In 2006, Lego A/S shuttered its U.S. manufacturing plant in Enfield, Conn., moving production to Monterrey, Mexico.
Now, 16 years later, the company is returning production to the U.S., with a new $1 billion facility in Chesterfield County, Va., near Richmond.
Why the new manufacturing strategy? Thank Lego's growing popularity, supply chain issues, plus advanced automation that's making U.S. manufacturing globally competitive.
"The U.S. is a very important market for the Lego Group. We've grown rapidly during the past four years, and we expect to see this demand continue as we increase availability across the country, and attract new builders to Lego play," Chief Operating Officer Carsten Rasmussen said in an email.
Since Billund, Denmark-based Lego closed the Enfield factory, the company's Monterrey plant has been primarily supplying the United States with the colorful ABS toy building bricks.
Now Lego is both expanding in Monterrey and returning production to the U.S., with a carbon-neutral facility that will be powered by a solar farm and employ 1,760.
The 1.7 million-square-foot facility will help the family-owned company, which is celebrating its 90th year in business, meet demand for Lego products as well as goals to manufacture them with greener materials in sustainable factories.
The Virginia factory will be a full-scale Lego facility with molding, decorating, assembly and packing handled on-site and molding tools manufactured internally, primarily in Denmark.
Company officials ruled out constructing a second plant in Mexico to stick with their strategy of building up their regional presence in big markets.
In Europe, Lego has factories in Denmark, Hungary and the Czech Republic. In Asia, Lego has a factory in China and is building one in Vietnam.
The Virginia project continues a trend of reshoring in the form of foreign-direct investment (FDI) — when the parent company is based outside North America — that contributed 80,000 of the 261,000 U.S. jobs reshored in 2021. Projections call for another big year for U.S. reshoring and FDI with the proposed Lego positions among some 400,000 job announcements forecast for 2022.
Lego saw massive gains during the pandemic and again in 2021 with the company's growth outpacing the toy industry. Sales increased by 27 percent to $8.06 billion (55.3 billion Danish krone) in 2021 compared with the prior year.
Founded in 1932, Lego building sets are an internationally beloved toy appealing to a wide age range with Star Wars- and Harry Potter-themed play kits, sets of 1,000-plus pieces for adults 18 and up, botanical collections, mosaic art and more.
"Demand for Lego has been fairly insatiable from U.S. consumers so it makes sense that they will actually be produced here again," James Zahn, deputy editor of The Toy Book, said in a phone interview.
While Lego skews as young as preschool, it really appeals to all ages, including a growing number of older teens, young adults and adults who are kids at heart. They are buying Lego Technic sets with functioning gearboxes, wheels and axles as well as artistic floral and portrait sets from the Lego Art range.
"Lego really zeroed on that market with detailed models and more elaborate lines older kids or adults would feel good about doing," Zahn said. "They were an early adopter of recognizing 'kidults.' You don't have to grow up anymore. It's very therapeutic to sit down and enjoy quiet time building something."
To meet demand from kidults and others, construction of the Virginia facility is set for a 340-acre, project-ready parcel in a county-owned industrial park with suitable zoning, roads and power, water and sewer connections all just waiting for the right business.
Production is expected to begin in the second half of 2025.
"The U.S. is the No. 1 toy market, but China has been running very close and likely will become the No. 1 toy market in the world because there are a lot of families with young kids," Zahn said.
To prepare for those orders, Lego is investing more than $1 billion to build a carbon-neutral factory in Vietnam that will employ about 4,000 people over 15 years.
With a growing middle class, demand from Asia is on track to outstrip supply from its Chinese plant, Lego officials told Reuters.
When the Vietnam plant opens in 2024, it will be Lego's second in Asia and sixth overall.
Lego is expanding plants in China and Europe, too, with the financial forecast calling for growth rates to normalize in 2022 and transition back to single digits.
"Lego has production pretty much around the world. It keeps setting up shop where it can be most efficient. It's about getting closer to the customer," Zahn said.
The goal is to respond quickly to shifts in local consumer demand for hot products, shorten the supply chain and reduce the environmental impact of shipping long distances.
"The toy industry talks about speed to market," Zahn said. "The standard timeline for a toy was 18 months from green light to production to your kid's toy box. Now companies want that done as quickly as possible. We've seen it shrink to three months for certain items and even quicker on other things."