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Senator McConnell's Message to Unicor: Back Off

When one of the most powerful United States Senators makes a suggestion, even a federal bureaucracy takes notice. Kurt Wilson, an executive with American Apparel, Inc., an Alabama company that makes military uniforms, and Michael Marsh of Kentucky-based Ashland Sales and Service found that out recently when it was learned Unicor, the Bureau of Prison's prison labor employer, was considering bidding on business that they already had. A public statement from Senator McConnell served to get Unicor to change its mind.

Like many other initiatives of the federal government and the Bureau of Prisons (BOP), this one started off as well-intentioned. Prisoners earning as little as 23 cents an hour are trained to work in factories supervised by BOP staff, where they can learn skills that will help them reenter society and avoid returning to prison. However, clearly Unicor has grown to be not only a job training program, but a domestic manufacturing behemoth that employs 13,000 prisoners and made over $900 million in revenue last year. With that kind of size, purchasing power, and cheap labor, it is almost impossible for small business to compete. This has made many business owners like Wilson and Marsh angry.

American Apparel has to compete head-to-head with Unicor on almost all of its contracts with the government, and says the unfair competition has forced him to lay off 150 people over the years. Wilson said, "We pay employees $9 on average. They get full medical insurance, 401(k) plans and paid vacation. Yet we're competing against a federal program that doesn't pay any of that."

Ashland Sales and Service of the small Kentucky town of Olive Hill, has been making windbreakers for the United States Air Force for 14 years, according to Marsh, putting 100 jobs at the largest employer at risk. "That's 100 people buying groceries. We use trucking companies in the town, buy parts and light bulbs there every day. That's all lost when prisons take away contracts."

Unicor, also known as Federal Prison Industries, started off as a job training concern that manufactured clothing, furniture, mattresses, and other supplies such as cups and bowls for the BOP. It now has 83 factories around the country and has gone far afield from just supplying prisons and prisoner needs. It now manufactures goods in seven industries, with clothing being its number one product. Additionally, many prison commissary workers are also classified as Unicor employees and hold positions inside the prison that would not be suitable for private employees to hold.

The latter jobs are not now being called into question, but many of the other business practices of Unicor are. Legislation in the past gave Unicor an advantage in obtaining various Pentagon contracts, but that law was amended by Congress in 2008 to limit that condition. A bill pending in the House of Representatives supported by 28 lawmakers from both parties would also require Unicor to compete across the board, driven by nationwide unemployment exceeding 8%. Kurt Courtney, director of governmental relations at the American Apparel and Footwear Association, states that Unicor is "a federal program (that is) tanking our industry...The only way for workers to get jobs back is to go to prison. There's got to be a better way to do this."

U.S. Representative Bill Huizenga, a Michigan Republican and sponsor of the bill, said, "We know that in the recovery, many new jobs are coming out of small businesses, and it makes no sense to strangle them in the cradle."

Observers of the American prison system can only agree. The 40,000 federal prisoners in private facilities run by companies like Corrections Corporation of America, as well as Immigration Detention Centers run by the Department of Homeland Security, are not Unicor customers. Most of the supplies and clothing used by these facilities is purchased from China and other overseas concerns, without regard for American manufacturing concerns. It is also hard to conceive that any government-operated manufacturing concern could compete on quality with a private concern, but where all of your customers are prisoners, where else can they go to purchase their undershirts, underwear, and socks? Only the wages of Unicor, which tops out at $1.15 an hour, makes Unicor competitive.

The other fact is that the face of American manufacturing has changed in recent decades. Unicor does not use state of the art manufacturing techniques because it doesn't have to and has no motivation to do so in any event. If the true goal of Unicor was to train prisoners for jobs in private industry after release, they would instead find them jobs in charities, religious organizations, local governments or school districts, or bring in private contractors and educators from private institutions who are conversant in state-of-the-art techniques. Under the current environment in the BOP, this is unlikely to occur, but it is just this idea that the new Congressional bill seeks to promote.

As to quality, when Unicor steps outside of its comfort zone and attempts to compete in areas other than prisoner goods and services, it often falls flat. Even though it landed a federal contract to supply helmets for the American military based upon a preferential bidding process, most of the helmets were rejected by the military because of inferior quality, and instead were sold to Pakistan.

Although the BOP cites statistics claiming to show that Unicor employees are less likely to reoffered upon release, private industry associations are not buying it. John Palatiello, president of the Business Coalition for Fair Competition, said his organization of businesses and taxpayer groups is sympathetic to the BOP's stated goals, but that they should not be accomplished at the expense of American small business.

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