A Rancho Santa Margarita-based manufacturer of catalytic converters and performance exhaust systems broke ground on a $10 million, 100,000-square-foot headquarters and manufacturing facility in Oceanside late last month.
MagnaFlow Exhaust Products plans to move its headquarters to the San Diego County city, where it also has a 270,000-square-foot factory. The new building is the fifth in MagnaFlow’s portfolio and its second in Oceanside.
The company’s current headquarters are in Rancho Santa Margarita, where it also owns a 25,000-square-foot research and development building and a 100,000-square-foot manufacturing facility.
About 80 of the company’s 90 employees at its headquarters are expected to commute from Orange County to Oceanside when the new facility is completed in the first quarter of 2016. Many will be given the option to work remotely on occasion from the Rancho Santa Margarita building, which is expected to remain operational.
MagnaFlow has more than $100 million in annual revenue and about 350 workers companywide, approximately 50% to 60% of whom live in Orange County, according to Dan Paolone, president of the company.
MagnaFlow’s products are distributed in 55 countries to large retailers, such as AutoZone and O’Reilly Auto Parts.
Paolone attributes the company’s growth in large part to the fact that it has remained family-owned and operated since its inception in 1981.
Founder Jerry Paolone, Dan’s uncle, moved to La Mirada from Toronto, Canada, in 1979 and established MagnaFlow to sell remanufactured catalytic converters through his new company.
Dan Paolone said customers appreciate MagnaFlow’s resolve to remain family-owned rather than sell to a private equity firm.
“Private equity firms are always ultimately thinking about selling, but people feel they can commit to us,” he said. “They know we will be around and hands-on.”
The Paolones have also resolved to maintain MagnaFlow’s “U.S. production-based business model.”
Every step of the production process—from research to prototyping to production—takes place in one of MagnaFlow’s Southern California facilities.
“Everything is here—the brains and the development,” Paolone said.
He said he’s confident MagnaFlow will continue its growth and profitability. He said the addition of new lines and products—it recently introduced a new motorcycle exhaust system—will continue to spur growth.
MagnaFlow also invests substantial resources into advertising and promotions.
“We have been able to use TV to reach that fringe customer and establish our credibility in the market,” Paolone said.
Motorsports and automotive industry “greats,” such as champion racecar driver Mario Andretti; Formula Drift star Vaughn Gittin Jr.; and Chip Foose, car builder/host of the TV series “Overhaulin’, ” all publicly endorse MagnaFlow.
“I don’t consider it a Foose design until that engine sounds as great as it looks,” Foose says in promotional materials. “MagnaFlow gives me that perfect sound.”
MagnaFlow’s anticipated move to Oceanside is a result of Orange County’s increasingly cramped industrial real estate market, according to Paolone.
“The lack of land availability was the motivating factor [for moving],” he said.
MagnaFlow’s effect on Rancho Santa Margarita will continue to be felt, Paolone said.
“Being a [high-profile] company in a small city helped with growth and with attracting larger companies to Orange County,” he said.
MagnaFlow’s neighbors in Rancho Santa Margarita include the headquarters of global medical device maker Applied Medical. Paolone said Applied Medical was attracted to RSM partly because MagnaFlow had done so well in the area.
Paolone and his uncle will continue to reside in Orange County after MagnaFlow’s move to Oceanside.
“I’m very excited about this new building,” Paolone said. “It creates the infrastructure for further growth opportunities. MagnaFlow has never been in a position where the opportunity for growth was so great, both nationally and internationally, as it is now.”
