Deputy Director Brian Connett

Prison Industry Bill Clears Nevada’s Senate Judiciary Committee

Prison Industry Bill Clears Nevada’s Senate Judiciary Committee

Senators move quickly to rein in runaway prison program

By Bob Sloan

On Wednesday a proposed bill amending Nevada’s Prison Industries was debated before the state Senate Judiciary Committee.  The bill, SB 478 was sponsored by the Senate Finance Committee, which is chaired by former Assemblywoman and now Senator Debbie Smith (D-13).  Senator Smith explained the bill to the Committee and why a revision to NRS 209.461 is needed to protect workers, private businesses and taxpayers from being unfairly compromised by prison industry operations.

Attending the hearing in support of the legislation, former U.S. Senator (and Nevada Governor) Richard Bryan outlined a proposal he’d submitted to the Board of Prison Commissioners last month that would help protect Nevada’s businesses and workers.  Proposed revisions to NRS 209 within SB 478 language would serve that purpose.

Sen BryanSuggested language includes requirements that the NDOC provide adequate notice and consult with private businesses and unions prior to entering into new contracts or developing new prison industries.  This would help protect Nevada’s workers from displacement and private businesses from unfair competition arising from the use of prison labor by private companies or state sponsored industry programs.

These requirements are already mandatory and annunciated under federal guidelines controlling prison-made products introduced into interstate commerce.  This is to protect workers and businesses in states receiving such goods.

Senator Bryan explained the reason such policy changes were necessary to first protect Nevada’s business and workers.  He stated that these protections were at the core of the proposal made to the BPC in March.

SB 478 includes a requirement that any private company applying to participate in prison industrial programs be required to provide a guarantee that operational expenses will be paid to the NDOC.  This provision requires the posting of a surety bond or personal guarantee:

“7. Before entering into any contract with a private employer for the employment of offenders pursuant to subsection
1, the Director shall obtain from the private employer:
   (a) A personal guarantee, surety bond in the sum of $1,000,000 made payable to the State of Nevada or security
agreement to secure any debt, obligation or other liability of the private employer under the contract including, without limitation, lease payments, wages earned by offenders and compensation earned by personnel of the Department.”

This clause seemed to draw the most concern and discussion from the Committee as they attempted to ascertain whether such a high bond was necessary.

Danny Thompsonsb 478 hearing conway

Other revisions require the NDOC Director to secure documentation pertaining to the impact upon private industry and labor in Nevada.  Before submitting such projects or new industries to the Interim Finance Committee’s Committee on Industrial Programs for recommendations or Board of Prison Commissioners for approval, these studies must be completed.

Also speaking in support of SB 478’s changes to policy requiring notice and consultation with labor, was Nevada’s AFLCIO Executive Secretary Treasurer, Danny Thompson and Robbie Conway of Ironworkers Local 433.

The Union Representatives spoke on behalf of unemployed union workers being displaced or unable to find employment because of prisoners used by Alpine Steel, LLC.  Alpine has been accused of using cheap prison labor to reduce labor costs and secure bids on projects, reducing the ability of other companies to compete fairly for the same jobs. One of those projects is the high profile construction of the Sky Vue Ferris Wheel on the Las Vegas strip.

SkyVue pic

Thompson raised issues of public safety due to using inmate labor to fabricate steel components used in building a public bridge over I-15 and the Wet ‘N’ Wild theme park in Summerlin. Thompson mentioned he’d made repeated requests for proof of required certification of the prison shop and inmate welders but Alpine and NDOC continues to withhold those documents.

Time for discussion opposing SB 478 was consumed by Alpine Steel owner, Randy Bulloch.  He vehemently opposed any requirement of posting a surety bond or consulting with unions, labor or competing businesses before starting up new prison industries.  He advised his company had been using inmates as a workforce for seven years before the operation was stopped early this year.

His argument was that requiring a bond would be cost prohibitive and “catastrophic” to prison industry operations.  Bulloch also claimed that noticing and consulting with unions and competing businesses and requiring approval of both would be impossible, “they’ll never agree to such projects.”  Presumably Bulloch’s persistent advocacy on behalf of prison industries demonstrates a desire to reopen the prison industry’s metal shop to Alpine Steel and regain access to that less costly workforce.

The proposed revisions do not include a requirement of “approval” by unions or competing businesses.  It only requires notice and an opportunity to participate in any discussion prior to submission of proposed new industries for approval. In addition until Bulloch repays nearly half a million dollars owed to the state it is unlikely authorities will consider allowing his company back onto prison property.

It’s interesting that Mr. Bulloch’s company was at the root of a controversy that ultimately resulted in the necessity of this legislative review of prison industries.  Actions of Bulloch and Alpine Steel placed the entire program in jeopardy by his refusing to pay incurred operational expenses owed to the NDOC.

Rather than open discussions of new industry operations to transparency, Bulloch seems intent upon keeping any new or proposed contracts shrouded in secrecy, and decisions regarding use of inmate labor made outside the view of obviously interested parties.

Alpine ran up a huge bill with the prison industries by failing to pay inmate and NDOC staff wages, utility costs, workers compensation or lease payments for nearly four years, accumulating a debt of $438,000 to the state.  After the story broke in the media is when officials closed Alpine’s operation at High Desert State Prison and forced Bulloch to agree to repay the state over the next four years.  Though Bulloch no longer has any inmates working for him in the prison shop and the facilities are closed to him, he continues to be the lone voice advocating for operating Nevada’s prison industries without any policy changes to ensure other companies are not able to operate with taxpayers footing the bill.

Competing steel companies protested lost business through unfair practices exercised by Alpine to secure contracts due to low-paid prison wages.  They also voiced concern that the state was unfairly subsidizing Alpine’s operations through a sweetheart lease agreement for prison facilities and a failure to collect the debts owed.  Both gave Alpine Steel a substantial advantage over all competitors in the steel industry there in Nevada.

NDOC Director Cox and Deputy Director Connett were present and stated they and the department was “neutral” on the legislation and will be submitting written statements to that effect.  Several former inmates attempted to speak in opposition, but time was short due to Bulloch’s lengthy statements in opposition and their discussion limited.

The following day, the Judiciary Committee voted unanimously to move the bill to the full Senate for discussion and vote.  It is unknown at this time how much support this legislation will get from the Nevada Assembly and full Senate.

More Businesses Victimized by Nevada Prison Industries

More Businesses Victimized by Nevada Prison Industries

By Bob Sloan

– Other Business owners complain of unfair competition –

When researching material for the Study of Nevada’s Prison Industry Program (released in January), I discovered that in addition to several steel fabrication companies, several other industries and manufacturers have come forward saying they’ve also been compromised by Nevada’s prison industry.  These businesses include; embroidery (Carson City), truck manufacturing (water trucks for construction use), auto restoration and repairing (classic cars) and companies involved in repackaging and/or resale of returned or refurbished goods.

