PEN Products’ New Business Model – Preparing for the Future
By Becky Deeb, New Enterprise Development Manager, PEN Products
The Indiana Department of Correction has continually challenged PEN Products, Indiana Department of Correction’s (IDOC) Correctional Industries Division, to increase the number of offender jobs, thoroughly analyze all areas of the business to maximize efficiencies, as well as focus on providing offenders with rich, on-the-job experiences while preparing them for a successful re-entry.
PEN, is an acronym for Prison Enterprises Network. However, six years ago the individual businesses, although connected under the same name, were not operating as a network but more as individual businesses. Some were succeeding while others were failing, meaning that the overall financial picture masked some of the realities of the individual businesses. This scenario is not uncommon to Correctional Industries. Many profitable businesses cover for those that are unprofitable. This is done in order to maintain as many offender jobs as possible which fulfills PEN and IDOC’s mission.
With the election of Governor Mitch Daniels in January of 2005, it soon became clear that it would no longer be business as usual. All state agencies were being challenged to reduce spending across the board and this would be no different for PEN Products. Soon after assuming the role of Director in May, 2005, Mike Herron began reviewing all areas of PEN’s business. The first area to be examined was the partnerships with private sector businesses. Herron expected that existing unprofitable partnerships be returned to profitability, either by increased hourly rates or minimum charges that would secure at least a breakeven for the individual operation. He also insisted that PEN Products, an arm of the state government, could not subsidize any private sector business. PEN Products reviewed all its partnerships and either increased rates or terminated the contract. In most all cases the operations continued. Additionally, a new methodology was developed to analyze new partnerships. This new methodology has been used ever since and over six new partnerships have been added with the total offender jobs involved in private sector partnerships being increased to over 800 jobs by then end of 2010.
After the restructuring of the joint venture partnerships, Herron began reviewing all other areas of PEN’s business. After careful review, many operations were consolidated. The five sewing operations were merged into just two separate facilities. The two wood furniture operations were consolidated into one. The main shipping warehouse was consolidated into our commissary distribution center. These moves allowed for a much better utilization of staff and equipment, while at the same time maintaining offender employment. Additionally, the food processing plant that provided over 200 offender jobs, but lost over $2 million annually, was closed. The farm operations were downsized and most tillable land was cash rented to private sector farmers.
With all these consolidations and closings, PEN was able to reduce staffing by 40 percent. All of these reductions took place either through retirement or redeployment to areas of security and maintenance. Not one member of the PEN Products staff was terminated due to the consolidations and closings.
During this same time, the PEN Products’ central office occupied a large warehouse and modern office facility in Indianapolis. This was a leased facility and when the lease expired in 2010, PEN Products was able to move its central office to downtown Indianapolis on the grounds of the Indianapolis Re-Entry Education Facility (IREF). This move reduced the administrative overhead that was spread to all operations and allowed individual enterprises to be less burdened by this expense. The new location was closer to the IDOC’s main office and also closer to many of PEN Products’ customers. The PEN Products’ central office is also able to employ over 30 offenders from IREF in sales and accounting.
PEN Products also has expanded its traditional products customer base from mostly IDOC and Indiana state agencies to also include local governments. Additionally, sales to non-state agencies have increased by 90% in the last two years.
The commissary segment of business, which services the offender population with snacks, health and beauty supplies, stationary and clothing items has continued to grow. It has expanded by serving Indiana jails and community correctional facilities and has also added a program where offenders can purchase gifts for their friends and family. The commissary operation provides over 250 offender jobs, and is totally self-sufficient.
PEN Products has continued to focus on self-sufficiency and has increased offender jobs within its operation. Since 2005, offender job numbers have exploded by 84%, from 982 jobs in 2005 to 1,807 at the close of 2010.
One of IDOC/PEN Products’ most proud accomplishments is the growth of the U.S. Department of Labor Apprenticeship program. From 2006 to 2010 IDOC/PEN Products not only started the U.S. Department of Labor Apprenticeship Program but has also become a national leader in this endeavor. The success of the apprenticeship program has also
been the catalyst for the development of the Job Placement Program. This portion of IDOC/PEN Products’ re-entry efforts took a huge step forward in 2009. Three PEN Products’ employees were selected to attend the National Institute of Corrections Offender Workforce Development Specialist training. After completion, all three became certified as Offender Workforce Development Specialists (OWDS) and Global Career Development Facilitators. They will be using this certification in 2011 to train an additional 30 Indiana Corrections Professionals in the OWDS curriculum. The training was funded by the National Institute of Corrections. The tools taken away from this training have resulted in offender Career Resource Centers, offender monthly Job Clubs, and a six hour workshop titled “Career Path Planning.” These workshops are designed to teach offenders a career approach for their future. Offenders and staff attend the training together and learn about Career Theory, Job Retention, and Time Management. These opportunities are truly changing the mindset of those offenders leaving the Indiana Department of Correction and moving back into our Indiana communities.
When Mike Herron was asked how so much has been accomplished, he stated, “We have a strong management team and staff. Whether it is purchasing, finance, engineering, sales, new enterprise development, operations or job placement, we have staff that believes in what we are doing and have the desire to make positive changes. We also have tremendous support from our Commissioner, Edwin Buss, as well as the entire executive and facility staff of the Indiana Department of Correction.
PEN Products will continue to prepare for the future by continuing to expand offender jobs, which will bring correctional industry re-entry programs to more offenders and help further reduce Indiana’s recidivism.
PEN Products Mission Statement
PEN Products equips offenders for successful re-entry through meaningful work while operating in a self-sustaining manner.
PEN Products Vision Statement
PEN Products workers positively impact the recidivism rate.
PEN Products Core Values
Professional Work Habits