TALLAHASSEE, Fla.—For nearly 30 years, PRIDE Enterprises Inc. has help-ed rehabilitate Florida prison inmates by teaching them useful skills including tire retreading.
Some Florida retreaders, however, accuse the independent, nonprofit corporation chartered by the State of Florida of undercutting their prices and stealing their business.
“I've been fighting this pretty hard with every congressman and senator who represents my district,” said Steve Wade, vice president of Day & Night Tire Service Inc. in Lakeland, Fla.
“What they do with their pricing hurts us,” said Wade, whose son Matt is company president, and whose late father, Chester Wade, founded Day & Night Tire in 1966.
“Our customers do some business with us and some with PRIDE, but what PRIDE does prevents us from raising prices to where they should be, or else PRIDE could take all our business,” Wade said. “I have nothing against PRIDE as a training program for prisoners, but you don't need to make 200 to 300 retreads a day to do that.”
Wade is the only one of several Florida retreaders contacted willing to go on the record. The others, fearing possible loss of state business, asked to remain anonymous.
“This has been an ongoing thing for 25 years at least,” one of those retreaders said. “Their wages aren't anything close to ours. They don't have to pay for things such as rent or electricity, and they didn't put up any new buildings.”
He insisted the quality of his retreads is better than PRIDE's, but that meant nothing in competitive bidding. “Their retreads are half the price of ours initially, and people in administrative positions don't always look at the cost per mile.”
Worst of all in the retreaders' opinions, the state government so far has not seen PRIDE's business as a threat to independent retreaders. Two years ago, a group of retreaders contacted the administration of then-Gov. Charlie Crist protesting what they said was unfair com- petition from PRIDE.
“The statutes pretty much say that if PRIDE goes beyond the government sector in selling products, it's supposed to have the governor's OK,” Wade said. “Crist said that only 2 or 3 percent of the retreads in Florida were being made by PRIDE, so he didn't see how it could have an unfair advantage.”
The response from the administration of new Gov. Rick Scott has so far not been much different, according to Wade. He said he had a telephone conversation June 1 with John Konkus, chief of staff to Lt. Gov. Jennifer Carroll.
“He said PRIDE had only bid on six contracts in the past year, and only won one,” Wade said. “I told him there are very few contracts on this end of the retreading business. It's the individual customers and wholesale accounts they go to. They are not supposed to sell to anybody without going through the bidding process.”
Wade said Konkus—who couldn't be reached for comment—promised to monitor the issue.
PRIDE Enterprises Inc.—its acronym standing for Prison Rehabilitative Industries and Diversified Enterprises—was born Dec. 14, 1981. A new law transferred administrative and operational control of Florida's prison industries to PRIDE from the Florida Department of Corrections.
“PRIDE was created during a period of nationwide financial and management problems in the correctional industries,” PRIDE said on its website. In Florida in the 1970s, such industries lost money and had to be subsidized by the state.
Led by Jack Eckerd, then-president and CEO of Eckerd Drug Corp., and two associates, an effort to change the situation resulted in the change in the law that created PRIDE.
Florida was the first state to transfer its correctional industry program to the private sector, according to PRIDE. Earnings from the program benefit the inmate workers, Florida taxpayers and the state government, not the corporation itself.
PRIDE's manufacturing activities encompass an enormous range of products and services, including office and park furniture, cleaning supplies, boxes, paints, apparel, optics, dental supplies, digital services and custom vehicles.
PRIDE assumed retreading operations from the Department of Corrections in 1983, according to Dee Kiminki, PRIDE's chief administrative officer. Although the number of retreads PRIDE makes annually is proprietary, retreads constitute about 7 percent of the corporation's annual revenues, Kiminki said.
PRIDE's retreading plant is located in the Avon Park Correctional Institution, eight miles from the town of Avon Park, according to Kiminki. Since 2005, 83 workers have been released from prison while working at the retread operation, she said.
“Ten percent of them were placed directly with employers in the tire industry,” she said.
“Most of the remaining participants were placed with employers in other industries. The employment placement rate for program participants, prior to the beginning of the recession in 2008, was 90 percent. Since the recession, the placement rate has declined significantly, reflecting Florida's high unemployment rate.”
The main question in the current controversy is whether PRIDE's charter allows it to sell its products to private and out-of-state customers as well as the Florida state government sector. Kiminki said it does, but PRIDE only sells about 4 percent of its retreads that way.
“PRIDE sells approximately 96 percent of its retreads to Florida customers or to export customers. The majority of its sales are to government entities,” she said.
At the request of Wade and other retreaders, Florida State Rep. Seth McKeel, R-Lakeland, asked then-Florida Attorney General Bill McCollum in March 2009 if PRIDE was allowed to compete in the private sector.
“While I strongly believe in PRIDE's corporate mission to equip inmate workers to become productive citizens upon release from incarceration, my specific concern is promoting a competitive business climate and creating jobs for Florida's citizens,” Rep. McKeel wrote.
Gerry Hammond, Florida senior assistant attorney general, responded a month later that PRIDE could sell goods to the private sector or foreign customers “if it is operating its traditional prison industries pursuant to state and federal law.”
Hammond added that the legislature also “expressed its concern that any such program should not result in the significant displacement of employed workers in the community.”
Rep. McKeel continues to have concerns.
“I believe that PRIDE and independently own-ed tire retreaders should compete on a level playing field and that the system should not favor one over the other by undercutting prices or by any other means,” he said.
Kiminki said PRIDE's retread operations have not caused any significant job displacement among Florida retreaders.
“PRIDE's prices are competitive,” she said. “They are certainly not always the lowest.” Historically PRIDE wins approximately 30 percent of its bids.
“PRIDE also conducts market price surveys, which reflect that its prices are within the price range of competitors,” she said. “If there has been displacement of retread workers, the most likely cause would be the recession.”
Still, Florida retreaders insist PRIDE regularly undercuts them in pricing, because of the low wages paid to prison workers and other cost advantages.
“My business is very blessed,” Wade said. “We're doing 150 truck tires and over 200 light truck tires a day, and we're looking to move into a bigger building. But at the same time we could do more, and I know there are other retreaders who have been hurt bad by PRIDE.”
Roy Littlefield, executive vice president of the Tire Industry Association, said he considers competition from PRIDE Enterprises one of the major state issues TIA faces.
“It's important for government to rehabilitate prisoners,” Littlefield said. “But it's wrong that these tires are even sold to the public. It's one thing to learn a trade, but it's another thing to have a government-subsidized program competing against independent business.”