In addition to those industries being victimized, any Nevadan that registers a motor vehicle, trailer or semi that requires a license plate is also being forced to contribute to the profits of the prison industry.

Under a contract with the Bureau of Motor Vehicles, the prison industry receives $.50 for every license plate “manufactured” and distributed in Nevada.  This fee appears to be in addition to the current contract between the NDOC prison industries and the BMV that sets pricing for the production of license plates.  Wording of AB 473 makes the payment mandatory and the money deposited to a dedicated Prison Industry Fund.  Vehicles requiring two plates (front and back) are charged an additional $1.00 per vehicle per year.

Sounds like small change for each vehicle owner – $.50 or $1.00 but with an estimated 2 million vehicles registered annually in Nevada the prison industries is expecting to receive a continuing windfall from this amended legislation.  When added to debts owed by private companies partnered with prison industries (2012 Accounts Payable and Outstanding were in excess of $600,000) the state owned and controlled “company” Silver State Industries continues to reap benefits from taxpayers.  They claim that SSI is self-sufficient and relies upon no tax dollars or appropriations for their operations, but what’s been discovered refutes that claim.  Could it be the license plate fees paid to the prison industries will be used to offset industry losses – at the expense of taxpayers who register their vehicles?

An unanswered question…since most consider registering their cars and paying for licensing a state “tax” for owning a vehicle, are Nevadans actually paying a $.50 cent tax per plate to the Prison Industries?

History

The story of Alpine Steel, LLC and their partnership contract with Nevada’s NDOC industries – Silver State Industries – has been in the news for months now.  When competing companies discovered Alpine had been using prison labor provided at or below minimum wages, they complained to the Governor and members of Nevada’s legislature about unfair competition.

Alpine had been contracting with the NDOC since 2006 to use inmates as a workforce in fabricating structural steel used in private sector construction jobs performed by the company. Due to the low labor costs, Alpine was able to respond to RFP’s and underbid all others for projects.

As the story evolved other issues began to rise to the surface identifying separate but factual concerns; unpaid wages to inmates and NDOC staff, unpaid utilities, unpaid taxes and unpaid lease payments by Alpine Steel.  In the end it was determined that Alpine owed the state nearly half a million dollars in unpaid operating costs.  Under the contract between NDOC and Alpine, there were no requirements for the posting of a performance bond or personal guarantee of payment should the corporation default.

The additional public admittance by NDOC Deputy Director Brian Connett that Alpine Steel had not been vetted for past financial or business practices prior to or during the contract(s) period brought to light that his prison industry operation had bypassed standard business practices when developing contracts with Alpine.

Hearings were held before Nevada’s Ways and Means Committee and the Board of Prison Commissioners (BPC) on the matter.  NDOC Director Greg Cox and Deputy Director Connett were questioned about the debt owed to the state by Alpine, on entry into the Alpine contract without any approval from the BPC and failures of consulting with private businesses and labor groups prior to initiating the steel industry operation.

Former Nevada U.S. Senator Richard Bryan came to the table at these meetings and proposed changes to protect Nevada’s workers, private businesses and protect inmate workers from further exploitation.

Proposed changes to Prison Industry Statute(s)

Apparently In response to concerns voiced by Governor Sandoval and his BPC and the proposal by Bryan, the Nevada Senate has proposed amending the state’s statute on prison industries through SB 478, filed on March 25th.  A hearing before the Senate Judiciary Committee is scheduled for Wednesday April 10th to discuss the proposed changes to NRS 209.

One important change to the statute would require any company wishing to participate in prison industry work programs post a bond to ensure situations such as that with Alpine do not reoccur with the state owed hundreds of thousands of dollars.

Other changes tighten the requirements for consulting private businesses that would be impacted by proposed industry products or services – and for consulting with unions and labor that may be adversely impacted by the labor of inmates. Costs associated with these consultations are borne by the company and not paid for with tax dollars and all new proposed industry or products will vetted by the Interim Finance Committee on Prison Industrial Programs.  Once that committee makes a recommendation, the proposed project is sent to the BPC where the Governor, Attorney General and Secretary of State will make the final decision.

Necessity for these changes

Thomson Water TruckIn addition to the Alpine prison operation, investigation revealed that a previous industry run in partnership between SSI and a private company resulted in the closure of at least one competing private manufacturer.  This was a project involving Thomson Equipment Company and SSI.  Thomson imported tanks and pumping equipment from foreign manufacturers and brought the materials to their prison industry facility where inmates assembled the Water Trucks.

Everyone has seen these trucks along highways and large construction sites where they’re used to spray water to keep dust down during construction.  A company that built the same trucks there in Nevada was forced to close those operations in 2006 due to the Thomson products being distributed through auctions and other outlets for as much as 30% less than the competing company’s pricing.  Workers were laid off and the company closed the division that manufactured the same products Thomson had begun selling for less.

“I either had to pay my workers much less or stop my operation to be competitive,” the company owner told me during an interview.  “I chose to close the operation down and not make any more water trucks.  With so many Thomson products dumped on the markets, I could ill afford to pay prevailing wages to my employees and continue to be competitive.

“I had no idea that those Thomson products were made using inmate labor.  I heard they were importing components from Asia and attributed the lower pricing to that.  If I had known at that time that I was forced to close and lay off good workers because prisoners paid minimum wages were used to undercut my pricing, I would have protested to state authorities.  I don’t know if protesting would have stopped it because from what I’ve read in the paper, the state is promoting prison industries.”

According to minutes of the Prison Industry Finance Committee, Thomson was bought out by a foreign conglomerate out of New Zealand and Australia.  They changed the name of the company to Silver Line Industries and began to import a huge number of tanks and other equipment from Hong Kong and elsewhere which the inmates of Nevada would transform into new truck products.  They stopped the prison operation a few years ago, but not before that operation caused the closure of competing Nevada businesses and put several workers on unemployment.  While the company put out of business by the prison industry paid prevailing wages to their workers, Thomson/Silver Line paid inmates minimum wage.

