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Lego expands again in Czech Republic

By: Richard Higgs

October 8, 2012

BILLUND, DENMARK (Oct. 8, 12:40 p.m. ET) — Thriving global toy maker Lego A/S has announced fresh expansion plans for its already substantial production plant in Kladno, Czech Republic.

This facility, which manufactures the group’s eponymous building brick products, has already been extended twice since 2010.

Now Lego is due to start work on a new project in December that will add another 150,000 square feet of processing and assembly space to the factory by 2014.

The two-stage project is scheduled to result in a facility with a total covered area of more than 1 million square feet. In the first phase, a 35,000 square foot upper extension will be added to a unit of the processing department where components are decorated and assembled. The additional section will also process Lego parts.

Last year, the company purchased a neighboring industrial site in Kladno. In early 2013, it plans to demolish an existing building on that site making way for the second phase of its own expansion. There Lego will construct an 120,000 square foot product packing hall and an underground car park for 250 vehicles, it said in a news release.

The Billund-based group expects its latest expansion scheme will require investment of more than 13.4 million euros ($17.4 million). It plans to hire another 300 workers.

“It confirms our strong belief in the Czech factory and in the skills and culture of its employees. We expect a lot from our colleagues at this site, and the factory is part of our future,” said group CEO Jørgen Vig Knudstorp.

Lego admitted that it had allowed for possible further expansion at the Kladno site, but was surprised that it was needed so soon. Continuing sales growth has meant it must add more space to avoid a squeeze on capacity there, it said.

This summer, Lego group began the construction of a 125 million euro ($161 million), 860,000 square foot factory complex near Nyíregyháza, Hungary, to manufacture its Duplo and Lego brand toys. That project is also set for completion in 2014.