Billund, Denmark — Lego A/S, the world's largest toy manufacturer, plans to get bigger.
The privately held Billund-based injection molder announced Oct. 20 that it will expand and invest significantly in its factories in Mexico, Hungary and Denmark to meet increasing demand for Lego products.
The news came the same day that Lego told Reuters that it would have trouble filling all the orders coming from customers for the remainder of 2015 — including the busy Christmas season.
“We are running our factories at maximum capacity and will do everything we can to meet demand,” spokesman Roar Trangbaek told Reuters.
The expansions won't be ready in time to help this year, but they are significant.
In November, the company is adding up to 2 million square feet to its existing factory in Monterrey, Mexico. Lego said it will spend more than 100 million euros ($113.5 million) on the project, but it did not provide a specific investment amount.
Manufacturing will start in 2018.
The Monterrey project includes more injection molding, processing, packing and warehousing, according to a Lego news release.
“The exact details of the expansion and investment will naturally depend on the future development in demand for Lego products,” said Bali Padda, chief operations officer and executive vice president, in the news release.
Expansion in Hungary and Denmark
Lego also announced new expansion projects in its headquarters site Billund, and in Nyíregyháza, Hungary.
In Hungary, Lego in 2016 will start installing injection molding machines in a rented facility near its existing factory in Nyíregyháza. The existing plant also will expand, with more warehousing and processing space.
Padda said Lego also is studying a plan that would double the size of the Hungary site, spending at least 100 million euros on more molding and packaging capacity.
Lego is adding 150 workers in Hungary, and may add as many as 1,600 more as it makes more investments.
At the Billund headquarters, Lego said it will update and modify its existing injection molding factory with new technologies in 2016. The company will invest at least 10 million euros in the project next year.
“Our molding facility in Billund plays an important part in our ability not only to deliver products to children globally but also to continue to innovate and lift our manufacturing know-how to new levels across the globe,” Padda said.
John Goodwin, the company's executive vice president and chief financial officer, said the expansion projects are needed to meet rising demand for Lego toys, which have grown at double-digit annual rates in the past decade.
“The high demand also puts a strain on our factories around the world, and we make these investments to ensure that we can deliver all the products consumers desire both in the short and long term,” Goodwin said, in the release.
Lego also recently expanded its factory in Kladno, Czech Republic, and it is in the process of building its first factory in China, which is scheduled to start production this year and be fully operational by 2017.