Shelby AmericanI interviewed owners of several car restoration companies in Nevada over the past couple of months.  They advised they were basically unaware of the car restoration industry run by SSI and had no idea they were competing against prisoners doing the same work on privately owned vehicles.  When I asked them about Shelby American’s use of inmate labor on the Shelby Mustang products, none of those interviewed had any inkling inmates were involved in that operation.  One said he had several acquaintances working for Shelby out by the race track in Las Vegas who assembled the Shelby line – and thought they were also manufacturing the parts used in the production.  A 2000 CNN article on Shelby American and a Wall Street Journal article about the restoration of a number of cars owned by private collectors was shown to one restorer.  The Shelby article revealed:

“Shelby American, manufacturer of the Shelby Cobra sports cars, pays Deere and a dozen other inmates at the facility an hourly wage to build every part of the car except the engine. Other workers at the Indian Springs penitentiary work for other private companies or the state restoring cars, beveling and staining glass windows, upholstering chairs and making bed mattresses.

”After five years of loyal service to his employer, the 63-year-old Deere earns less than $8,000 a year in his full-time job, gets no vacation or sick pay and is unlikely to ever be promoted.”

The WSJ story contained this information:

“The cases in question are cars—very cool vintage cars. They come in rough and battered, and inmates restore them to their original glory. It may be the penal system’s most unusual workshop…

“The auto shop’s present inventory includes 32 cars in some stage of restoration. Among them: two 1960s-era Corvettes, two 1960s Mustangs, a 1959 Thunderbird, a 1965 Malibu, a 1935 Chevy pickup and two 1969 GTOs.

“All kinds of customers bring their cars in. Barry Becker, a Las Vegas realtor, has had nearly a dozen cars restored by prisoners.

‘I just keep buying stuff I don’t need,’ he says. Among his prison-rescued treasures are a 1937 Dodge sedan convertible, a 1937 Dodge “Woody” wagon, a 1956 Nash Metropolitan and a 1941 Plymouth pickup truck

“A Las Vegas couple recently agreed to pay the prison $19,000 for a re-do of a 1973 Datsun 240Z, with a V8 engine installed. “Mom’s going to go to the store really fast,” says the shop’s director, Carl Korsgaard.

“Inmates, including a few murderers and lifers, have been trained to do everything from sanding steel bodies down to sewing upholstery. One upholsterer was born in Cuba, where Mr. Korsgaard believes he absorbed his countrymen’s talent for keeping vintage U.S. vehicles on the road.”

Corvette restored by SSIThe business owner exclaimed, “How can the state openly promote a program such as that?  By using inmates to restore or repair privately owned vehicles, they are taking work away from hard working business owners and our employees.  I haven’t committed a crime…my workers aren’t criminals and we need work to put food on the table and pay our bills, raise our kids.  How can the state justify doing something like this that they know hurts business owners like me and dozens of others trying to make a living restoring cars?”

I couldn’t honestly answer his questions.

In 2011 the owner of Billow’s Embroidery in Carson City, Nevada began protesting to the NDOC, SSI and ultimately to Governor Sandoval that his company was losing business due to direct competition with a prison industry doing embroidery.  His complaints included the fact that he had to pay fair wages, benefits and provide insurance for his workers, while the prison industry paid no benefits, insurance and only paid minimum wage.  This made their products and service pricing substantially less than Mr. Billow was able to compete against.

Mr. Billow was invited out to the SSI Embroidery operation and given a tour of the prison industries located at the prison.  He was asked to stop complaining about unfair competition as training of prisoners was important and necessary.

During the tour Mr. Billow described as a “dog and pony show” he was shown the prison’s printing industry shop.  Mr. Billow observed that inmates were being trained on and using antiquated AB Dick offset printing equipment.  He stated, “I learned printing while in school on that equipment decades ago.  I couldn’t understand how training inmates on such old equipment would prepare them for employment in the printing industry upon release, when they would know nothing about the digital and advanced printing machinery used in the private sector.”

Mr. Billow felt that the “tour” he was given was conducted as a way of demonstrating that he was up against a huge industry run by the state and that to continue to complain would be useless.  He said he felt that it was an effort into intimidating him into silence.

Jacobs Trading Company

bigjacobsAn ongoing industry run at the women’s prison facility operated by SSI, is a partnership with Jacobs Trading Company.  Jacobs is a national company that specializes in buying, refurbishing and repackaging returned or damaged products from retailer such as Wal-Mart and Best Buy.  Female prisoners are paid minimum wage for their labor.

The Great Recession was a boon for Jacobs Trading Co., the liquidation company in Hopkins MN. that bears the name of Irwin Jacobs, one of the state’s best-known businessmen. The company deals in overstocks, scratch-and-dents and returned merchandise and saw operating income rocket to $14 million in 2009 from $5 million in 2008.  Jacobs relies heavily upon prison labor for their repackaging operations.

Inmate workers receive the materials and repair if necessary and then remove all labeling, advertising and UPC coding that identifies the original manufacturer or retailer.  They then repackage and ship the refurbished products all over the country.  Recently Jacobs demanded SSI provide the money to expand their prison operation at the women’s prison.  Jacobs said they need another loading dock in order to put on a third shift and employ another eighteen female prisoners.

Rather than “request” the NDOC or SSI provide the new construction, Jacobs demanded that they do so, and threatened to reduce their operation to a single shift and lay off inmate workers if the state run department did not meet their demands.  Some refer to this as sharp negotiating others would call it a form of extortion.

Research revealed that Jacobs Trading Company has created an “empire” within the repackaging industry in the U.S.  Currently they operate in prison industry operations in at least six states.  Consider the following discussion that occurred fifteen years ago in reference to Jacobs Trading’s operation in Minneapolis – and legislation proposed to favor Jacobs’ use of inmate labor:

“Corrections officials are quick to cite a statewide labor shortage to justify deals such as the Jacobs bill. Employersare having trouble finding people to work, they point out.

But Neuenfeldt shoots back: “If Jacobs wants to bring 50 jobs to Wisconsin, it would be good to open up an operation in central-city Milwaukee or somewhere else in the state where we have high unemployment.

“And I would think that the business community, especially small business, would have some concern over businesses set up using prison labor, because if this guy pays a dollar an hour it’s pretty hard to compete with that,” he adds.

If the Jacobs legislation passes as currently written, Jacobs will indeed pay inmates $1 per hour, skirting a federal interstate commerce law that requires that prisoners working for commercial ventures be paid prevailing wage.

Federal law only applies to the production or manufacturing of a product,” says Steve Kronzer, director of Badger State Industries. “If they started repairing then it would be considered manufacturing, and then it would come under the federal law.”[1]

The Jacobs plan demonstrates the enthusiasm with which the Department of Corrections is expanding into the private sector–even at the expense of profits. “The whole reason for doing this thing is so the state gets money back to cover its losses for boarding these people,” says Neuenfeldt.

But, the labor rep says, some basic math shows that the savings would be minimal, possibly nonexistent.

