News Release
August 13, 2008
Contact: Alicia Phillips
(512) 463-0103
Nichols calls on TDCJ to end a prison industry contract costing Texans jobs

Austin — State Senator Robert Nichols (R-Jacksonville) today asked the Texas Department of Criminal Justice to terminate a contract with Direct Trailer, a private manufacturer using prison labor to assemble its products.

"Prison work programs can be a good thing but not when they cost the jobs of law-abiding men and women," said Nichols. "No Texan should lose their livelihood to businesses unfairly subsidized by prison labor."

As a partner in TDCJ's Prison Industry Enhancement Certification Program (PIE program), Direct Trailer employs offenders in the Michael Unit at Tennessee Colony to assemble trailers for 18-wheeler trucks. In January Direct Trailer's competitor, Lufkin Industries, Inc., closed its trailer manufacturing division, affecting 150 employees.

Lufkin Industries, Inc., located about 85 miles from Tennessee Colony, could not compete with Direct Trailer who sold its product for thousands less due to an indirect subsidy from prison labor. 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. The company only pays $1 a year to lease 70,000 square feet of factory space from the prison. Direct Trailer even advertised they could sell their products for less because of a special relationship with the state utilizing inmate labor.

"The purpose of the PIE program should be to give inmates job skills, not give businesses a taxpayer-paid advantage over the competition," said Nichols.

To help prevent the loss of jobs, federal and state law requires these programs not operate where there is a labor surplus in related skills, crafts, or trades. However, Nichols discovered the information the PIE oversight board currently uses does not meet this requirement.

The Texas Workforce Commission recently informed the PIE oversight board it does not have the data to determine a labor surplus in specific skills, crafts or trades.

Considering the PIE program does not have access to the needed information for required certification, Nichols asked for an informal opinion from the Office of the Attorney General on the matter.

"After further review by the Office of the Attorney General, I am further convinced this contract violates federal and state law," said Nichols.

Despite a failure to determine if Direct Trailer operates in a specific labor surplus area, the PIE oversight committee has still not terminated the contract. Nichols now feels it is appropriate to go to the TDCJ for action.

In addition to Nichols, community and business leaders from both Lufkin and Nacogdoches testified before the PIE oversight board regarding the impact of this contract on their local economies and calling for its termination. Representatives from Bright Coop, Inc., which manufactures Viking trailers, testified their business is affected by the continued Direct Trailer contract.