Execs Say MSI No Threat For Now

September 17, 2003
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GRAND RAPIDS — Office furniture industry executives say the state’s prison-run manufacturer poses no existing threat to their business, although that could change if the agency ever were to expand.

One executive was even complimentary of Michigan State Industries’ ability to operate without significantly interfering with the industry while still providing job skills to thousands of prisoner annually.

“We applaud the state for its history of finding balance between procurement of commercially produced goods and services and providing meaningful work programs for prisoners,” Phil Todd, director of customer development at Haworth Inc., said during testimony last week to the state Senate Labor and Commerce Committee.

Michigan State Industries “has continued to provide rehabilitation through work programs without overly intruding on commercial markets and firms,” Todd said. “We’ve seen no new impact yet and hope not to.”

The Sept. 10 hearing was organized by five state senators from West Michigan who worried that Michigan State Industries was expanding the production of office furnishings, a move that could hurt that office furniture industry as it remains stuck in its worst-ever downturn, resulting in thousands of job losses.

Testimony at last week’s committee hearing indicated those concerns were unfounded.

A corporation run by the state Department of Corrections, Michigan State Industries employees about 1,400 prisoners at 31 facilities operated at 15 state prisons to produce a assortment of products, most of which are sold to the state. The agency’s role is to teach job skills to prisoners for when they’re released, helping to reduce recidivism rates by 30 percent to 40 percent, according to Kimbrell.

Nearly 85 percent of the $44.1 million in sales that Michigan State Industries recorded last year were to the state Department of Corrections. State law prohibits Michigan State Industries from selling its goods to the public and only allows the agency to sell to state departments and tax-exempt, nonprofit organizations, which collectively accounted for about 5 percent of the agency’s revenues in 2002.

For its part, Michigan State Industries has no plans to pursue a growth strategy and works to keep any effects on the private sector to a minimum.

“I live in Michigan myself,” Michigan State Industries Administrator Lloyd Kimbrell said. “We are very much interested and paying attention to the businesses we’re in and who we sell to and trying not to cause problems.”

Even if it lacks plans to grow, Michigan State Industries still deserves watching should administrators ever change that stance, industry executives say. Any increase in the production of office furnishings could have a significant impact on the industry’s sales to the state, they said.

“We believe it would be very damaging to the private sector,” said Craig Wilson, director of industry accounts for Steelcase Inc.

Mark Groulx, president of Trendway Corp. in Holland, urged lawmakers to consider changing state laws governing Michigan State Industries to prevent any kind of overlap with the private sector. Given the state of the economy and manufacturing today, “a re-think is in order,” Groulx said.

“We have to at least challenge ourselves,” he said. “We owe it to ourselves to find anther solution.”           

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