March 21, 2001 11:00 pm

By Ray Linker

Observer Staff Writer

Should the state be in the business of manufacturing Freightliner trucks? Nike shoes? How about travel trailers?

Doesnt make much sense?

Well, neither is it logical that the state should be in the business of manufacturing safes, said Ulrich Graffunder of La Grande. His business has been in operation since 1981 and he now works from his building on a two-acre site at the Union County Industrial Park at the airport.

The state prison system has gone into the business of manufacturing gun safes, competing directly with us, private enterprise, said Graffunder.

He said he was told prisoners have produced 51 safes to date and placed them on consignment at various gun dealers and other outlets. His company manufactures about five safes a week, he said.

Chris Davis, executive assistant in Oregon Corrections Enterprises, the part of the prison system that oversees the inmate work program, confirmed that the state had manufactured about 50 gun safes in the past two years.

We sell them primarily to law enforcement agencies and other state agencies, she said. We havent sold a lot of safes to the public and we arent actively pushing that. Our plan was to place them with gun dealers. We had a possible client (gun dealer) in La Grande, but we have put that on hold.

Its not our intention to put someone out of work although we can sell to the public, Davis said.

The staff of House Speaker Mark Simmons, R-Elgin, was contacted by phone by The Observer more than a week ago and again Tuesday morning, and the issue was being discussed.

Graffunder, meanwhile, said, Its really unfair to us. The state doesnt require dealers to pay for the safes before they sell them. We cant do that. We have to sell them wholesale. We cant put them out there without getting our money out of them. We dont do consignments.

He had planned to expand his 5,000-square-foot building this year, but now doesnt know what to do.

This is really an unfair thing. The state cries that it needs to help create jobs in the private sector, then they turn against that sector.

His company, Graffunder Safe and Vault Co., started in Elgin in 1981. Before moving to La Grande he had thought about relocating to Boise. But Union County officials talked to him, and he decided to stay in Oregon.

Graffunder, who immigrated from Germany to San Francisco when he was 21 and learned the trade there, said he had just purchased two new machines for about $6,200.

I could have bought them out-of-state, but I bought them in Oregon. Im trying to keep business here.

The company has had as many as six employees manufacturing commercial and residential safes of all kinds, with prices ranging up to more than $3,000.

We make gun safes for homes. We sell direct to the public, and gun stores and locksmiths also buy them for resale to the public, Graffunder said.

He said he heard about the prisoners making the safes from a prospective buyer in Elgin who bought a convict-manufactured safe from a Baker City outlet.

The man paid about $800 for it and had to go get it. We have one right here for $849.

He added, I havent seen the prison product. Their quality is not the point. Its not that it is as good as ours or isnt. The point is why does the state want to drive us out of business? My feeling is they should have done some research.

Davis, of the inmate work program, said making safes would be just one project in our metal shop. Its such a small portion of what we do.

She said there was no specific goal as to how many safes would be produced, and it would be hard to say a certain number of inmates worked only on safes.

Were trying to do things that dont impact businesses in the state, but we werent aware he (Graffunder) was there, Davis said.

Graffunder doesnt buy the explanation.

There are only two safe manufacturers in Oregon, us and a firm in Eugene, he said. Weve been registered with the state since 1981, so they cant say they didnt know we were here.