Texas prison labor drives Lufkin factory out of business

The East Texas town of Lufkin was home to one of the biggest manufacturers of tractor-trailer beds in the state until sluggish sales forced the firm, Lufkin Industries, to close its factory earlier 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 smaller, nearby competitor, in this case, Direct Trailer and Equipment Co., which sells an almost an 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.

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

The arrangement is part of a federal program that allows select companies to provide paid work experience to select prisoners, as 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 and includes nearly 400 inmates working in five prison plants across the state.

Companies applying to operate inside the prisons must have outside-prison operations and must pay wages commensurate with those paid 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 keep about 20 percent of their wages, with the rest going to their dependents, victims, the courts and the state.

[white squigly wurms]

I cannot believe noone has a comment on this subject,the implications are enormous.

[Another John]

People are more interested in placing blame on some political party for any economic negative. They are reluctant to find fault at home. Politicians will duck and dodge when this story is mentioned.
It is hard for me to believe that a name like "Lufkin Trailers" could be put out of business by a company that most folks had not even heard of until this article was printed.
I can only believe that at least a couple of bad business and/or management decisions played some part in the demise of Lufkin Trailers.

[Becca]

man that is so crazy

[ATT]

We are a slave nation and we'll always be a slave nation. This just isn't news and the rich will always control the poor.

[Another John]

I pass by the Lufkin Trailer factory every time I go to Lufkin. 5 yrs ago I was on the welding advisory board at a local university's technical school. We had a young man who quit Lufkin Trailers and went tech school for a welding certificate...and later an associates degree...then became a welding instructor. He quit Lufkin Trailers because of being laid off every three or so months for lack of work. This business has been troubled for a long time.
Now, I won't deny that the use of cheap prison labor, apparently subsidized by the state, is completely wrong. But I will say that it was not the only reason Lufkin Trailers went under. It was just the final nail in the coffin.