Correctional Commerce

Giles Spaulding, director of Colorado Correctional Industries, has been with the organization for about 14 years. Originally a research manager for ten years, Spaulding became the marketing director and has been the director two-and-a-half years. He is responsible for overseeing Colorado’s $44 million correctional industries, which is involved in everything from furniture construction to vineyard management to fish farming. The organization’s Web site is: www.cijvp.com.

Joe De Patta: Can you give us a little background on the industry?

Giles Spaulding: Colorado Correctional Industries goes back to 1976. It was created by a legislative initiative, and we are a division of the DOC. When the industry was put in place a number of statutes were created that gave us statutory authority to manufacture certain items like office furniture, license plates, and highway signs. We also did printing and we had a dairy-actually, the dairy was in place before we were created as a division. It’s one of the oldest dairy herds in the state of Colorado, and goes back to the early 1920s.

Our sales are roughly around $44 million a year and that incorporates all the different sectors such as agribusiness, services, manufacturing, and canteen.

JD: You said, “People don’t realize we exist.” Can you explain what you mean by that?

GS: Most people have no idea that Correctional Industries is in the business of putting inmates to work manufacturing and servicing products. Also, the products and services are for the benefit of the state. Our sales figures are in the top ten of the country.

JD: How many inmates are employed by Correctional Industries?

GS: Right now we have around 1,400 inmates working and about 18,000 inmates incarcerated.

JD: What is your staff to inmate ratio?

GS: Our staffing varies, but on average it runs anywhere from 1 to 15 and in some places it goes up to 1 to 25.

JD: What are some of the benefits to the inmates?

GS: They are able to get out of their cells and learn marketable skills. It reduces idleness on their part and they earn money. We provide nothing to inmates outside of their cell-they have to buy their own canteen items for instance. Our program gives them an opportunity to earn money to pay for those things.

JD: How do you know what to stock, manufacture, and sell?

GS: Take office furniture, for example. We’ve had years and years of experience to collect sales data and we track sales by item. We have a tracking mechanism in place that gives us a good idea of how many chairs we may need, how many desks, etcetera.

Another thing is that we will build to order. If we receive an order for a desk, we will have that thing manufactured from scratch and to the customer within three to four weeks.

JD: What is your market? Who are your customers?

GS: Our biggest market is the state of Colorado. That includes office furniture such as seating, panel systems, and case good products. We do a lot of the state’s printing. Our metal products division makes products for the state, plus we have a few joint ventures. Our license plate manufacturing division sells their products to the Department of Revenue. We have a garment factory that makes garments and bedding material that goes to the Department of Corrections. The inmates manufacture their own clothing. Special services include a fire fighting program and a center for distributing items from our print shop.

JD: Tell us about the agricultural part of your industry.

GS: Agriculture is one of our largest divisions, and incorporated into that is our dairy herd and our milking, processing, and packaging procedures. We ship the milk all over the state. The inmates drink that milk and the excess goes to the Dairy Association here in Colorado. We also have a huge greenhouse where we produce bedding plants, cut flowers, and vegetable sets. We have a farm that grows fruits and vegetables. Three years ago we put in a vineyard for grape production. A local vineyard buys our grapes and produces wine from them.

JD: The inmates tend the vineyard?

GS: They prune all the grapes. We raise 27 acres of grapes and our first crop was harvested last fall and was sold to the Holy Cross winery in Canyon City. They have their own winery and they use grapes from our vineyards.

JD: When working in so many different divisions, where does the know-how come from? How is it you’re able to succeed in these myriad ventures?

GS: Most of our employees have been hired from the outside. We recruit and solicit people who have worked in the private sector. Those people were brought in and trained in security consciousness. If we need someone in the garment factory, we go to the private sector and recruit someone who’s had previous experience manufacturing garments.

JD: Your role is putting together ventures that put inmates to work. What types of ventures are you looking at? What deals do you pursue?

GS: Let me tell you about one we just started. It’s one of our fastest growing ones. About a year ago we took the old piggery processing facility and converted it into a fishery. We have more than 100,000 American Tilapia (a flaky, pinkish-white fish) in this area. They were brought in at about a quarter of an inch in size and they now weigh about a pound and a half each. They are being sold through a distributor network as far away as New York to natural food chains. Our products are all natural-there are no hormone injections. We also have a facility that started about two weeks ago where we actually process and filet the fish and sell them to restaurants and other outlets as far away as the UK.