The 50 inmates involved would be paid $1 per hour for 1,950 hours. This would cost Jacobs $97,500 a year in wages. Thus, each inmate would be paid about $2,000 a year. Fifteen percent of that would go to the corrections system, and another 5% would go to the victim-restitution fund. The state’s 15% comes to $14,625, plus an estimated $8,000 savings from wages the state would no longer pay the inmates who would otherwise be employed in other ventures. So the state gain would be around $27,525.

But the state would also have to pay for a supervisor, which the AFL-CIO estimates will cost $17,800. This brings the state’s take down to $9,725. Subtract the costs of facility adjustments and security measures, and “the Jacobs bill could even be a money-losing proposition,” says Neuenfeldt.

So why do it?

“You have to understand the mentality that goes on within the prison industries itself,” says Nick George, director of government relations for Wisconsin Manufacturers and Commerce. George served on a prison industries advisory committee that discussed the governor’s budget proposals.

“In prison industries, there is a mentality, and this is not unique to Wisconsin, of wanting to see their industries grow,” he explains. “They have a number of advantages over private industry, and a lot of the individuals who run these prison industries have an empire-building attitude.”

Several of these operations are identified as participating in the federal Prison Industries Enhancement Certification Program (PIE Program).  This program allows companies to use inmate labor to manufacture products sold and shipped across state lines – but only where the company pays prevailing wages to the inmates, consults with private companies performing the same manufacturing or services and with labor unions, prior to start-up of the industry.

While the Jacobs operation in Nevada is listed as a PIE Program participant, the inmates are not paid comparable wages.  They receive minimum wage or less for all job descriptions, regardless of years of experience or skill.

In other states Jacobs has failed to register these operations as PIE though the products received at those facilities cross state lines and finished products are shipped back across state lines.  Here is a listing of some of those current or former Jacobs operations:

  1. Nevada – Southern Nevada Correctional Center.

  2. Oklahoma – Eddie Warrior Correctional Center (not listed as PIE).

  3. Idaho

  4. North Dakota

  5. Indiana –  Bunker Hill,  and Rockville, Indiana

  6. Minnesota

Currently Nevada is the only “PIE” operation listed for Jacobs…yet as shown, they are operating in Oklahoma without listing it as a PIE industry.  In each of the foregoing states inmates are used as the sole workforce for Jacobs’ repackaging operations.  Jacobs does not use non-inmate labor in their repackaging operations.  Looking at the map of distribution centers operated by Jacobs, one finds that they are placed in areas where the prison industries are operating.  In a couple of those industry operations, Jacobs has acquired exclusive contracts with Corrections Corporation of America to use inmate labor and facilities under control of this private prison company.

Jacobs Trading and its owner, Irwin Jacobs have been in the news in a similar manner to Alpine Steel and owner Randy Bulloch over questionable business practices.  In 1997 Jacobs retail operations were sold to Petters Group Worldwide.  After failing to make payments for their purchase, the stores were ultimately shut down.

(It is interesting to note that Tom Petters, whose company had purchased the retail operations from Jacobs Trading, was recently convicted of multiple felony counts as part of a $3.65 Billion Ponzi scheme.)

In 2010 Irwin Jacobs came under intense scrutiny over investments made in a top boat company, Genmar.  It appears Jacobs urged investors to put money into Genmar before the company wound up in bankruptcy.  In the two years preceding that collapse, Jacobs and some of his investors received substantial “dividends” from Genmar as it was financially foundering.

Once the bankruptcy was final, Jacobs and one of his investor friends began buying Genmar back for pennies on the dollar, vowing to make it one of Jacob’s “best acquisitions ever.”

Corruption in Prison Industries

I mention Jacobs and the appearance of manipulating businesses and use of inmate labor, because a means of capitalizing off cheap labor permeates all the companies involved in prison industries.  Alpine Steel revealed that aspect to Nevadans recently.  Previously I wrote about U.S. Technologies that was formed for the specific purpose of using inmate labor in the PIE Program to provide a labor advantage to numerous companies acquired by U.S. Technologies.

Like Jacobs, UST formed exclusive contracts with CCA and/or Geo Group to allow them to operate at all facilities owned or managed by these private prison companies that have prison industry operations.

Board members of UST included many top names of the politically and financially powerful in Washington; George J. Mitchell, William Webster, General Alexander J. Haig Jr., etc.  In 2006 UST went belly up after the Chairman was indicted for embezzling over $20 million in investor funds.  The SEC devalued UST stock and the high profile Board members ran from any connectivity to UST as quickly as possible.

In Florida the prison industry corporation PRIDE came under fire for creating nine spin-off corporations to take advantage of the PIE Program and turn huge profits.  The entire executive staff was forced to retire once the scandal broke but that didn’t save four private companies that had been taken over entirely by PRIDE, putting the legal business owners into bankruptcy.

Beyond the cheap low cost labor, is the ability to secure equally cheap leases on state owned manufacturing facilities and as in Nevada, avoid paying the Modified Business Tax on employees.  Alpine secured a lease of 20,000 square feet of manufacturing space from the NDOC.  The contract charged Alpine $.26 cents per square foot for that property.  The average cost per square foot for comparable space in the private sector is $.68 cents a square foot.  Which means Alpine enjoyed a savings of $95,000 in operational expenses every year.

This “savings” to Alpine Steel reduced the potential revenue stream to taxpayers – for the lease of public owned facilities – to the tune of that same $95,000.  When we calculate savings realized by Alpine over the past 7 years that this contract with SSI existed, we easily determine that taxpayers lost more than $665,000 in potential revenue.  Between this loss of potential income and the actual amount owed to the state by Alpine Steel in unpaid debt and unpaid taxes, Nevada is out more than $1 million dollars.  Over the next four years Alpine’s owner has agreed to repay $438,000 owed in the unpaid debt without additional penalties or interest…but the income lost under the leases is gone and there is no provision for Alpine to repay the additional $38,000 owed to the Dept of Revenue for unpaid state taxes.

That $1 million dollars represents a huge loss to a state with high unemployment rates, a declining tax base and increasing government costs.  Nevada in effect subsidized one company’s operations to the tune of a million dollars over half a decade while the competing companies lost income and the ability to hire new workers due to that subsidization.  To me this is beyond unfair, it borders on the very definition of corruption.

Additionally, Jacobs Trading, JT Wholesale, the Embroidery industry and other companies that have left SSI; Shelby American, Thomson Equipment, etc. all have/had similar sweetheart leases on publicly owned facility spaces and inmate wage rates.  How much more in revenue was denied to Nevada’s taxpayers from these leases?  How many more Nevada workers were not hired because inmates were used instead?

So there is a lot of incentive for companies to partner with state run prison industries.  The temptation to realize huge savings off cheap labor, low cost leases, tax breaks, and no requirement to pay worker benefits is too attractive to companies already looking desperately for an “edge” in their respective markets.

