TDCJ Ends Direct Trailer Contract

Austin -- Today, state Senator Robert Nichols (R-Jacksonville) thanked the Texas Department of Criminal Justice (TDCJ) for not renewing a prison industries contract that hurts the Texas job market. The TDCJ decision came after a letter from the Texas Workforce Commission (TWC) making a case against the contract.

"It's the right thing to do," said Nichols. "Hard-working citizens shouldn't have to compete for jobs with cheap prison labor and facilities paid for by taxpayers. I appreciate the leadership of Gov. Perry, TWC and TDCJ to help resolve this issue."

East Texas News spoke with NEDCO President Bill King and he said, "This is great news.  We've been waiting for that for the last six months or so.  You want to help prisoners develop a skill or trade to help them become productive citizens upon their release, but the unintended consequences of contracts like this one hurt local companies who are trying to compete."  King went on to say that the State did the right thing in ending the contract with Direct Trailer.  "I salute Senator Nichols for all of his hard work.  He's worked long and tirelessly."

Lufkin Industries spokesman Paul Perez answered our inquiry with this written statement:

"The decision by the Texas Department of Criminal Justice to terminate its business relationship with Direct Trailer was the right decision.  In principle the decision will benefit all manufactures and employees in this State.  Unfortunately for Lufkin Industries we competed against the unfair prison labor situation for several years which was made worse by a slowing economy.  We're thankful and appreciate the support of many individuals and organization that made this decision possible."

In a telephone conversation with East Texas News, Clem Russell with Bright Coop of Nacogdoches said, "It's certainly good news.  Obviously, they (Direct Trailer) were competing at reduced pricing because of low labor rates and the facility they were able to use."  Russell went on to say, "We just completed a trailer expansion here at Bright Coop and honestly, we recently had to reduce labor because of a lack of sales, hopefully, things will all turn around and start to come back."

In a letter dated December 10, TDCJ informed Direct Trailer and Equipment Company (Direct Trailer) the board would not renew the company's contract set to expire March 1. Nichols first called for an end to Direct Trailer's contract when he learned it helped lead to job losses in East Texas. Over the last year, Nichols has called on the prison industries program oversight board to cancel the contract. After numerous appeals to the oversight board, Nichols took the case directly to TDCJ.

"The program is well-intentioned, but the unintended consequence of employing prisoners takes jobs away from law-abiding men and women," said Nichols.

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 of dollars less due to an indirect subsidy from prison labor and facilities. While Direct Trailer supposedly pays a prevailing wage, it benefits from the use of cheap facilities, a reduced tax burden, and not paying for employee benefits. The company pays only $1 a year to lease70,000 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.

"It's wrong to give prison industry businesses these huge advantages and then ask private companies to compete," said Nichols. "Especially in times like these, we should help Texas businesses, not drive them away."

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, calling for its termination. Representatives from Bright Coop, Inc., which manufactures Viking trailers, testified their business is affected by the continued Direct Trailer contract.

"What's at stake is not just the jobs lost but also the jobs not created because employers feared the competition from companies using prison labor," said Nichols.

While action from the TDCJ on this contract is a significant victory, Nichols will work to resolve injustices from other prison industry contracts.

"During the legislative session, I will continue to work with TDCJ, TWC, business groups and labor representatives to help protect Texas workers," said Nichols. "Ending this contract is the right first step."