JD: You are a for-profit venture, then?

GS: Yes. We are a quasi-state agency. We are all state employees, under the DOC, but we are totally cash funded. We don’t get any tax dollars at all. We can spend as much money as we want, we just have to earn it first, like any other business. Our employees’ motivation is obvious. The money we generate pays our salaries. We also pay all of our own utilities.

JD: How do you identify new markets?

GS: We have a research and marketing division headed up by one of our staff. They are continuously sending out feelers; we go to the trade shows, the ACA conference, and the NCIA conference. We are looking for joint venture products almost on a daily basis.

JD: What are some of the deals you have put together?

GS: We manufacture saddles for a company out of Denver called Colorado Saddlery. The company was looking to move that product category out of state to Mexico, and we set that program up as a Prison Industries Enhancement Program where we pay the inmates prevailing wages, and most of that money comes back to the division in costs of incarceration, court-ordered child support, and mandatory savings. We have about 45 to 50 inmates working in that program and we produce about $ 1.5 million worth of saddles a year.

JD: Are there any areas in which you’ve tried to operate a business that didn’t work out?

GS: Recently, when the economy took a downturn about two years ago, we were manufacturing computers and computer components. We were selling primarily to the state and Colorado didn’t have any additional money to spend on computers. We had about twelve inmates working there and we’ve had to close down that division.

JD: Is the tough economy affecting your sales?

GS: Our sales are actually down but we’re operating in the black. We’ve done things like reassign staff and close down unprofitable areas and we’ve been able to stay afloat. Our trend, I think, is beginning an upswing. Some of our factories that were down in sales last year are actually up so far this year. Our garment factory sales are up. We have more areas where the sales are up this year.

JD: How competitively do you run your business?

GS: We are like any other business. We have to sell at competitive prices. If we don’t, state agencies that would buy our products can ask for a waiver and buy their products somewhere else. We do research to determine our prices and manage those prices so they continue to be competitive.

JD: Why such an extensive enterprise? Is there that big of a return for the state of Colorado?

GS: We feel that, on average, Correctional Industries in the state of Colorado saves taxpayers anywhere from $5,000 to $6,000 per inmate who is employed by us. That works out to $6.5 million annually. We calculate those figures by factoring in how much it would cost the state to put inmates into programs if they weren’t working for us. The state would have to provide vocational education, among other things, and those programs need full-time state employees who are funded by tax dollars.

JD: What type of performance is expected of you and what are you expected to contribute to the Colorado DOC? What kind of performance do you expect of your department?

GS: Our basic request, from the department, is to put as many inmates to work as possible. That reduces their inmate pay; as the budget tightens up in Colorado, they ask Correctional Industries to put more programs in place and expand the base of inmate employment.

We have a business plan that we put together at the beginning of every year. As part of that plan we talk about the total dollars in sales, the costs of raw material, etcetera. We manage that closely. We have an inmate pay line and a personal services line. We are just like any other business-at the end of the year we have to make a profit. Our profits are reinvested into additional products and/or equipment to expand our base.

JD: Are you noticing any trends or commonalities between what’s being sold or asked for?

GS: We see ourselves shifting more towards agribusiness products and service related products. There hasn’t been as big a need for our office furniture, for instance.

JD: For other states or corrections departments interested in pursuing similar ventures, what advice do you have?

GS: We have a number of states that call us on a regular basis asking about product categories and services that we offer. We’ve had correctional departments call us about the fishery program. We meet with these people on a regular basis. The Western Correctional Industries Association is made up of about 17 states. We met in November and we talk about products and services that we offer. We find out from each other what areas we can expand into.

JD: Do you have any final comments?

GS: There have been studies done that show that whenever you put inmates in programs where they work in correctional industries, the recidivism rate is reduced as a result of that. I want to also note that we are one of the only states whose correctional industries program is ACA accredited. Those standards mean a lot. I appreciate the opportunity to put inmates to work and give them the opportunity to learn a valuable skill.