Lego to build first China plant

By Michael Lauzon
Correspondent

Published: March 22, 2013 2:17 pm ET
Updated: March 22, 2013 2:20 pm ET

Related to this story

Topics China, Toys, Injection Molding
Companies & Associations Lego A/S

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.


Comments

Lego to build first China plant

By Michael Lauzon
Correspondent

Published: March 22, 2013 2:17 pm ET
Updated: March 22, 2013 2:20 pm ET

Post Your Comments


Back to story


More stories

Image

African equity fund invests in Kenya's General Plastics

January 28, 2015 4:24 pm ET

An African investment fund specializing in agriculture has invested in Kenyan packaging firm General Plastics Ltd. to provide funds to expand in the...    More

Image

China XD to catch up on Sichuan project

January 28, 2015 2:41 pm ET

Automotive compounder China XD Plastics Co. Ltd. (Nasdaq: CXDC) has been working on its fourth production base in Nanchong, Sichuan province since...    More

Image

China's plastics industry making a shift

January 27, 2015 3:41 pm ET

China's plastic industry is in the midst of a “profound adjustment” from large-scale and high-speed growth to growth focused on quality,...    More

Image

Citadel opens second compounding facility in China, near Shanghai

January 27, 2015 3:22 pm ET

Citadel Plastics Inc., the American manufacturer of thermoplastic and engineered composite compounds, has opened its second facility in China,...    More

Image

Major packaging merger includes plastics operations

January 26, 2015 12:24 pm ET

A merger of packaging companies MeadWestvaco Corp. and Rock-Tenn Inc. will create a new company with nearly $16 billion in annual sales.    More

Market Reports

Plastics in Automotive: Innovation & Emerging Trends

This special report newly released by PN and sponsored by The Conair Group examines current trends in the use of plastics in automotive, materials innovations and the changing landscape. It includes a review of legislative/regulatory activity impacting vehicle development and lightweighting, market opportunities & challenges for mold and toolmakers, innovative design strategies being implemented by major OEMs and suppliers, as well as a review of key indicators in Canada, Mexico, Brazil and China.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Upcoming Plastics News Events

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events