When government administrators “help” by increasing the incentives for companies to bring their manufacturing and labor needs to prison industries, it further depresses the normal employment and sales markets.  Leases to the likes of Alpine Steel were made without approval or even review by the Legislature or the Executive branch of government.  The wage rates paid to inmates are likewise without review or question…all leading to the current situation in Nevada.

When we realize the numbers of industries, businesses and unemployed workers who continue to be harmed because of prison industry operation we begin to understand why Nevada jobs are becoming scarce, why private business sales are suffering and why new businesses are finding it more difficult to compete against a captive workforce supported by state subsidized operations.

The Senate Judiciary Committee is scheduled to discuss the proposed changes to Nevada’s prison industries this coming Wednesday.  I would encourage those who think they are or may be adversely affected by competition in your industry by prison labor, to attend and use this opportunity to voice your opinion.



[1] This is the loophole that Senator Bryan’s proposal to Governor Sandoval would close.  This would protect Nevada employers and workers before protecting workers and businesses in other states.  When SSI’s prison made goods are sold in Nevada, there is no protection to business or workers, requirements to consult with labor or competitors.  Only when SSI products leave the state, are workers and businesses in receiving states getting protection by requiring the inmates are paid comparable wages and consultation with labor was fulfilled.

Casinos & Prison Labor – Strange Bedfellows

Casinos & Prison Labor – Strange Bedfellows

By Bob Sloan

On Tuesday March 19th, the Nevada Board of Prison Commissioners (BPC) met in Carson City to discuss an assortment of prison related issues.  Members of the BPC are: Governor Brian Sandoval, Attorney General, Catherine Cortez-Masto and Secretary of State, Ross Miller.

Issues of: (a) realignment of state Parole and Probation responsibilities with the Nevada Department of Corrections (NDOC; (b) compliance with the federal Rape Elimination Act; (c) certifying the Nevada State Prison as a Historical Site was on the agenda.  However, the topic which generated the most heated public discussion was listed on the agenda was: (d) a review of the prison industries program run by the NDOC.

As I’ve reported over the past two or three months, there has been an increasing amount of criticism of NDOC Director Greg Cox and Deputy Director Brian Connett over the operation of the state’s prison industry program.  This program operates under the name “Silver State Industries” and employs hundreds of inmates in various industrial programs.  Many of those prison workers are actually “employed “by private corporations and companies.

The need for discussion of prison industries during this meeting of the BPC came about due to a total lack of transparency surrounding the program.  The NDOC is reluctant to pull the veil of secrecy from prison industry operations that has hidden it from public and legislative view for years.  This was demonstrated in the meeting on the 19th by Secretary of State Miller when he was forced once again to request a list of industries being run by SSI.  AG Masto made the same request at the previous meeting in December and was assured by Deputy Director Connett that one would be provided at the following meeting.  At this time, no such list has been provided to the BPC by Cox or Connett.

Additionally, for more than two years SSI successfully hid from the BPC and Legislature the fact that Alpine Steel was not paying inmate and staff wages, lease payments, utilities or workers compensation payments owed to the state.  The NDOC also hid their lack of compliance with state statutes requiring notification to private businesses and labor before initiating new industries and took that one step further, by not even apprising the BPC in 2006 of the Alpine contract and creation of the steel fabrication industry.

SSI is operating at least half a dozen industries under the federal PIE Program – yet the Interim Finance Committee on Prison Industrial Programs was never made aware of the mandatory requirements of that program – or that those requirements also called for consulting private businesses and union officials.  They have not paid the inmate workers in the program comparable wages as mandated and have kept that secret from both the BPC and the Committee.

On March 8th the Agenda for the NDOC Budget hearing before the Ways and Means Committee listed several of the prison industries the NDOC claim were operating – but at least one of those was closed back in 2011.  So those excluded by this blanket of secrecy surrounding SSI operations includes the Nevada Assembly.  Unbelievably the one industry that has been closed for nearly two years is still being presented to the BPC as viable and operating and was mentioned as a positive in last week’s discussion.

The need for a review by the BPC in the first place was necessitated by this ongoing secrecy and lack of transparency exhibited by the NDOC, the Director and Deputy Director of Prison Industries.  It was this that caused several Nevada companies to complain the prison industry operation was being used to drive down wages in the private sector, reduce the number of available jobs for unemployed workers and argue prison based companies are competing unfairly against others in the marketplace.

At first it was a handful of steel fabrication companies that complained prison-based companies are competing unfairly against others in the marketplace by using – illegally underpaid – inmate labor to underbid on contracts.  But by the day of the meeting, another business owner named BIllow in an entirely different industry was identified as having notified the Governor and the NDOC for more than two years that his embroidery business had been compromised due to direct competition from prison industries.  This complaint had no impact upon that competition that continues to harm that man’s business in the private sector.

Responding on behalf of those complaining, former Senator Richard Bryan (D NV) proposed to the BPC that Nevada adopt the federal Prison Industry Enhancement Certification Program’s (PIE Program) mandatory requirements as prison industry regulations.  The PIE regulations require prison industries to contact and consult with labor groups, unions and private businesses to determine if there will be a negative impact upon sales, displacement of workers or jobs lost prior to commencing any new product line or industry.  They also require inmate wages set at the same rate as those performing identical jobs on the outside.

The state takes back most of the inmate’s earnings to offset the costs of incarceration, healthcare, feeding and clothing of inmates and for victim restitution and to repay fines or fees owed by the prisoner.  Senator Bryan’s proposed solution is simple and easily adopted since Nevada currently holds a PIECP Certificate issued by the U.S. Department of Justice and has six industries participating in the PIE Program.  These SSI industries already have to abide by the mandatory requirements in more than 50% of their operations. Making it applicable to remaining industry operations, would be easily accomplished and resolve the current issues.  This proposal had the support of many of those who spoke to the BPC last Tuesday on this and other issues. Prison industry operations nationwide have been increasingly scrutinized and widely reported.

Strangely, however, most labor groups and unions have remained silent about the impact – if any – upon their members or workers from competition with prison industries.  The meeting Tuesday broke that ongoing silence, with both the Nevada Executive Secretary Treasurer of the AFLCIO, Danny Thompson and Robbie Conway, Business Agent of Ironworkers Local 433 sitting down with the BPC and objecting to the ongoing competition from prison labor.  Others representing Nevada Law Enforcement, Parole and Probation workers and NDOC employees, also stated their support for the proposed adoption of PIE regulations.

