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State of WashingtonDepartment of CorrectionsCorrectional Industries2007-2009 Business Plan

Correctional Industries2007-2009 Business PlanEXECUTIVE SUMMARYAs a major entity within the Department of Corrections, it is the mission of Correctional Industries to providemarketable job skills and job training to offenders who are incarcerated in our state correctional facilities. Alloffenders will need a legitimate means to support themselves and their families after release. CorrectionalIndustries work program is an important component in the process of preparing an offender for a successfulreentry. Opportunity is provided to offenders who want to take an active role in changing their behavior thatled them to incarceration. Correctional Industries programs help reduce the cost of government, reducerecidivism, and in turn createsfewer victims.Correctional Industries job experience, in conjunction with education and vocational training programs is arecipe for success. Collectively, these programs must expand and work more closely together. The educationand work experience gained through Correctional Industries are essential in protecting lives—civilian staff andoffenders, preserving stability, and saving money for our state prisons.Ninety-seven percent of all incarcerated offenders eventually return to our communities. A report published bythe University of Washington found that 50% of offenders were unemployed prior to incarceration. Research bythe Washington Institute for Public Policy shows Correctional Industries programs work. Correctional Industriesworks directly with offenders but the primary beneficiary is the community.The challenge for Correctional Industries is to remain financially self-sufficient while providing enough workfor an increasing number of offenders. The Washington offender population is projected to increase by 1,000over the next three fiscal years, and it is projected to continue growing in the foreseeable future. CorrectionalIndustries needs to increase offenders jobs in order to provide as many offenders with job training as possible.Legislation requires Correctional Industries to operate in a real-business world environment. Sales equaloffender jobs. Correctional Industries must increase sales effort while ensuring that the impact on Labor andbusiness is minimal.Policy makers have long recognized that increasing the number of incarcerated individuals means increasing thenumber of prisons and, in turn, increasing the size of Correctional Industries which contributes to improving themanagement of our prisons. As Correctional Industries steps into the future to fulfill its goal, continued supportof the Department and policy makers will pay important dividends for the citizens of Washington State. In order to replace lost Class I offender jobs and to meet the offender job targets set in RCW 72.09.111,funding will be required to manage department institutional laundries statewide, an increase of 1 millionbiennial for the Department of Corrections operating appropriation, and To maintain existing operations, Correctional Industries must begin replacing obsolete equipmentsystematically, investing approximately 8 million, over the next four years to ensure offender job targetsare met.

Correctional Industries2007-2009 Business PlanINTRODUCTIONBy statute, Correctional Industries models its marketing and customer service principles from the private sectorby providing the value chain: quality products, priced right, delivered on time. Correctional Industries hascontinued to streamline its operations in order to succeed even during a period when the stare government iscutting budgets. Correctional Industries has doubled its sales to 50 million in the last six years and currentlyoperates thirty-four separate businesses throughout Washington State within thirteen institutions.BREAKING THE CYCLE OF RECIDIVISMWashington State’s prison population began to climb in the 1990’s due to changes in law reflecting the publicsincreasing concern with crime. Costs will continue to increase, as new prisons are required. In addition torising costs, the justice system is faced with the number of repeat offenders. Approximately one third of allreleased offenders will commit a new crime or violate the conditions of their release within five years andreturn to the correctional system.A report conducted University of Washington found that 50% of offenders were unemployed prior toincarceration. Nationwide studies indicate that offenders who participate in work programs are less likelyto recidivate. With acquired job training and work ethics gained through Correctional Industries, releasedoffenders have a greater chance of being gainfully employed and succeeding after release.PAYING THEIR WAYClass II work-training programs offer multiple public benefits by holding offenders accountable through payrolldeductions including: Crime victims compensation Legal financial obligations Family support Court costs Child support Costs of incarceration Court-ordered restitution Mandatory savingsGOOD BUSINESS, GOOD GOVERNMENTAccording to the Washington Institute for Public Policy study published in January 2005, every 1.00 of statedollars invested in the Correctional Industries Program, an overall net gain of 6.65 is achieved throughreduction in crime victims and criminal justice costs.Correctional Industries customers play an important role in this process. Sales of goods and services providedby Correctional Industries create offender jobs, in turn, lowering the cost of the criminal justice system.Correctional Industries is good public policy.

