Subject:
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article about the enfield situation
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Newsgroups:
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lugnet.lego
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Date:
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Wed, 29 Nov 2000 05:26:19 GMT
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Lego To Shut Enfield Plant, Lay Off 94
By MATTHEW KAUFFMAN
The Hartford Courant
November 28, 2000
Lego will lay off 94 workers and shut down its Enfield-based manufacturing
plant in response to a multimillion-dollar net loss this year, the company
said Monday.
The Enfield plant - Lego's only manufacturing facility in North America -
will fall silent just before Christmas, said Katherine Lee, a spokeswoman
for Lego Systems Inc., the company's U.S. subsidiary. All molding and
processing work will move to plants in Denmark and Switzerland. Although
labor costs are not appreciably different at the European plants, the
company expects to save money because the plants are more automated and are
running below peak capacity, Lee said.
As part of a global restructuring of the toy company, Lego will also impose
a temporary shortened workweek for as many as 400 packing and distribution
workers in Enfield. To accommodate the company's cyclical workload, the
employees will work three or four days a week, beginning in January, and
receive partial unemployment benefits to make up some of their lost income,
Lee said. The employees will return to full-time work around June, when the
pre-Christmas ordering picks up, she said.
Lee said the company expects that its packing and distribution operations in
Enfield will expand over time, taking over the space currently used for
manufacturing.
The cost cuts are in response to an estimated fiscal 2000 loss of $40
million to $65 million globally, which follows several see-saw years for the
company's finances. Lego had strong earnings in 1996, but barely made a
profit the following year. In 1998, the company reported its first loss
ever, which led to layoffs for 10 percent of its global work force. But last
year the company rebounded with a pretax profit of $67 million, built on a
25 percent increase in sales.
A good chunk of that increase came from the introduction of the
extraordinarily popular Star Wars-themed sets. The sets are still selling,
but not at last year's blistering pace, and Lego is reporting a general
decline in sales across most product lines. Some products continue to sell
well, however, including Lego's pricey and high-tech MindStorms robotic sets.
In addition to the changes in Enfield, Lego is re-evaluating its business in
Latin America, which has had disappointing earnings, the company said.
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Message has 1 Reply:
 | | Re: article about the enfield situation
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| (...) Do they even understand that one of the reasons they're losing money is because they're dumbing down their educational building toy product? They start losing money (for the first time ever, apparently) around the same time as they introduce (...) (24 years ago, 29-Nov-00, to lugnet.lego)
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