Mag Instrument, Inc.

1930–2004

Mag Instrument, Inc. is a producer of high-quality flashlights under the Maglite brand. A believer in the American dream, company founder Anthony Maglica has kept manufacturing inside the United States, thanks in part to extensive use of automation. The company began work on a new facility in Ontario, California, in 2004. The flashlights are exported to more than 85 countries around the world; one-quarter of sales come from outside the United States.

Origins

Company founder Anthony Maglica was born in New York City in 1930, at the beginning of the Great Depression. He moved with his mother to her homeland of Croatia at age two. He was eventually trained as a machinist in Europe.

In 1950, Maglica returned to the United States with little knowledge of English but ample faith in the free enterprise system. According to the Business Press of California, he was unable to find anything but sewing work in New York City, so he moved west. He operated a lathe for Long Beach-based Pacific Valve Co. and then A.O. Smith Water Products Co., an East Los Angeles manufacturer of water heaters.

In 1955 he set up a small job shop in his garage in Los Angeles as a side venture. His start-up capital was the $125 he had saved, just enough for a down payment on a $1,000 lathe.

The business was incorporated on September 25, 1974, as Mag Instrument, Inc. By this time, Maglica was producing artillery shells. He also was making components for a flashlight manufacturer. Dismayed by the poor quality of their product, in 1976 he decided to build a better flashlight. At the time, most were cheap and virtually disposable.

After three years, Maglica came up with a design that was tough and durable, with anodized aluminum housing rather than plastic. Called the Maglite, it was initially marketed toward law enforcement and rescue personnel. The flashlight also was designed to be attractive to civilians. Sportsmen were another early target market.

In 1987 the company won $3.1 million in a copyright infringement suit against Streamlight, Inc.

1979–2003

The Maglite, introduced in 1979, was a critical and commercial success. It won numerous accolades from product design circles as it made its way into home improvement chains and department stores. The Maglite Rechargeable Flashlight System (Mag Charger) was introduced in 1982.

That year, Maglica relocated the firm, which then had 80 employees, to a new 126,000-square-foot factory in Ontario, California, about 50 miles east of Los Angeles. Using his tooling experience, Maglica designed the machinery for the plant himself.

Defending Its Trademarks in the 1980s

According to California's Business Press, a 1984 lawsuit against U.S. retailers who had imported cheap knock-offs of the Maglite flashlights was a turning point for the company in more ways than one. While Mag won the suit, instead of pursuing a cash award, Maglica had the retailers buy five Mag flashlights for every imported copy they had sold. This was an effective way to gain a great deal of shelf space, as the merchants included Sears, Roebuck & Co. and Kmart Corporation.

The original Maglite ran on D cells. In 1984 the company unveiled a smaller flashlight called the Mini Maglite, which ran on AA batteries. A still smaller AAA version came out three years later. The keyring-sized Solitaire flashlight was introduced in 1988. In the mid-1980s, Maglica also developed underwater lighting for eminent sea explorer Jacques Cousteau.

In 1987 the company won $3.1 million in a copyright infringement suit against Streamlight, Inc. Another judgment soon followed against Kassnar Imports, Inc. ($2.75 million, 1989) and The Brinkmann Corporation ($1.2 million, 1990). More imitations by potential competitors--some 50 different companies around the world--would follow. Mag spent $17 million from 1986 to 1989 to fight cheap knock-offs. This was more than three times the company's advertising budget, noted the Wall Street Journal.

It was often difficult to collect on such judgments, as manufacturers who lost suits were prone to declaring bankruptcy. Nevertheless, Mag spent millions to aggressively defend its trademarks for the design and manufacturing process of its flashlights. According to Management Review, the United States lagged behind other countries in protecting design features. In 1997, however, the "shape, style and overall appearance" of its Mini Maglite flashlights received copyright protection, followed by the other designs in 2003.

1989–2001

Inc. magazine reported revenues were in the range of $70 million in 1989. ADWEEK mentioned reports the company held a 25 percent share of a U.S. flashlight market worth $400 million. Mag ended the decade with about 500 employees. Maglica was committed to keeping manufacturing operations in the United States. Extensive use of automation on the factory floor helped keep costs down.

A loyal Republican, Maglica donated 40,000 Mini Maglite flashlights for President George H.W. Bush's 1989 inauguration celebration. They reinforced the "thousand points of light" theme. He also supplied them for the younger Bush's inauguration in 2001. Audience members lit the lights as part of a grand finale.

Exporting in the 1990s

Although an impassioned advocate for U.S. manufacturing, Maglica remained sensitive to the situation in the former Yugoslavia where he was raised. In 1994, Mag donated 40,000 flashlights inscribed with "Remember Sarajevo" for the closing ceremonies at the Lillehammer Winter Olympics. In 1997, Maglica established the nonprofit Maglite Foundation in Croatia. Its mission was the environmental cleanup of the region, particularly on the island of Zlarin, where Maglica grew up.

Mag entered the European market in 1995. The flashlights fared well even in Germany, known for its "over-engineered" products. They also were accepted in quality-conscious Japan. Total sales were reported at about $240 million per year.

The company was soon looking to expand its manufacturing space. It sought to take over the coating process done to the aluminum flashlights by a Kalamazoo, Michigan company.

Continued Growth in the Early 2000s

1995–2006

In the first years of the new millennium, Mag Instrument employed 850 people and had 450,000 square feet of manufacturing space scattered across 11 buildings. In November 1999, Mag began leasing another, 300,000-square-foot facility as a stopgap measure to meet increasing demand.

The flashlights were sold in more than 85 countries; exports accounted for 25 percent of total sales, which were reported at between $100 million and $250 million in various sources. The company was valued at $775 million, Maglica's attorney told Ontario's Business Press in 2000 after settling a palimony suit brought by Maglica's longtime companion. The Business Press added that the company had produced 39 million flashlights the year before.

In 2003, Mag won a rare monetary award ($113,000) against a Japanese manufacturer, Asahi Electric Corp., which was found to have infringed upon Mag's patent. The 17-year patent on Mag's flashlight, however, was due to expire in March 2005. U.S. Representative Joe Baca was sponsoring a bill to extend the patent for two more years. According to the Business Press of California, part of Mag's appeal was an eight-year gap after the request of a renewal in 1995 in which Mag had no patent protection.

The company began construction of a new $80 million, 700,000-square-foot facility in 2004. It was expected to house a total of 2,400 employees after its scheduled opening in 2006. The company's long-term goal was to increase exports to at least half of total sales.