Correctional Industries2007-2009 Business PlanCLASS II OPERATING BUSINESS PLANBUSINESS MISSIONCorrectional Industries is a program within the Department of Corrections. RCW’s 9.96A.010 and 72.09.010established the legislative intent and RCW 72.09.100 provides the authority to create and operate variousclasses of offender work programs. The Legislature’s intention is for the program to reduce recidivism byproviding offenders with job skills, job training, and an improved positive work ethic prior to their releasewhile saving taxpayers money through production of goods and services.BUSINESS DESCRIPTIONWhat the Business Does and the Nature of the BusinessCorrectional Industries has been in existence since 1981. Some of our shops, like license plates, have beenoperating since 1926. Class II industries are state-owned and operated enterprises designed to reduce thecost of goods and services for tax-supported agencies and nonprofit organizations. Correctional Industries is aconglomerate, operating 34 businesses in 13 institutions providing 1,570 offender jobs in the program. A briefdescription of each shop is in Appendix A.Correctional Industries combines manufacturing operations, job shop for custom products, and pass-throughgoods and services. Correctional Industries purchases raw materials, applies offender and civilian labor,to produce goods and services to meet our customers specifications and expectations. Goods and servicesinclude:Production OperationsService Businesses Office Furniture Computer Assisted Design K-12 Furniture Furniture Installation Food Products Meat Cutting Optical Transportation Printing Warehousing Bindery Products Asbestos Abatement Embroidery Office Administration Upholstery Recycling Garments Composting Signage Laundry License Plates and Tabs Furniture Restoration Trades Related ApprenticeshipCoaching Metal FabricationMARKETING PLANMarket Niche or Competitive AdvantageRCW 43.19.534 requires state agencies to purchase goods and services from by Correctional Industries.The focus of Correctional Industries is to train offenders in meaningful work programs, expand trainingopportunities to more offenders, and save tax-supported governmental agencies and nonprofit organizationsmoney, rather than make a profit. Correctional Industries offers our customers tax savings while providinggoods and services that equal or exceed quality found in the private sector. The challenge is to deliver theselower priced goods and services within 7 to 21 working days.

Correctional Industries2007-2009 Business PlanManner Products and Services Are ProvidedCorrectional Industries uses the latest processes found in private industry, such as ISO 9000 quality control andthe value chain (quality, product, price, delivery, and warranty). Correctional Industries must balance theneed for automation to produce consistent products with the need to expand offender jobs, which potentiallyare lost to automation.Adult offenders in Washington State prisons produce many of the products offered by Correctional Industries.Correctional Industries purchases many of the raw materials needed to produce goods and services fromWashington suppliers, 34 million annually. Correctional Industries has several warehouses located throughoutthe state, to include a centralized warehouse in Tumwater.Correctional Industries owns and operate its own transportation unit, which delivers products throughout theState of Washington. Correctional Industries operates and manages its own installation and service crewsfor furniture products. Correctional Industries operates and manages a centralized customer service unitin Shelton which supports non-perishable products statewide and a separate centralized customer servicedepartment in Airway Heights for food products.Other Organizations Attempting to Meet the Same Market NeedCorrectional Industries competes with private sector businesses and state-operated proprietary enterprises,such as the State Printers and Central Stores. The challenge is to sell goods and services at reduced costs, haveminimal impact of Washington business and Labor, and meet customer demands for delivery, usually 7 to 21working days.Target Market and Customer CharacteristicsCorrections Industries products and services are marketed to tax-supported agencies and nonprofitorganizations. Recent changes in the law have expanded markets: Chapter 167, Laws of 2004 set contract mandates for higher education providers to purchase 1% of theirtotal goods and services from Correctional Industries by June 30, 2006, 2% by June 30, 2008; and Chapter 346, Laws of 2005 expanded Correctional Industries markets to include offenders, offenderfamilies, Department of Correction’s employees and immediate family members, and encourages K-12education providers to set a purchasing goal of 1% of their total goods and services from CorrectionalIndustries.Correctional Industries produces an annual marketing plan with the intention of identifying customer profilesand key changes in the market place for the purpose of expanding offender training programsAn annual market share report by product group is prepared and submitted to the Correctional Industries Boardof Directors. The fiscal year 2005 Class II market share averages only 0.07% based upon Correctional Industriestotal sales and sales data provided by the Washington State Department of Revenue.