To be fair, the one member of the Committee representing labor is Mr. Magnani of the Teamsters who is totally outnumbered by NDOC, legislative and business members.  His single voice and vote is constantly outweighed by the two members representing the NDOC (Director Cox and NDOC purchasing agent, Greg Smith) and seven more representing business and the legislature. Time and again the minutes reflect Magnani asked for materials, lists of industries in operation and on occasion voiced his opposition to suggested actions advanced by the NDOC (such as the current proposal for a recycling industry).  None of his requests resulted in Connett or the NDOC providing what he’d requested and his vote opposing actions proposed by the NDOC or SSI went against a majority of votes favoring the proposals.

Some members of the Committee would be absent for several meetings then return and cast a vote without any real understanding of what they were voting on – just that the proposals were favored by the NDOC.  So the suggestion presented by Connett last week to the BPC that the “advisory Committee” was a good representation for labor and businesses alike, was disingenuous and misleading at best.

Joining Union voices in opposition of making inmate labor available to private companies were a number of non-union businesses in a rare demonstration of solidarity.  Nearly a dozen union and non-union steel companies signed petitions to the BOPC objecting to the use of prison labor by Alpine Steel, Inc. as a means of underbidding them for steel construction projects in Nevada.  Alpine had been using inmate labor as a means of gaining an advantage over competitors since 2006.

The three petitions stated:

“Honorable Governor Sandoval, Attorney General Masto and Secretary of State Miller; We the undersigned owners of steel businesses in Nevada wish to voice our objection to competing against state subsidized prison industries in Southern Nevada.  Competing against prison labor reduces the number of jobs available in our industry and hampers our businesses from expanding.”

Signatories included; Southwest Steel, Tandem Industries, Vegas Steel, Inc., Southern Nevada Welding, A & N Custom Fabricators, XL Steel and Imperial Iron, Inc. The letter from Southwest Steel outlined the objection(s) best:

“Honorable Governor Sandoval, Attorney General Masto & Secretary of State Miller; As you all know too well, the construction industry in the Las Vegas valley is as competitive as it’s been in 20 years. With that being said, companies large and small have had to make radical changes; be it cutback of manpower, chase work in different markets or revisit our business model in its entirety, to maintain existence over the last 3 – 4 years has been a challenge. “As the Vice President of Operations for one of the larger steel companies in Nevada, I wish to voice our Company’s objection to competing against state subsidized prison industries in Southern Nevada. Competing against prison labor reduces the number of jobs available in our industry and hampers our businesses from expanding. Tom Morgan Vice President, Operations Southwest Steel”

The references to “state subsidized prison industries” come from the unpaid debt outlined above.  For several years Alpine was able to continue operations at the High Desert State Prison, working approximately fifty inmates for several years without paying any of the costs associated with keeping the industry operating. The state of Nevada has had to pay supervisory staff’s salaries, cover the utility costs of Alpine Steel and absorb the lost lease payments.  The total cost to Nevada’s Taxpayers? $438,000+ according to the forbearance agreement between the Attorney General’s office, NDOC and Alpine Steel:

forbearance excerpt

Only after complaints against Alpine Steel’s use of inmate labor was it discovered that the company had been operating basically without covering the costs of operations – which were ultimately passed on to Nevada taxpayers.   Silver State Industries had curiously authorized the steel fabricating prison industry to remain open and available to Alpine even as SSI was losing money throughout 2011 and 2012, essentially “doubling down” in the hope of recovering its losses.  Once the “debt” and gambling was made public, SSI was forced to close the steel fabrication industry and deny further inmate labor to Alpine.

The foregoing debt is to be paid off over another four year period, very surprisingly given the circumstances, without any interest going forward, unless Alpine defaults on monthly payments of $5,000.  An additional state tax lien was placed against Alpine Steel in January of this year for another $38,000 plus owed to the Nevada Department of Taxation.

The Alpine Steel story reveals that this company is responsible for the current problems and full media attention now focused upon Nevada’s prison industry program after the Associated Press, Bloomberg Business, Yahoo Finance and California media picked up this story and spread it as far as New Zealand and Australia.  The entire program and indeed, prisoner labor has now come under intense international scrutiny because of the complaints brought against Alpine Steel and the subsidization of its business using Nevadans’ tax dollars.

This has now resulted in the prison industry program being publicly brought to its knees while state regulations and statutes are under review for amendment because of the actions of Alpine Steel and the NDOC – which occurred without proper oversight.  With the steel fabrication industry shut down, Randy Bulloch has been transformed from a “partner” in the prison industrial program, to a “debtor” forced by the state to repay a huge sum owed to the NDOC.  He has not melted into obscurity with the stigma of having bilked taxpayers out of nearly half a million dollars, instead coming to every meeting involving prison industries and doing his best to fight on behalf of access to inmate labor.

Bulloch and Alpine are out of the prison industry program and business, yet surprisingly, Bulloch is now the “Poster Child” for prisoner labor.  He is now being used by the NDOC to argue on behalf of continuing the program!  Bulloch and NDOC Deputy Director Connett have been seen conferring and whispering before and after budget hearings and meetings – like co-defendants instead of partners in a failed business relationship – a weird sort of relationship with one owing the other nearly a half a million dollars and both continuing to work together.

Mr. Bulloch confided to me in an exclusive interview that he would once again use prisoners to fabricate his steel components…as long as he did not have to pay “comparable wages” to inmates, as was suggested by Senator Bryan’s proposal.  Yet there he was on Tuesday, arguing fiercely in support of the prison industry program, his lone voice supporting prison industries and opposing the views presented by unions, unemployed workers and private businesses.  One has to wonder – why?

Curiously, Director Cox and Deputy Director Connett assign no blame for their current circumstances to Bulloch or Alpine – perhaps that is why Bulloch continues to act as a spokesman on behalf of prison industries.  It will be interesting to see if Randy Bulloch continues his advocacy on behalf of prison labor in future meetings or hearings in the absence of any official business relationship with prison industries.

Nevada companies argue that aside from being forced to compete against already low wages paid to prisoners by Alpine Steel, they have had to pay proper taxes, utilities, leases and workers compensation…or be closed down by the state of Nevada.  This creates a situation whereby the State of Nevada is subsidizing an unfair advantage to Alpine. Now you can play online casino if you are from NJ, have a look at this casino site to view the licensed USA casino sites. This not only hampers any business expansion by free enterprise companies, it also reduces the number of jobs available to unemployed steel workers in Nevada.

Critics of the prison industry programs operated by SSI point to the Legislature’s Interim Finance Committee (the Committee) on Industrial Programs as failing in their duties of oversight.  They blame the committee for failing to protect businesses and workers against prison industry operations.

