The Pros and Cons of a Prison Business

A Tustin-based company that grinds up used automobile and truck tires and transforms them into tiles for playgrounds and basketball courts is taking its business to prison.

The Quantum Group Inc. has built a 10,000-square-foot recycling process plant in the Richard J. Donovan Correctional Facility, a medium-security prison in San Diego County, that will be staffed by up to 40 inmates.

The company will initially hire 12 prisoners but hopes to add more inmates as it moves into new product lines, including apartment and factory flooring.

“We’re getting a relatively low-priced facility and minimum-wage labor,” Quantum Executive Vice President Keith Fryer said. “We just believe from a business standpoint this is a good project.”

If all goes well, Quantum hopes to build a larger factory on six acres of land next to the new plant. The company signed a three-year contract with the prison that can be extended.

Under a state program, for-profit companies can hire inmate labor.

At present, 12 companies employ 300 inmates in 10 prisons in California. The inmates are paid $5.75 per hour and keep 20% of their net pay for themselves. The rest is divided into equal amounts for an interest-bearing savings account, a designated family member, the state for room and board, and the victim compensation fund.

New companies are signing up to participate in the program, which was created in 1990 when voters passed the Prison Inmate Work Initiative.

“The economy has expanded so quickly that businesses are experiencing a labor deficiency and are turning to us because they can’t find workers on the outside,” said Susan Jacobson of the California State Department of Corrections Joint Venture Program.

Quantum expects to spend $2 million in start-up costs for the new prison operation. The company is looking at other prisons as sites for future expansion.

“We see opportunities in California and in other states,” Fryer said. “This is a win-win proposition for everybody.”

The company expects to turn a profit at Donovan, Fryer added.

Founded in 1988, Quantum employs 20 full- and part-time workers. The company has built and installed waste tire recycling plants around the world.

Quantum is the third company to set up shop at Donovan. The other businesses manufacture T-shirts and beer and wine brewing vats.