Correctional Industries2007-2009 Business PlanThe following table shows Class II sales by customer type for fiscal year 2005:Class II Sales by Customer Type - FY 200560%51%50%40%34%30%20%12%10%3%0%State AgenciesDOCOther GovernmentNon-Profit &Private ContractorsSource: Correctional Industries Accounting DepartmentMarketing Strategy and Changes in Market TrendsThe Correctional Industries marketing strategy includes educating customers about product and services,emphasizing the public benefits to providing offenders with job skills and job training opportunities.Correctional Industries utilizes direct selling with account executives, web-based advertising and ordering,direct mailing, partnering with building design professionals, and working directly with agency purchasingmanagers.Recently, Correctional Industries received authorization to accept orders using purchasing cards from highereducation partners. The Correctional Industries web site will have the ability for online ordering using thesecards, and will begin accepting purchasing card orders May 2006.The market conditions suggest more demand for online ordering in the future.Key Benefits and Features of Products and ServicesCorrectional Industries products and services follow the value chain: high quality, product, price, delivery, andwarranty. In addition to the value chain, there are social and public benefits to ordering products and servicesfrom Correctional Industries. Deductions from offender gratuities for crime victims, cost of incarceration,family support, and court-ordered legal financial obligations hold offenders accountable. Further benefits areachieved in the reduction of recidivism, reduced court costs, and fewer victims of crime.

Correctional Industries2007-2009 Business PlanWashington State ContractsCorrectional Industries holds several state contracts to include:14393Furniture Contract for office, dormitory, and miscellaneousfurniture10103Umbrella Contract for validation tabs, signage, garments,engraving, printing, emergency products, embroidery, food,binders, laundry services, and environmental services12303Eye glasses04101Laundry bags09700Uniforms, polo shirts and denim shirts09895Warehouse shipping/storage boxes and mailing tubesCorrectional Industries partners with the Department of General Administration to identify expiring statecontracts held by out-of-state suppliers for products and services that may be provided by CorrectionalIndustries. Correctional Industries also partners with General Administration to identify opportunities foradditional contracts identified through the new product development process.Sales ForecastCorrectional Industries sales forecast for Fiscal Year 2007 is 50.2 million.During Fiscal Year 2007, Correctional Industries will: Expand sales efforts of food products to cities and countiesImplement the acceptance of higher education orders using purchasing cardsContinue to supply component parts to other state correctional industriesIncrease sales of goods and services within the Department of CorrectionsMaintain market share in current product linesPenetrate kindergarten through high school (K-12) markets and target smaller school districtsConduct full market research for new product developmentFACILITIES ASSESSMENT PLANCorrectional Industries utilizes an average of 300 square feet per Class II offender job. Space use mustconsider manufacturing, office, and warehousing needs. Additional space is required to create and expandClass II programs to increase offender jobs.Correctional Industries currently utilizes 491,000 square feet of production, warehousing, and administrativespace throughout the state. A detailed listing of space by institution and shop is in Appendix B.The Department has identified short-term investments needed to expanded offender employment. In addition,the Legislature has authorized the Department to develop a Correctional Industries Master Plan, and oncecompleted will identify long-term investments. The following are the short-term facility improvementrecommendations:Short-term Recommendations Invest in fire suppression systems at two of Correctional Industries warehouse locations, which store andsupport products produced at manufacturing sites. Invest in tenant improvements at the Washington Corrections Center for Women to replace lost Class I jobsby expanding Class II offender jobs Invest in welding cells at the Washington State Penitentiary to expand offender jobs. Maximize existing floor space by adding additional work shifts and requesting operational appropriations foradditional correctional officers.