This committee is made up of Assembly members, Legislators, business owners or representatives and the one member representing labor (Mr. Magnani):

Members Assemblyman James Ohrenschall,

Chair Senator David R. Parks,

Vice Chair Senator Dean A. Rhoads

Assemblyman John Ellison

Bruce Aguilera, Las Vegas – (Vice President/General Counsel, Bellagio)

Michael Mackenzie, Las Vegas – (Principal, Operations Improvement Company)

Mike Magnani, Las Vegas – (Teamster/Union Representative)

Allen J. Puliz, Las Vegas – (Moving and Storage Co.)

James “Greg” Cox, Director, Department of Corrections

Greg Smith, Purchasing Division

Alternate Members

Debra Miller, Las Vegas

Scott Stolberg, Las Vegas

Richard Serlin, Las Vegas

While the arguments of a lack of protecting some businesses from unfair competition appear factual, other businesses represented on this Committee have profited handsomely from prison labor and industries.  In this undated article, NDOC Deputy Director, Howard Skolnik (who preceded Brian Connett) bragged about the prison industry, saying:

 “Skolnik explained, ‘I suspect that most people don’t know that anything they are using is made by inmates. More and more of it is. If you have been in many of our major properties you have seen a stained glass window, you have seen something that is manufactured in one of our institutions.’

Excalibur stained glass 2

They built all the original stained glass in the Excalibur; make casino mattresses, chairs for attorneys, and exclusive lines of clothing for airport retailers. They make award plaques, reupholster cars and rebuild water trucks for a local water company…”

Clothing - mattress pic

Those involved in the Casino industry in Nevada appear to have profited off of prison labor due to the manufacture of mattresses and custom stained glass products – as have clothing retailers selling to travelers and tourists passing through Nevada’s airports.

This “Committee” has been overseeing prison industries since the late 1980’s and every industry, product, contract with a private company and for determining the impact upon competing companies and workers, comes under their responsibility.  They had to approve the prison industry manufacture of the stained glass for the Excalibur and for the mattresses for casino/resorts…and the manufacture of clothing for sale to tourists.

Once the Committee makes their decision on new products or a new industry, that decision is supposed to then go to the Board of Prison Commissioners for final review and approval or denial.  In the recent case involving Alpine Steel, the BPC stated publicly that this was “an isolated incident when a contract was enacted without clearance from the prison board.”  Whether this was indeed an “isolated incident” or a practice of the Committee that became the standard over the years, is unknown.  Certainly the experience of Mr. Billow makes claims of Alpine Steel being an “isolated” incident difficult to swallow.

Throughout this story the elephant in the room remains the total lack of transparency and absence of independent oversight.  The Committee does not pursue any review of programs or industries submitted to them by the NDOC’s Deputy Director of Prison Industries.  Connett brings them a proposal for a new industry or product line and informs that he has determined this would be a viable industry or contract.  The only information obtained by the Committee is a one-sided presentation from the NDOC.  They perform no independent analysis, provide no notice to the public, labor unions of competing private businesses.  No opportunity is provided to any of these affected groups to attend a subsequent meeting where the proposal would be discussed.

Instead, as we now understand from both the NDOC Director and the BPC, the Committee has been operating as the final word on approving new industries.  The requirement of forwarding Committee recommendations to the BPC for final review and approval has been somehow eliminated.  The skipping of this important step results in the NDOC securing approval of an “interim” legislative body for new programs without notice or conference with the executive department.  The BPC has overall authority over the NDOC but in this manner they are kept out of the loop and the only safeguards provided to the public is a small Committee that has never performed their duties as required.

Even if the chain of review operated as required, this Committee would end up stamping proposals with their recommendation and forwarding it to the BPC – with a recommendation that was determined in the absence of any actual review, public input or notice.  Their determinations would be based solely upon the presentation made by the NDOC accompanied by a departmental analysis indicating the program and contract with a private company would be successful.

But, if as the BPC claims, the approval for the manufacture of products for the casinos, resorts and clothing retailers, water trucks, limousines and restoring classic cars, were ultimately not approved by them, they would still share responsibility with the Committee for lost jobs or contracts resulting from those operations.  They too have a duty to perform final reviews and failed to notice that new proposals were not being submitted.

The fact that the BPC is now attempting to address the issue and make corrections to ensure no more Nevadans lose jobs and businesses aren’t faced with unfair competition, is a benchmark.  It also highlights that the Committee has been shirking their duties for decades, approving whatever plans the NDOC and SSI put before them without vetting the company’s or the industries proposed by SSI.  They performed no independent or impartial reviews of such proposals, failed to determine factually the impact upon labor and other businesses before stamping each submission “approved”.  Again, one has to ask – why?

The proposal made by Senator Bryan makes good sense to most.  The argument against it came from NDOC Deputy Director Connett and Alpine’s owner, Randy Bulloch.  Both voiced their opposition to installing the PIE regulations as Nevada law or regulation, claiming that paying prisoners wages comparable to that paid on the outside, would remove the key incentive that attract businesses that exploit inmates  – and ultimately result in the loss of jobs to Nevadans.

Connett told the BPC, “I can’t pay prevailing wages.  If I have to pay prisoners prevailing wages, it would mean closing the industry program completely.”  That statement was more revealing than most who heard it realized.  In the PIE Program industries operated by SSI, prisoners are paid “minimum wage”, not “comparable” or “prevailing” wages as required.  SSI is required to consult with outside businesses and labor unions and groups prior to commencing any new PIE operation…and has not complied with these requirements either.

This explains why Director Cox and Connett have refused to mention or discuss the PIE Program when defending Nevada’s prison industries.  Nor has Connett explained his conflict of interest as head of the NCIA – which promotes prison industries and is tasked with ensuring compliance on behalf of the U.S. Department of Justice. Another duty Deputy Director Connett has failed to fulfill.

Apparently the NDOC and top officials fear the BPC or general public looking at the PIE Program’s requirements, will find that the federal mandates have been ignored as well as existing state statutory requirements. Regardless of whether Governor Sandoval and the BPC adopt the proposed PIE Program regulations as state reg’s, the Governor stated, “”Under no circumstances would I want prison labor displacing private sector jobs,” Sandoval said. “I don’t want a situation where private contractors are underbidding by subsidizing with prison labor.” This statement combined with assurances that no further prison industries will be opened without approval from the Board, indicates business owners and unemployed Nevadans are being offered at least a modicum of protection by the Governor and other members of the Board of Prison Commissioners.

