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LEGO to Build First China Plant
From PlasticNews.com
By Michael Lauzon
March 22, 2013
BILLUND, DENMARK -- Targeting Asia as a major up-and-coming consumer of its
building-block toys, LEGO Group plans to set up a factory in Jiaxing, China, its
first in the nation.
“It is our strategy to have production close to our core markets in order to
secure short lead time and … service to our customers and consumers, and it has
proven a successful strategy,” said LEGO Chief Operating Officer Bali Padda in a
news release. Padda said Asia is a future core market.
“Having full control of the production process is essential to deliver products
of a consistent high quality and safety and in harmony with our values,” Padda
said.
The Jiaxing plant will be in the middle of the Yangtze River Delta about 60
miles from Shanghai, where LEGO is planning to establish a regional distribution
center. LEGO expects to begin construction of the Jiaxing plant in early 2014.
LEGO would not disclose actual sales volumes in Asia.
“We currently source from a range of suppliers in China,” said LEGO spokesman
Roar Rude Trangbæk in an email. “The parts we source from China include a
smaller portion of our LEGO and Duplo elements as well as the majority of our
electronic components and textile elements. We have no plans to stop sourcing
from current suppliers.”
LEGO has been investing in growing markets as it shifts some operations from in
its headquarters plant in Billund, Denmark.
The company recently installed several hundred Arburg injection presses in
Ciénega de Flores, Mexico. LEGO opened the plant in 2009. The facility, believed
to be one of LEGO’s biggest, is Arburg GmbH & Co.‘s biggest customer in Mexico.
Arburg installed the last hundred of the presses in February.
In February, LEGO announced it was cutting 380 jobs at its main production plant
in Billund, Denmark, where the toy major is based. Most of the work affected
will be decorating and packaging, which will shift to LEGO plants in Hungary,
Czech Republic and Mexico. Billund, however, will receive large investments in
its molding operations.
“The new China factory will be built and run with the same technology,
automation and standards for employee safety and product quality as our LEGO
factories in Denmark, Hungary, the Czech Republic and Mexico, and it will have a
distinct LEGO look and feel,” said Michael McNulty, LEGO senior vice president
of procurement.
Trangbaek said it is too early to estimate the number of injection molding
machines destined for Jiaxing. He said the firm would not reveal the cost or
planned supplier of the machines.
LEGO does not now directly manufacture in China. The new investment will include
molding, decorating and packaging operations. LEGO’s sales in Asia have grown by
more than 50 percent in recent years.
“Based on our current expectations for growth in Asia, the factory should be
able to supply approximately 70-80 percent of all the LEGO products sold in the
region in 2017,” McNulty predicted. “All products made in the new factory will
be sold in Asia.”
Jiaxing, with a population of 5 million, was chosen because of its
infrastructure, proximity to LEGO’s regional distribution center and the city’s
plans for sustainable development. The city has a natural market of 15 million
and boasts two universities and several technical colleges.
By 2017 the new Jiaxing plant will be fully operational with an area of about
1.15 million square feet and about 2,000 employees. By 2015 it will employ
200-400. LEGO did not release precise figures for its Jiaxing investment but
said it will amount to three-digit million euros.
LEGO recently reported a 25 percent increase in group sales to US$4.04 billion
for 2012. It said more than 60 percent of its sales derive from new launches
each year.
Plasticsnews.com
Additional news sites:
FT.com: LEGO to build its first factory in Asia
Reuters.com: Toy maker LEGO plans to build first China factory
From LEGO Group website:
LEGO Group to build factory in China
-end of report-
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