ONTARIO, Calif. /eNewsChannels/ — According to Mag Instrument Inc., the Calif. State Senate Judiciary Committee last week voted against a bill that would have made it easier for American manufacturers – and California manufacturers in particular – to claim their products are made in the United States, dealing a major blow to the state’s already weak business climate.
By a 3-2 vote, the committee voted against sending AB 858 to the Senate for a full vote, despite the fact that in June the Assembly voted 68-0 in favor of the measure.
One prominent Inland Empire manufacturer who was one of bill’s strongest supporters harshly criticized the committee’s vote, which was decided on party lines: All three Democrats voted no while the two Republican members voted yes.
“I could not be more disappointed and disgusted in the vote the committee took today,” said Tony Maglica, founder and owner of Mag Instrument Inc. in Ontario, which makes high-quality flashlights used by law enforcement agencies as well as the general public. A longtime champion of California-based manufacturing, Maglica built a 700,000 sq. ft. manufacturing facility here in 2005 – in the middle of a decade that saw more than 600,000 manufacturing jobs leave California, amounting to a loss of 1/3 of the state’s manufacturing base.
“It’s another example of the state legislature making it as difficult as possible to do business in California,” continued Maglica, who started in business in 1955, in a one-man machine shop in a South El Monte garage. “We now have another example why this state is such a terrible place to operate a business. The Committee vote also shows that there are some state legislators who just don’t understand the realities of manufacturing in the age of the global supply chain. Some parts and materials you just can’t get domestically. Or maybe they just don’t care about the 700 jobs on my payroll, or the thousands of additional local jobs our manufacturing operations support indirectly.”
The bill, sponsored by Assemblyman Brian Jones, R-Santee, sought to reform an absurdly strict “Made in USA” labeling law that has been on the books in California since 1961.
That statute makes it impossible for many California manufacturers to claim that their products are made in the United States: if so much as a pin, a screw or a rubber o-ring seal was made outside the country, then the manufacturer cannot sell his product in California with a “Made in USA” label, according to the statute.
Any business that runs afoul of that statute could be sued for false advertising – and charged with a misdemeanor under California law.
California’s uniquely strict standard differs dramatically from the Federal Trade Commission’s “Made in USA” Guidelines, which have been embraced in all of the other 49 states. The FTC Guidelines provide a nuanced approach that focuses on the content of the product as a whole and the nature, amount and significance of any imported content the product may contain. The FTC Guidelines also consider whether a “Made in USA” label would be materially deceptive, and likely to mislead consumers acting reasonably under the circumstances. The California standard is far more rigid: It insists that not even a single small part can be of foreign origin, regardless of how small a percentage of the overall cost it represents. The California “Made in USA” statute also does not require proof of deceptive intent or effect, or of the materiality of any misstatement. It makes a miss as good as a mile – so even 99 percent domestic is not good enough to support a “Made in USA” label if one small part is foreign.
Hence, under California law, a manufacturer cannot claim its flashlights are made in the United States if even an o-ring or a light bulb that it uses is imported. For a multi-component manufactured product of any complexity, it is often impossible to find a viable domestic source for certain parts.
Jones’s bill argued that a “Made in USA” claim is not misleading if a foreign-made component is an insignificant part of the product. The bill would simply have brought California law on “Made in USA” labeling into line with the other 49 states and the FTC Guidelines.
“As law it makes no sense,” Assemblyman Jones said. “It’s a barnacle on the side of manufacturing in California.”
Because of California’s out-of-step “Made in USA” labeling law, all American manufacturers are at a disadvantage against foreign competitors. Unless they want to undertake the expense and risk of having one package for the other 49 states and a special package just for California, American manufacturers have no choice but to produce a 50-state package that complies with California’s unreasonably strict standard, under which it is almost never permissible, for a product of any complexity, to affix a Made in USA label. This can mean foregoing the right to lawfully mark its product “Made in USA” in the other 49 states. Although this is a special problem for California manufacturers (they are more likely to be sued under the California law because they are local), it competitively disadvantages all manufacturers of American products.
“The California statute is a dog in the manger – the only thing standing in the way of a uniform, rational, 50-state policy on Made in USA labeling,” commented Jerry Reilly, Mag Instrument’s Corporate Counsel. “Uniformity is needed now more than ever, at a time when American manufacturers and California manufacturers especially, need to be able to proclaim robustly their commitment to making things in America. At a time when our country’s manufacturing base is under siege and California’s even more so, AB 858 would have helped. The California Senate Judiciary Committee had a chance to advance a significant law reform today, and to give our state’s horrifically battered manufacturing sector a hand up. But the majority balked at this opportunity. I am very disappointed.”
Because it would have harmonized California’s law with the rest of the country, AB 858 was endorsed by the California Manufacturers & Technology Association and the California Retailers Association, as well as by organizations dedicated to promoting the purchase of American-made products, including the Made in the USA Foundation and the Made in USA Brand Certification Program.
It is not known if Jones plans to reintroduce the measure.
About Mag Instrument, Inc.:
Mag Instrument was founded in 1955 and its campus in Ontario, Calif. consists of 9 buildings, including a new headquarters, manufacturing, engineering and distribution facility that occupies 700,000 square feet and employs more than 700 people. Mag Instrument is proud that its products are not only designed in the U.S.A. but built by American workers. Mag Instrument is committed to remaining a U.S. Manufacturer. For more information visit: http://www.maglite.com.