As president and CEO of PRIDE Enterprises, she oversees a group of employees who lack experience, work ethic and basic social skills. All her workers have criminal records, and she can't be picky about whom she hires. The acronym PRIDE stands for Prison Rehabilitative Industries & Diversified Enterprises Inc. It's a private, non-profit corporation that operates outside state government - the only one of its kind in the country. PRIDE trains and employs about 4,300 inmates in 56 industries across the state, ranging from farming and eyeglass manufacturing to car and truck renovations and printing.
Until recently, state and federal prison labor laws have restricted what PRIDE can produce and to whom it may sell - essentially, only to government agencies or their contract vendors. Yet despite operating a crazy quilt of businesses with a non-traditional work force and restricted markets, PRIDE has nevertheless gained a nationwide reputation for its unique, cutting-edge approach - and strong financial performance.
Last year, however, marked a turning point: After a $3.3 million profit (4% of sales) in 1995, PRIDE went $470,000 into the red in 1996. Revenues fell by nearly $12 million to $72.9 million, and the number of inmate-hours worked also dropped by 10%.
In many states, PRIDE's half-million dollar loss wouldn't raise eyebrows - most prison industry programs aim to keep inmates busy and out of trouble, not make money. PRIDE, however, is accustomed to both financial and social success. Out of PRIDE's annual net income, 86% is plowed back into inmate industrial job training and post-release job placement and transition support. Fifteen cents out of every dollar earned by inmates is contributed into a state fund that provides restitution to crime victims - the total last year was $243,000. Even the Department of Corrections receives a cut of the take, which amounted to $726,500 in 1996.
As a whole, PRIDE calculates that it contributes some $40 million annually to the state economy through its staff payroll of about 400 and through purchases of goods and services from around 3,500 Florida-based companies. Just as important is PRIDE's impact on prisoners after they're released. A 1994 PRIDE study found that only 12.6% of ex-cons who worked six months or more for PRIDE were back in prison within a two-year period. Florida's overall recidivism rate is about 50%, with rates in other states ranging from 25% to 75%. Studies in New York and Minnesota found that a job in the slammer had virtually no effect on whether prisoners in those states would return to crime after being released.
New realities
Other states have taken notice. When California wanted to revamp its own troubled prison industry authority last year, legislative analysts recommended modeling the new entity after PRIDE. "Florida's program," observes Dominic Calabro, who closely monitors PRIDE's progress as president and CEO of Florida TaxWatch, "is probably one of the best in the country."
Despite its winning image, PRIDE's 1996 financial results were a signal to the company's leaders that they had to contend with new political and fiscal realities. Since PRIDE gets most of its revenue from sales to government agencies, the downward trend in government spending in 1996 hit the company hard. Failed attempts at diversification, such as a Panhandle catfish farm, and investments in new industries have taken a further toll on the bottom line. "Based on our lack of (recent) growth, we've realized we've done as much as we can do," says Davis.
An energetic, politically savvy saleswoman with a Ph.D. in business operations management from the University of Miami, Davis is a hard-nosed state government veteran whose private sector experience includes a stint as a market development manager for Motorola. She's held PRIDE's $146,000 top spot since 1990 and doesn't see PRIDE's future in making dentures, textiles and government-issue furniture. Instead, she believes, PRIDE has to market the asset it has that nearly everyone else wants: an abundant source of low-cost American labor.
"The state prison system is growing faster than we can create jobs," Davis explains. "We can't go much further than what we're doing unless we reach out with these new relationships."
Davis' premise is that private employers can put PRIDE's captive work force to work for them. The deal? PRIDE offers a workspace and job-training dollars. In return, inmates get job opportunities and PRIDE can wean itself from relying so heavily on sales to government agencies.
In building the partnerships Davis envisions, PRIDE will rely on the federally sanctioned Prison Industries Enhancement program. PIE eases interstate commerce restrictions on joint private-public prison manufacturing ventures as long as prevailing wages are paid to inmates and local industries are unaffected. According to the guidelines, up to 80% of inmates' wages can be allocated toward the cost of their incarceration, to a crime victims restitution fund, for child support, taxes on earnings and other court-ordered fines.
