LEGO Group to build factory in China By 2017 a new LEGO factory in Jiaxing, China is expected to be fully operational and have approximately 2000 employees. The LEGO Group has announced plans to build and operate its own LEGO factory in China. The factory will supply products for the growing Asian market. Construction is expected to begin in 2014. “It is our strategy to have production close to our core markets in order to secure short lead-time and world class service to our customers and consumers, and it has proven a successful strategy. Asia – including China – is a future core market for the LEGO Group and therefore I am excited to share our plans for the new factory. 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” says Bali Padda, COO and adds: “In addition by placing a manufacturing site in the region we reduce our environmental impact as we will reduce the need for transporting products from Europe to be sold in Asia.”
State-of the art factory The factory will be built in the city Jiaxing, right in the middle of the Yangtze River Delta and located approximately 100 km from Shanghai where the LEGO Group is planning to locate a regional distribution centre for Asia. “The new 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, Czech Republic and Mexico, and it will have a distinct LEGO look and feel.” says Michael McNulty, Senior Vice President, Procurement. Producing for Asia only The LEGO Group currently does not operate its own manufacturing facility in China, but with the new production site including moulding, decoration and packaging facilities it will have a supply base for future growth in Asia. LEGO Group sales in the region have grown by more than 50 percent annually 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.
All products made in the new factory will be sold in Asia,” says Michael McNulty. Location with focus on employees The location of the new factory, Jiaxing, has a population of 5 million and it has been chosen for several reasons, says Michael McNulty: “It is close to our regional distribution centre and the city has all the facilities and infrastructure needed. But in addition, we believe the location is perfect in regards to securing the best environment for future LEGO employees. The city is the strongest possible match with core LEGO values, and the plans for a sustainable city development is well organized” Jiaxing has been named “National Health City”, “National Model City for Greening”, “National Garden City”. For further information, please contact: Roar Rude Trangbaek, LEGO Group Press Officer Ph: +45 7950 4348 Cell: +45 3065 3164 • By 2017 the factory is planned to have an area of approximately 120.000 square meters
• In 2015 the factory is planned to have approximately 200 - 400 employees • By 2017 the factory will be fully operational and is planned to have approximately 2000 employees • These numbers depend on the growth and demand for LEGO products in Asia and can be adjusted. • The investment will amount to a 3 digit million Euro figure • Construction of the factory is planned to begin in early 2014 • By 2017 the factory is planned to be fully operational • Jiaxing has a population of 5 million and a catchment area of approximately 15 million. • There are two universities and numerous technical colleges located in the city. • Jiaxing is ranked 25th in the city ranking of “100 best cities for foreign investment” and has earned the titles of ‘National Civilized City’, ‘Chinas outstanding Tourist City’, ‘National Health City’, ‘National model city for greening’, ‘National garden city’ and national innovation pilot city.
• Jiaxing is right in the middle of the Yangtze River Delta There are numerous multinational companies located within Jiaxing Economic and Technological Development Zone • Jiaxing is located approximately 100 km (1.5 hours) from ShanghaiLEGO® brand products are beloved by millions of children all over the world. As the world’s 6th largest toy manufacturer, LEGO Group sells their products in more than 130 countries. In 1999, LEGO toys were named the Toy of the Century by FORTUNE magazine. In 2004, LEGO Group was struggling as a company and was in need of change. Debt had reached over $1 billion and they saw sales fall over 40%. They hired a new CEO, Jørgen Vig Knudsdorp, to take over global LEGO operations. Jørgen turned focus back on the LEGO brick and their core competency, making great LEGO sets for all ages. He relocated manufacturing and scaled down their product line. Part of his strategy was to leverage outsourcing as a means to reduce costs and create a more variable cost structure;
all while keeping or increasing the quality of their products to the customer. In 2006, they began searching for a specialty order fulfillment partner to support their online business. They sought a single partner that could effectively integrate with their online channel and respond to dramatic seasonal demand spikes during the holiday peak while also taking advantage of a variable cost model. After an extensive evaluation, they chose PFSweb as their direct-to-consumer order fulfillment partner. PFSweb provides LEGO Brand Retail with a flexible, custom order fulfillment solution from a centrally based distribution center that includes system integration, order fulfillment, returns processing, kitting, and transportation management. PFSweb services all LEGO customer orders from the website and the LEGO Shop at Home catalog in North America. PFSweb also supports all the U.S. LEGO stores with product replenishment services. A few examples of the services offered by PFSweb which are utilized by LEGO include: