Monday, July 7, 2008

Arbeit nicht mach frei


It sure seems like it exacerbated a problem business for Lufkin Industries. Like how to compete with a wage burden much higher than the ones paid for by the company using prisoners.

Prison labor at center of debate
Lisa Sandberg: Express-News

AUSTIN — The East Texas town of Lufkin was home to one of the state's biggest manufacturers of tractor-trailer beds until sluggish sales forced the company, Lufkin Industries, to close its factory this year, displacing 150 workers.

For everyone but the affected employees, the story might have ended as little more than a cautionary tale of what happens when an established business gets squeezed by a nearby, smaller competitor, in this case Direct Trailer and Equipment Co., which sells an almost identical product for as much as $2,000 less.

Instead, plenty of people have taken notice of this East Texas labor imbroglio — and some are crying foul.

Direct Trailer produces its trailer beds with cheap prison labor and generous subsidies from the state of Texas. The company rents space inside the Michael Unit, a 2,900-bed facility in Tennessee Colony, for $1 per year. The state foots the tab on work force health care, too.

The arrangement is part of a federal program that allows certain companies to provide paid work experience to select prisoners so long as the prison operation doesn't eliminate similar free-world jobs nearby. The Prison Industry Enhancement, or PIE, initiative has been operating in Texas since 1993. It includes nearly 400 inmates working in five prison plants across the state, making everything from trailer beds to windows to computer parts.

Companies applying to operate inside the prisons must have outside prison operations and must pay wages that are commensurate with those for similar work in the same locality's private sector. (Welders make at least $8 an hour in the area where Direct Trailer operates its prison plant.)

Inmates get to keep about 20 percent of their wages, with the rest divvied up among their dependents, their victims, the courts and the state.

Paul Perez, general counsel for Lufkin Industries, said his company paid workers upward of $15 an hour and simply couldn't compete in an already competitive market against a newcomer that could produce a less-expensive product.

“It exacerbated an already difficult situation,” Perez said.

Direct Trailer's chief financial officer, John Quaid, said critics were exaggerating his company's impact on competitors.