Some states already have such arrangements; in Connecticut, convicts make baseball caps for sale on the open market, and in South Carolina, inmates sew graduation gowns and assemble wire harnesses for electronic cables. Polk Correctional Institution in Polk City is the site of PRIDE's first such joint venture. There, in a corner of the prison's metalworking plant, inmates assemble steel tubing and box components for a build-it-yourself dog kennel. The kennels are only a small product line for Reeves Southeastern Corp., a Tampa-based manufacturer of fencing and perimeter security products.
Reeves figures it costs about as much for PRIDE to do the work as it did for Reeves to do it. But cost wasn't the issue, says President Mike Augello. "For us, getting the labor force was the problem," he says. "We were using temps primarily and other workers on overtime."
Aside from the economic equation, Augello notes, there is an incalculable social value to the deal. Both Reeves Southeastern and taxpayers are already reaping rewards - the company recently hired a PRIDE alumnus. "To us, the social aspect is important," he says. "However, there was a commercial need and an opportunity. We didn't explore this just to give them something to do."
For Geonex, a St. Petersburg-based high-tech mapping company that recently emerged from Chapter 11 bankruptcy, PRIDE supplied something more than just warm bodies and fuzzy feelings - it offered the low-cost work force required for a large-scale, labor-intensive map project that converts topographic details from maps into digitized form. Unlike the Reeves Southeastern venture, the deal with Geonex is not a PIE program. Since the mapping project involves inmate services rather than goods, different federal guidelines are in effect. For example, inmates don't have to be paid the prevailing wage. For cost-conscious Geonex, the deal hinged on that distinction. No other American company could match PRIDE's bid, which was competitive with offshore contractors, according to President and CEO Ken Mellem. In the beginning, Mellem had reservations about PRIDE's ability to do quality work and meet deadlines. The international firm that commissioned the sensitive job was worried about security. But upon reflection, Mellem realized that offshore labor raised exactly the same issues of quality and security. With PRIDE, a nearby location and familiar language would facilitate any troubleshooting. And if the project expands beyond the expected 50 to 70 workers, there is always a ready source of additional labor.
As for the security issue, Mellem quickly realized there are advantages to a workplace replete with razor-ribbon, metal detectors and armed guards. "After we went through the arrangement with our client," he explains, "they figured it probably couldn't get any more secure. Nothing can leave the room."
Detractors
To Davis' supremely confident way of thinking, the Geonex contract is a harbinger of things to come, and with several other deals in the pipeline, she may be right. But even for a relentless proselytizer like Davis, selling the private sector on prison labor will take some effort; PRIDE has its detractors. Small businesses such as printing shops and furniture manufacturers say PRIDE's low wage scale - 50 cents an hour at the most - puts them at a competitive disadvantage. Organized labor frets that prison work initiatives could lead to a loss of jobs for union members. Political opponents have long contended, with some justification, that PRIDE is too zealous in pursuing profits and not diligent enough in creating actual jobs. And over the years, PRIDE and the Department of Corrections - one of its main customers - have bickered over the prices PRIDE charges for its products and also over inmate work assignments. PRIDE's defenders counter that the company does pretty well with what it has to work with. The corrections department often cherrypicks the most cooperative and productive inmates for its own uses. PRIDE is unable to run a second shift because of prison regulations. In addition to the obvious security issues, there are personnel problems linked to turnover, prison rules that can lead to random downtime and distribution concerns raised by remote prison industry locations. The prisoners who are assigned to PRIDE also must be taught how to meet private sector productivity and quality standards.
It's difficult to maintain that those factors amount to hallmarks of a competitive tiger, notes Hillsborough County purchasing director Ted Grable, a longtime PRIDE customer: "I'd like to see the employer who would take a work force of incarcerated individuals who don't exactly begin with the work ethic or the skills."
For her part, Davis is convinced that new partnerships and profitability are both within reach. "Our story best sells when I explain to private sector people what's in it for them," she says.