this more thoroughly as we were informed by an inmate working in the trailer program that Direct Trailer moved its business to the Mississippi prison system , so what has it accomplished that TDCJ lost it ??? Also Lufkin Trailer Co's contribution to Senator Nelson's campaign might be interesting .
Other States have many more prison industry programs that harm no free world business. It is essential that we train as many inmates in a skill that keeps them out of trouble. Of course the corruption surrounding these programs is another subject and needs to be dealt with.

Helga Dill, Chair, TX CURE
(Citizens United for Rehabilitation of Errants)

TxBluesMan said...

Anon 9:00,

I don't have a problem with them working at a prison farm either. I remember going past a number prison farms with inmates working, being watched by guards on horseback.

Anonymous said...

I am a convicted felon and was incarcerated for six years in Lockhart, Texas where there is currently a PIE program. People seem to miss the main objective that this program is a benift to the public and to the felons. Everyone makes mistakes and some
make very bad choices which cause
them to get incarcerated. This program is for felons that are not a danger to the public that have a chance to be released and restart their lives. The PIE company I worked for taught me different skills I would have never have learned and it set me straight in which to makes sure I do not get in trouble again. Public cannot just shut this program off. This is a small number of hand picked people who can make a difference and fix their lives. As far as taking free world jobs away..That really is not true. PLease go to www.whatispie.com for more information on this matter.

Anonymous said...

In this instance, Direct Trailers offered to no longer produce trailers but Senator Nichols and Lufkin Industries continued to fight this contract for spite and poilitical reasons. The legislators are cutting off their nose to spite their face as the state will no longer receive the monies for housing these inmates. Nichols only wanted to make a name for himself but is one of the most ignorant individuals I have ever met.

Anonymous said...

"Public cannot just shut this program off. This is a small number of hand picked people who can make a difference and fix their lives. As far as taking free world jobs away..That really is not true."

Actually, the Public is not attempting to shut them down, politicians worried about their campaign dollars are. I hope for the sake of felons that are attempting to learn real skills that this attack is turned off. My thought on the matter is, like you, people have made mistakes, I can think of only one person who didn't and he was nailed to a pole..

John Hill said...

I recently caught wind of an effort on the part of certain elected officials to dismantle the PIE) program. As a “graduate” of that program, I think that would be a big mistake. Here is my story.

I was arrested in Amarillo in March of 1990 for a terrible crime. I take full responsibility for my actions and make no excuses. I was later sentenced to 20 years.

I sunk as low as man can go in my first few months. Not only was I facing a long prison sentence but also I was faced with an incomprehensible personal tragedy. While incarcerated in a county jail awaiting trial, I learned that my two daughters – ages two and four – had been killed accidentally. My ex-wife had left a lamp by the bathtub that the girls had pulled into the tub – electrocuting my daughters instantly. I chose to deal with this tragedy by offering inspiration to other inmates and even guards. But make no mistake; this was by far my darkest moment.

I was taken to the Gib Lewis Unit in Woodville, Texas. Soon after arriving, I qualified for a work release program and was transferred to Lockhardt, Texas. I noticed a job posting for two positions. Even having experience as an electrician and a plumber, I did not hold out much hope in getting the job as I was competing with 500 inmates. I was interviewed and by the grace of God received the job offer.

I can honestly say I was the first PIE program employee.

Chatleff Controls, which is a manufacturer of heating and air conditioning controls, was building a facility in Lockhardt. Chatleff Controls used my skills to assist in setting up the manufacturing plant. Later, I was trained in all aspects of their operations.

I learned all I could in the 5-½ years spent in the PIE program as an employee for Chatleff. By the time I was released in 1998, I had saved $20,000. This is after TDCJ had taken out funds for restitution, supervision, the Crime Victims Fund and taxes. So when I was released by TDCJ, I didn’t leave with only $50 and a suit. I also had a new skill set, money, self-respect and an intense desire to travel a straight and narrow path.

Better still, I had a job waiting for me with the company that bought Chatleff – Danfloss Chatleff Controls, LLC, where I have worked ever since. Danfloss Chatleff has given me every chance to succeed. I ran with it and never looked back.

I am dismayed when I hear the state may be looking at eliminating or restricting the PIE program. I know the impact PIE had on my life and I am here to tell you firsthand PIE has the same positive impact on others.

The state probably does not do enough to reduce recidivism by investing in reentry programs. This is one successful program TDCJ can point to that curbs recidivism. I believe strongly, because of my personal experience, PIE should be expanded not reduced.

Anonymous said...

Great story BUT you screwed up by making two fabricated comments. Anyone out there want to guess?

Retired 2004