Consumer Federation of California

Several hundred workers make Maglite flashlights in Ontario and even build machines that build other machines to make the flashlights. But that doesn’t make them ‘Made in the USA,’ according to California state law.

A small rubber ring and imported lightbulbs prevent Mag from being able to say its flashlights are ‘Made in the USA.’

Proposed state legislation aims to change that, but it is one issue among many that Mag Instrument’s founder, Anthony Maglica, says makes it a burden to manufacture products in California.

On a recent workday, Maglica, 81, wore his usual grease-stained grey smock ‘ complete with a patch that said ‘Tony’ ‘ as he swiftly walked the lengths of his massive Inland factory. He pointed to machines that spit out the aluminum shells for a flashlight handle while others engraved the company’s name and in some cases, Ontario’s, on one end.

‘Let me run my business,’ he said of the government. ‘Get off my hair.’

So many people wander into its corporate headquarters with a Maglite peeking from a shirt pocket, seeking a free fix on a product that has a lifetime warranty, that the receptionist has a stack of maps at the ready pointing the way to the office where the repairs are made.

It’s against the law, and has been for decades to sell a product that bears the label ‘Made in the U.S.A.’ or ‘Made in America’ or even ‘U.S.A’ when the product, ‘or part thereof, has been entirely or substantially made, manufactured, or produced outside of the United States,’ according to the state code, the only state to differ from the Federal Trade Commission’s less strict standard.

It’s the ‘part,’ part that frustrates Mag Instruments and other manufacturers.

Mag was sued twice years ago for including a ‘Made in the USA’ label, the company’s attorneys said recently. Mag never had to pay damages, said attorney Robert Weiss, but ultimately spent hundreds of thousands of dollars to destroy their old packaging and make it new.

Being ordered to do so was ‘heartbreaking,’ Maglica said.

The company’s executives couldn’t say for sure where the rubber ring came from originally but guessed it probably got its start in China.

Maglica said he buys the rings for 4 cents each from a U.S. supplier that gets them from overseas. It would take $1.40 to make one himself, he said.

The company has to sell $100 million worth of flashlights annually to break even, but hasn’t done so for the past few years, losing about $20 million in that time, Maglica said.

Since the recession, the company has laid off about 300 of its 1,000 employees. Mag had further expanded its already sprawling nine-building campus near Ontario International Airport to fit more automated machines but has delayed moving in, hiring workers and buying $19 million worth of equipment in case the political winds shift against them.

‘We’re struggling,’ added Weiss, a lawyer for the company. He said the ‘Made in the USA’ label could certainly help. ‘(Consumers) look for those words,’ he said.

A bill, AB 858, introduced by state Assemblyman Brian Jones, R-Santee, aims to make the federal standard which allows for ‘virtually all’ of a product to be physically made in the United States to earn the label. The bill passed the Assembly unanimously but remains in a Senate Judiciary Committee facing opposition from consumer and litigation attorneys.

Richard Holober, executive director of the Consumer Federation of California, opposes the bill because his group sees it as an opportunity to overturn a state Supreme Court decision in January 2011 that ruled consumers could claim harm was done if they were deceived into buying a product because it was purported to be ‘Made in the USA.’ The case involved lock maker Kwikset that had included the label on its products despite using screws from Taiwan and having some components made in the company’s Mexico factory.

‘We’re against weakening consumer laws ‘ to satisfy corporation A or corporation B or corporation C,’ in order to magnify the company’s profits, Holober said when asked about Maglite’s rubber ring situation. ‘There’s no need to weaken California law that has served consumers well.’

Holober also dismissed the contention that the ruling would open up companies to more lawsuits that would benefit class-action attorneys more than consumers calling it ‘one of the great myths and fictions.’

If someone bought a $20 product because it said ‘Made in the USA’ but it turned out not to be, that customer isn’t going to hire an attorney on their own, he said. The only way cases like those have their day in court, ‘is when those consumers band together,’ he said.

California’s statute is hardly new ‘ it was formalized in the early 1960s but has precedent stretching as far back as the Great Depression, said Mag’s corporate counsel Jerrold Reilly.

It didn’t mean much to anyone, including the California manufacturers who included ‘Made in the USA’ on packaging anyway, until attorneys started suing corporations that appeared to be violating it about 10 or 15 years ago, said Weiss.

CONFLICTED FEELINGS

Maglica’s feelings about the United States are best defined as complicated. He describes himself as a patriot who doesn’t understand why immigrants, namely Europeans like himself, wouldn’t appreciate the freedoms afforded to them in the United States.

But he hates his government for what he considers an anti-business attitude, he said, acknowledging at the same time that hating or disliking the government is also one of those freedoms worth valuing.

‘If I don’t like my president, I can tell them they can go to hell,’ he said, without ever naming President Barack Obama by name during an interview at his company’s headquarters.

Maglica has been a visible supporter of Republicans, most recently opening his factory to Republican gubernatorial candidate Meg Whitman and sending 40,000 of his small Maglite flashlights to the inaugural celebrations for both George H.W. Bush and the younger George W. Bush to commemorate the senior’s Thousand Points of Light initiative.

He doesn’t dislike labor unions ‘ from the 1930s. Those fought for necessary worker’s rights, he said. But he doesn’t see a point to their existence now, since laws have been long established to protect workers. Instead, he wishes there were more protections for businessmen.

He’s still irked about a $1,800 fine he faced several years ago when a puddle collected on his property and the city of Ontario feared it would attract mosquitoes. He was levied another $100 fine for installing a canvas cover for an outdoor area for employees. Money was never an issue, he said. It was the principle.

‘I think sometimes that even God is against you,’ he said.

Despite being born in New York in 1930, Maglica’s story is more suited for an immigrant’s tale having moved to Croatia with his mother when he was 22 months old. He returned to New York only after the end of the second World War and after having experienced fascism and communism. Following higher wages to California he bought a lathe in 1955 with a $125 down payment, keeping his night job while his own manufacturing business grew. The Maglite brand began in 1979.

‘I have not raised prices on my products since,’ he said, adding that he wouldn’t be able to afford to with competition from foreign manufacturers. Weiss confirmed that prices don’t increase once Maglite introduces a new product which goes for the original D-cell incandescent model Maglica started selling 33 years ago.

At Wal-Mart, prices for two models of Maglite flashlights were $17.88 and $33.88.

His dislike for doing business in California is evident, but he has no intention of moving for his employees’ sake, he said.

‘I would feel like I was committing a crime if I closed this place,’ he said. ‘Sometimes I think ‘ I have a little socialist in me.’

He said he has entertained offers to sell the company but has said there’s one condition: the buyer would have to keep it where it is.

‘I’ll stay as long as I can,’ he said. ‘Who knows, maybe things will change.’