Correctional Industries2007-2009 Business PlanSiteDescriptionTermEstimateWCCFire Suppression SystemShort Term 150,00010SCCCFire Suppression SystemShort Term 150,00010WCCWPikaPak, Embroidery, UpholsteryShort Term 77,00014WSPWelding Cells for Stainless SteelShort Term 40,0003MCCManufacturing Expansion andConfigurationShort Term 428,00020 845,00057SUBTOTALJobsKEY EQUIPMENT AND TECHNOLOGY REQUIREMENTSMaintaining Employment and EquipmentCost estimates for maintaining the existing job base include an investment to replace aged, obsolete andinefficient equipment. New equipment is essential in producing the highest quality products possible inexisting shops. This then leads to lower priced goods and services to customers.Equipment must be systematically upgraded and replaced to meet the value chain established by the customerfor delivery, quality, service, and price for all Correctional Industries products.Correctional Industries will conduct a comprehensive review of equipment, identifying the priorityreplacements and establish a timeline to replace the equipment.Expanding Employment - Start-Up CostsDirect start-up costs include front-end research to identify viable expansion opportunities and initial operatingexpenses that must be covered prior to receiving sales income. Key start-up cost elements include: Feasibility studies and planningProduction staff start-up costsInitial raw materials and packagingDurable goods inventory (equipment)Worker trainingEquipment and installation, andAdditional construction costs such as taxes, permits, andmanagement feesThe Department’s current expansion project for Coyote Ridge includes a satellite food factory. This satellitewill be utilized to prepare bulk food products to provide meals for the additional offender populations atCoyote Ridge Corrections Center and at the Washington State Penitentiary.

Correctional Industries2007-2009 Business PlanLABOR REQUIREMENTS: Offender Training, Continuity and TransitionCorrectional Industries must match, as much as possible, the available pool of offender work skills andaptitudes with work opportunities within the community (RCW 72.09.100). Training offenders in communityvalues, job skills, job training, work ethic, and holding offenders accountable is an ongoing process.Correctional Industries programs are an essential component for an offenders successful re-entry in to thecommunity.Class II Offender GratuitiesOffenders are paid a gratuity ranging from 0.45 to 1.50 per hour. Deductions from offender gratuitiesare deposited in various funds to contribute to crime victims, offset the cost of incarceration, pay familysupport, and pay legal financial obligations ordered by the court. The following table shows the deductionswithheld from Class II offender gratuities from Fiscal Year 2002 through Fiscal Year 2005:FISCAL YEARNO. OFOFFENDERSGROSSPAYROLLCOST AL20021,297 2,065,266 309,790 103,263 206,527 1,445,68620031,289 2,204,239 330,636 110,212 220,424 1,542,96720041,419 2,317,888 347,683 115,894 231,789 1,622,52220051,574 2,698,548 404,782 134,927 269,855 1,888,984* RESIDUAL: The residual amount represents payments made for legal financial obligations, family support, court ordered restitution,institution debt, and offender spendable.Offender PopulationMany times, Correctional Industries is the first job held by the offender. Success in the program dependsupon the offender’s behavior, education, social skills, security classification, and work ethic. CorrectionalIndustries match offender job opportunities with the available pool of offenders to promote the greatestdegree of success for the offender. Offenders may lose jobs in the program due to transfers to otherfacilities, unsatisfactory behavior, or voluntarily leave to work in other classes.Working in Class II is voluntary; offenders must apply to work for Correctional Industries. Offenders beginin entry-level positions, and advance to jobs requiring additional skills and knowledge. Advancementrequires the attainment and demonstration of job competencies, as documented by shop supervisors whoprepare evaluations for offenders. Correctional Industries needs 30 thousand of annual sales to support oneoffender job.Breakeven Sales to Offender Jobs400003

Correctional Industries customers play an important role in this process. Sales of goods and services provided by Correctional Industries create offender jobs, in turn, lowering the cost of the criminal justice system. Correctional Industries is good public policy. Crime victims compensation Legal financial obligations