Products ‘Made in America’ at odds with CA

July 3, 2012

By Katy Grimes

When Anthony Maglica founded his machine shop in 1955 as a one-man operation, he never dreamed of the success he would have, nor would he ever imagine that the state in which he lived would slowly kill off his business one day.

Maglica, the creator of the wildly popular and reliable Maglite flashlight, started his machine shop in his garage. He turned that business into an empire, and has sold 420 million hard aluminum-encased flashlights since 1979. And he has not raised the price of the best selling flashlight since.

But California lawyers have fought Maglica over his claim that his flashlights are “Made in America.”

Born in the USA

Maglica, born in New York, moved with his mother to her native Croatia during the Depression and lived there through World War II, and the ravages of war. He returned to the United States at age 22, where after working different jobs, he saved $125 to purchase a metal lathe and start his own machining business.

“I didn’t build this business by myself,” Maglica told me during a tour of his magnificent plant in Ontario, CA. “The employees built it with me.” Against all odds in California’s business-killing climate, according to Maglica, his employees are the primary reason he remains in business.

But Maglica said, that since the last Presidential election, his business hasn’t been profitable. He attributes the business downturn to politics, the sputtering economy, and cheap facsimiles of his product allowed into the country without the stringent regulations he is faced with.

There was a time Maglica could proudly state “Made in America” on his product labels. But he says that California has an unattainable, absurdly strict law requiring that 100 percent of the product be manufactured in America, in order to state this on the product label.

“I have always tried to make all product parts in my own U.S. factory,” Maglica said. “But globalization and the emergence of new manufacturing centers have changed the cost and availability of some components I now have to import.” Maglica said that some parts are just not available from any other American manufacturer, or are cost prohibitive for his company to produce.

California Law

Because the Maglite company has to import a very small percentage of its parts, California state law requires that the company omit the label that states that the product is “Made in the U.S.A.,” despite the fact that Mag Instrument is a U.S. company.

“Unless 100 percent of a product is made in the United States, California’s ridiculous Business and Professions Code provision prohibits my company from using ‘Made in the U.S.A.’ on the packaging,” Maglica explained.

When touring Maglica’s immense facility, it became abundantly clear that he not only manufacturers the many components of more than 20 different flashlights, Maglica has purchased, and turned around, several financially distressed component parts companies in order to keep components available for his line of flashlights. He has brought all of this additional work to his plant in Ontario.

But even this has not helped him in California.

Federal Law

Federal law only requires that a product be “substantially” made domestically to bear the “Made in the U.S.A.” or “Made in America” mark. Maglica said that in all 49 other states, Maglite could make flashlights with even fewer U.S. manufactured parts than it currently does, and still call them American made… but this cannot be done in California.

Maglica said that because of California’s laws, Maglite, which is the only major flashlight company still manufacturing in the U.S., can never be advertised as an American product. “Consumers will never know that I employ hundreds of U.S. workers and that my company provides millions of dollars in economic benefit to the city of Ontario, the Inland Empire and the state of California,” Maglica said.

AB 858 – the easy cure

Assembly Bill 858, by Assemblyman Brian Jones, R-Santee, would change California’s law so that it aligns with the other 49 states, and would adopt the federal policies set by the Federal Trade Commission.

While AB 858 appeared to have no opposition early on, recently the state’s Consumer Attorney’s of California have taken up fighting the bill. “Made in America” claims have been a favored target of consumer attorneys for several years.

Maglica said that he has spent far too much money in court protecting his product from illegal copycats, and has been victimized by lawyers in a snafu over the “Made In America” label, accidentally shipped to California from Canada.

While AB 858 will be heard in the Senate Judiciary Committee Tuesday, some have speculated that powerful Capitol staff, opposed to changing the California law, could also be fueling the recent opposition. The Judiciary Committee only released its legislative analysis Monday, less than 24 hours before the hearing, and left out crucial information about California’s existing “Made In America” code requirements.

California’s code was enacted in 1961, more than 50 years ago, long before the global economy was the reality, and before American-manufactured components were shipped overseas where cheaper labor is the norm.

The California statute, which may have been a good idea in 1961, has only added to interstate chaos, putting California businesses at yet another disadvantage, together with stricter labor laws, wage and hour laws, workers compensation insurance laws, and higher state and corporate taxes.

The newly-released Senate Judiciary Committee Analysis failed to even list the Made in USA Brand Certification Mark organization among the supporters of AB 858, even though that organization sent a letter to the committee making abundantly clear that California’s go-it-alone approach means that California has effectively excluded itself from the Made in USA Brand Certification Mark program, which adopts the FTC Guidelines as its labeling standard.

The Judiciary Committee analysis also confused much of the significant differences between the state and federal standards, making them sound nearly identical.  But the differences actually are quite notable, particularly because the federal standard focuses on the foreign content of the completed product as a whole, but the California standard looks at each and every part of the product, regardless of how minuscule or available. The California code requires that each part, even down to the tiniest pins and screws, be produced domestically.

The analysis characterized Maglite’s position on the issue as inviting manufacturers to not even try to produce a 100 percent domestically produced product. But the analysis left out that 100 percent of a total product domestically produced is actually unattainable in America, according to Maglica.

Maglica said that with the incandescent light bulb ban in America, he can’t even get light bulbs for his products, which are all guaranteed for life.

The Analysis also ignored the effect that California Code §17533.7 currently has on California manufacturing jobs.  Analysis focused on making sure consumers have “the benefit of the bargain,” but totally missed what the consumer aims for by purchasing a produce made in America.

Polls have shown that if given a choice, consumers will spend more on products if they are made in America.

Maglica has worked diligently to make sure that manufacturing for his Maglite flashlights stay in Ontario, when he very well could have taken much of the work to Mexico for a fraction of the cost.

Given that the Korean-built, Euro-spec Chevy Cruze has product contributions from more than 15 different countries, California’s “Made in America” law is hypocritical at the very least.

Maglica has built an American dream with his own hands, and continues to this day to provide employment to the families of more than 700 California residents. Democrats have long complained about American businesses leaving the U.S. in search of cheaper labor overseas. AB 858 is a chance to address this, and potentially bring back more manufacturing jobs to the state.

A manufacturing business is known to support five-times more jobs than what is reflected on its payroll. Shouldn’t California lawmakers believe that  this bill is a good change for the state? After losing more than 600,000 manufacturing jobs between 2001 and 2011, California businesses could use a little ray of light on the dark uncertainty that has taken over the state.

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