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In lugnet.mediawatch, Will Middelaer wrote:
> http://www.journalinquirer.com/site/news.cfm?newsid=16811796&BRD=985&PAG=461&dept_id=161556&rfi=6
>
> Excerpt follows:
>
> Danish-based toy maker Lego Systems Inc. plans to lay off more than 44 percent
> of its Enfield work force by early next year, and will close its Enfield
> packaging operation, subcontracting all warehousing, packaging, and distribution
> work to an international company based in Singapore, Lego officials said today.
Read the news today, oh boy (sorry for such an obvious quote, I could'nt
resist).
Why is anyone suprised by this? Lego has stated for the last 2 years that this
was going to happen.
Here's the thing: I dont think this is the worse news you are going to hear over
the next few years.
Some background history:
Lego was founded and remained in Billund, Denmark. OKC then GKC, and later
Kjeld, operated the international company out of their hometown. They
essentially built the city and the central Jutland region.
Billund became their primary manufacturing and business center. Over time they
added manufacturing facilities in new Western markets. By the 1990's they had
manufacturing and packaging operations in Denmark, Switzerland, Germany, Korea,
Brazil and the US. At the time these made business sense in that they were
located in important sales markets. But in most of these cases they were also
very expensive labor markets (in fact Switzerland IS the most expensive labor
market in the world).
It, then, comes as no suprise, that in order to compete with other toy
manufacturers they have sought out less expensive labor markets. First it was
the Kladno plant in the Czech Republic, but also China. Look closely at where
your Lego sets are manufactured. Primo, Clickits, Galidor, and some Duplo have
always been made in China.
Todays announcement suggests that, like MOST companies, they are getting out the
the toy manufacturing business altogether. By subcontracting the manufacturing
to a 3rd party, Flextronics, they have put the last peice together in something
they have been working on for the last 5 years:
PART II:
Lego is owned by two companies:
Kirkbi Invest AS, with 2 primary shareholders, Kjeld and his sister Gunhild.
Kirkbi owns the intellectual property of Lego and acts as the Lego and Kirk
Kristiansen "bank", and Interlego, which owns Lego A/S and has 4 primary
shareholders, Kjeld and his 3 children.
Over the last several years these companies have divested themselves of many of
their assets. We all know about Interlego selling the Theme parks but Kirkbi has
been quietly divesting itself of most of the companies it owns.
It is also no secret that Kjeld has for some time indicated that he wishes to no
longer sit on the board of Lego or Kirkbi [1], but only remain on the board of
the Lego Foundation, to which he is in the process of selling his shares of the
Lego company (Lego Holding currently holds 25% on the shares of Lego).
So, Kjeld has stated his intention in divesting his interest in Lego. His 3
children, as far as I know, are not involved with the company, and a few years
ago he brought in a new CEO, someone from Finance. Someone to streamline the
operation and make these drastic cuts.
PART III
Kjeld is getting out of the operations of the company. His children are not
taking over. He has divested himself of many of the extraneous components of his
empire. Add to this the final part of divesting the company of any actual
manufacting. What is left is a portfolio of intellectual property (licenses,
patents and trademarks) and an R&D operation.
An attractive package for someone (with alot of money) to buy.
The family is preparing the company for sale.
[1] Do a Lego search on the Copenhagen Post or the Posten-Jyllands newspaper
sites.
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Message has 2 Replies:
Message is in Reply To:
 | | Massive Layoffs At Lego (in Enfield, CT)
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| (URL) follows: Danish-based toy maker Lego Systems Inc. plans to lay off more than 44 percent of its Enfield work force by early next year, and will close its Enfield packaging operation, subcontracting all warehousing, packaging, and distribution (...) (18 years ago, 20-Jun-06, to lugnet.mediawatch, lugnet.general) !!
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