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From WJT.com. June. 20, 2014.
LEGO to Boost Capacity at Mexican Factory
Danish Toy Maker to Increase Head Count by 50% in Move to Serve North and South
American Markets
By Clemens Bomsdorf
COPENHAGEN—Lego A/S, the world’s No. 2 toy maker by revenue, is planning a 50%
increase in head count at its factory in Mexico to meet demand for its popular
interlocking brick toys in North and South America.
The Danish company, which has enjoyed significant momentum in recent years, saw
its sales growth moderate in 2013 amid challenging conditions for traditional
toy makers around the world. Chief Executive Jørgen Vig Knudstorp has been
shifting focus toward emerging markets, such as China, where it has not yet
scored the sales success notched in places like the U.S.
The investment in Mexico, however, signals continued optimism about Lego’s
prospects in the lucrative U.S. market. An additional 1,000 people will be hired
to work in a factory that employs 2,000 and it will “significantly” boost
production capacity for the Americas markets, the company said.
LEGO spokesman Roar Rude Trangbaek didn’t give details on total output or future
expectations. The extra capacity at the plant north of Monterrey will be in
place in September, he said.
“When planning expansions we want to secure that factories’ capacities can meet
demand in the longer run, meaning capacity is not necessarily utilized fully
straight away,” he said, adding that the same strategy is in place for other
expansions, such as into China, where a factory is envisioned by 2017.
Mr. Rude said LEGO is moving toward a manufacturing strategy of building toys
close to where they are sold. “Our setup is built in a way that the Americas
shall be served from the Mexico factory and production sites in Asia and Europe
serve those markets.”
The U.S. is LEGO biggest market, but the company doesn’t disclose detailed sales
figures by country. The company, which had revenue of about $4.6 billion last
year, is second only to Mattel Inc. in global toy sales.
Mr. Knudstorp in a recent interview said LEGO quadrupled its business just in
the U.S. market over the past several years, and the company’s success has stood
out in an otherwise struggling industry. “We have done so by not focusing on the
competition,” he said, noting that while the U.S. toy market has declined by 9%,
without LEGO the decline would have been 16%.
LEGO recorded a 9% rise in profit last year on 10% revenue growth. In 2012, its
profit rose 35% while revenue grew 23%.
From:
wsj.com
-end of report-
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