In the next article I will report on my exclusive interview with Randy Bulloch and other interviews obtained while I was in Nevada for the BPC meeting.  I’ll also introduce Jacob’s Trading Company and owner Irwin Jacob and how both have attempted to build a unique empire using prison labor and factories.  JTC operates another of SSI’s prison industries in Nevada using female prisoners as a unique labor force and SSI has applied for funding to expand the facilities for JTC to put on a third shift and employ an additional 18 workers.  This discussion continues, while Nevada’s unemployed remains at near record levels and Governor Sandoval continues to inform that creating jobs is his number one priority.

Lawmakers Lambaste Money-Losing Prison Industries Program

Lawmakers Lambaste Money-Losing Prison Industries Program

We have been posting about an investigation into prison labor violations in Nevada.  Three posts by VLTP Executive Director Bob Sloan, which you can access here, here, and here.  After exposing this to the entire Nevada State Legislature, Governor Sandoval (R), AG Masto (D), and Union leaders, and aided by an interview on the Dana Gentry Show just over a month ago, the ball started rolling fast. 

Elected leaders and Union leaders realized that they were being  at the least, misled by DOC Chief Cox and Nevada Department of Corrections Public Information Officer Brian Connett (who, not so incidentally, also NCIA logo  serves as the head of NCIA and is likely guilty of a serious conflict of interest) and reacted quickly to the information provided to them by Bob.

 

Today, elected officials had a special hearing to address the information about Messrs. Cox and Connett.  Many questions were obviously formed from the Cox and Connettinvestigative report that Bob had  researched and submitted to the Legislature, Governor, Attorney General and Secretary of State.

The following article from the Las Vegas Sun – complete with Bob’s comments – show that there are a lot of powerful people who are very upset and embarrassed about being defrauded.  The disgust was bipartisan, as the impact on Nevada taxpayers and the abuse of prison laborers united both progressives and conservatives in condemning the actions of Cox and Connett.

There is still a lot more to happen until this situation is fully and properly resolved, including what to do about the legal transgressions and tax issues. This issue will be discussed next at an open meeting of the Nevada commission sometime later this month. Bob Sloan will be writing his own article on the events to date, but for now I’d like to present you with the MSM Newspaper coverage of today’s events to bring you up-to-speed on what is happening as the result of Bob’s investigation for VLTP.  All emphasis is mine.

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From the Las Vegas Sun, by   (contact)

Friday, March 8, 2013 | 4:03 p.m. CARSON CITY — Legislators lambasted the state’s prison industry program Friday. They bemoaned the financial losses the program has incurred during the past few years and further decried the possibility that prisoners could be unduly competing with the private sector for scarce jobs.

“It appears that at some point the reserves are going to run out, but in the meantime, it’s a loss-loss across the state,” Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, said at a legislative committee meeting, noting that the state would lose money and the private sector could lose jobs.

The prison industries program uses voluntary prison labor to run various shops with some proceeds from sales paying for restitution and room and board for prisoners; the prisoners receive training and skills they can later use to find a job when they are no longer incarcerated.

Department of Corrections chief Greg Cox conceded that the program has been a money loser during recent years but still defended the merits of the Silver State Industries program.

“We have been able to say historically this is helping us operate our facilities, it’s a good management tool, and it provides vocational training,” he told legislators. “The cold hard facts are now that we have to aggressively look at what industries are not turning a profit.”

The prison industries’ furniture and metal shop, auto and upholstery shop, and drapery shop have lost hundreds of thousands of dollars during the past few years.

Others, like the mattress, print and garment shops have turned small profits. But those surpluses aren’t enough to offset losses in the other shops, and the department has been drawing down reserves as a result.

“This is a clear track into the dirt, and without substantial retooling, it’ll be in the hole,” Assemblyman David Bobzien, D-Reno, said.

Bobzien and Assemblyman Michael Sprinkle, D-Sparks, tried to wrangle an answer from Cox about which programs would be cut and what the department would do to get its industry program on a sustainable track.

Cox said he’s “very pessimistic” about future revenues and that “when resources go, of course programs will go.”

He cited the auto shop, the biggest money loser, as one program that could be under the chopping block.

Cox faced further criticism for the prison industry’s public-private partnership with Alpine Steel, which owes the state about $400,000.

The company also got a below-market rate lease to operate within High Desert State Prison, which Bobzien called an unfair subsidy.

The challenge of convincing a business to work within a prison environment necessitated the need for a cheap rate, said Nevada Department of Corrections Public Information Officer Brian Connett. (note: there’s a whole lot of conflict-of-interest here).

Danny Thompson, of the AFL-CIO, also protested Alpine Steel’s use of cheap prison labor.

“They’re displacing people who are out of work with prisoners,” he said. “There’s no way you can compete. … I have 300 out-of-work ironworkers who are not criminals.”

He said Alpine Steel produced steel girders for a construction project at the North Fifth Street Bridge in North Las Vegas.

Calling into question the quality of prison labor, he said the potential lack of certification and training for prison laborers could lead to unsafe construction on a public road over Interstate 15.

The company’s owner, Randy Bulloch, testified to legislators that his company did no work on girders for that project and that the prison laborers have required certifications.

Cox also said Alpine Steel is on a payback program and is no longer operating within the state’s prison system, although that could change in the future.

and now for Bob’s comment posted to the Las Vegas Sun’s article:

  1. By bobsloan

March 8, 2013 8:32 p.m. Director Cox seemed to be at a loss for solutions to the many problems surrounding his prison industries – and on how to damper the criticisms aimed at him because of the industry program. Some obvious solutions that could have been suggested to the legislature today never came up in the responses the NDOC Director and his Deputy provided to pertinent questions. They could have suggested ways to stop the industries from losing money, such as enforcing collection of lease payments, owed salaries for staff.

Reevaluate all facility leases private companies enjoy with prison industries and increase them comparable to similar leases in the private sector – you know at the rate all other Nevada businesses pay for manufacturing space. They could have suggested not extending credit (tax dollars) to companies partnering with the prison industries. The decision on reducing lease rates to private companies on publicly owned property or facilities should not be a decision made by a Deputy Director, rather one made by the Board of Prison Commissioners.

Taxpayers rely upon Director Cox to protect their interests. Entering into leases that cost those taxpayers as much as $90,000 per year in potential income does not generate trust – or a lessening in deficits. To use such low cost leases as an “incentive” to encourage companies to bring manufacturing to the prison industries is an expenditure that should be authorized at a higher pay grade. It was disheartening to learn that after owing the state more than $400,000 for four years the company in question was offered an agreement to repay the money over an additional four year+ period without even interest penalties. Director Cox added insult to injury by declaring that if Alpine Steel’s work picked up he would reopen the prison industry to him.

That statement alone left the impression the Director was willing to move forward with a partnership that has already cost the state nearly a half million dollars – and let that company amass more debt as if the NDOC can extend state subsidies in the face of legislative objections or concerns.