Roy Maynard: Early Returns

It's a case of "When Good Policies Go Bad," state Sen. Robert Nichols says.

The Jacksonville Republican has taken on a Texas Department of Criminal Justice prison labor program, which he says has already driven a Lufkin manufacturer out of business, and is now threatening others.

"Prison work programs can be a good thing, but not when they cost the jobs of law-abiding men and women," says Nichols.

"No Texan should lose his livelihood to businesses unfairly subsidized by prison labor."

The work program is the TDCJ's Prison Industry Enhancement Certification Program (with the warm, harmless and gooey acronym PIE). Its aim is to give inmates marketable job skills and experience -- a worthy goal, Nichols says. But, the state must ensure that prisons don't undercut companies on the outside.

But the state has failed to do just that, Nichols contends. A company called Direct Trailer is a participant in the program at Tennessee Colony near Palestine. Inmates assemble its 18-wheeler trailers, at a cost to Direct Trailer far below what labor in the free world would cost, according to Nichols.

"The components are made in China and assembled by prisoners," Nichols says. "They get a 70,000-square-foot manufacturing facility for $1 a year. While Direct Trailer supposedly pays a prevailing wage, it benefits from the use of cheap facilities, a reduced tax burden and a dramatic cut in other labor costs. Direct Trailer even advertised they could sell their products for less because of a special relationship with the state utilizing inmate labor."

It's important to note that no one is saying Direct Trailer is doing anything illegal -- it's simply taking advantage of an existing program to cut its costs -- something any manufacturer would do. The problem is the program, Nichols says.

Calls to Direct Trailer's parent company have not been returned.

"One of the first rules of government is to do no harm, particularly with the taxpayers' dollars," Nichols contends.

"I'm all for free trade, but trade isn't free when you have the taxpayers subsidizing one company, at the expense of others."

Direct Trailer's edge in manufacturing costs put the squeeze on Lufkin Industries, which also made 18-wheeler trailers.

"There was no way for Lufkin Industries to compete," Nichols says. "Their trailers sold on the same lots as those of Direct Trailer, which can sell its own for thousands of dollars less."

Last fall, Nichols began looking into the matter. He began by going to the Texas prison system itself, with what he believed was an open-and-shut case.

"This is not a gray area," he says. "It's very clear-cut. We've got federal law, state law and administrative codes on our side."

Prison industry programs must abide by certain rules. They must not displace workers on the outside.

"The program must certify that locally, there is no surplus of jobs on those skills, crafts and trades," Nichols says.

Nichols warned the prison system that jobs were at risk, particularly at Lufkin Industries, which had been manufacturing trailers since 1939.

"Since December 2007, I have presented to the Private Sector Prison Industries Oversight Authority (PSPIOA) substantial evidence that the contract between TDCJ and Direct Trailer is in clear violation of federal law, state statute and the program's own administrative code," Nichols wrote to the chair of the Texas Board of Criminal Justice on Aug. 8.

The Texas Workforce Commission cannot verify that jobs in specific skills, crafts or trades aren't at risk. Without that verification, the program can't comply with federal law, Nichols contends.

"The Texas Board of Criminal Justice must protect the interests of Texas by terminating the contract with Direct Trailer," Nichols wrote. "I respectfully ask that you place an action agenda item for the cancellation of the contract with Direct Trailer at your next board meeting."

Even if action is taken, it's too late for Lufkin Industries.

In January, that firm announced it would cease manufacturing trailers -- a move that meant 150 jobs, Nichols says.

"They survived the Great Depression, World War II, and numerous recessions," Nichols says.

"But they couldn't survive competition subsidized by prison labor."

Roy Maynard
()