LEGO is removing the final blocks from the traditional edifice of the Danish toy company with plans to outsource production to a Singapore electronics company.
The company, a mainstay of employment in its home country since it was founded in 1932, will shed 900 jobs from Danish factories during the next three years as it shifts the manufacture of standard Lego bricks into the Czech Republic.
A further 300 jobs will be cut in Connecticut as US manufacturing and distribution is moved to facilities in Mexico.
Some of Lego’s products, including the Lego Technic and Bionicle ranges, will still be made at the company’s headquarters in Billund, some 160 miles from Copenhagen, which employs 1,200 workers. Flextronics, of Singapore, will manufacture all of the famous bricks that are made outside Denmark.
The outsourcing and redundancy plan will take place over three years between next year and 2010. The company, which employed more than 8,300 at the end of 2003, expects to employ only 3,000 by the end of the restructuring.
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Lego — the name can mean “I assemble” in Latin but was coined from the Danish phrase leg godt, meaning “play well” — was founded in Billund in 1932 by Ole Kirk Christiansen, a carpenter. The company has passed from father to son and is now owned by Kjeld Kirk Kristiansen, one of the founder’s grandchildren.
In recent years the company has struggled. Last year it made a profit of $87 million (£47 million), compared with losses of more than $300 million in 2004.
Jorgen Vig Knudstorp, a former McKinsey consultant brought in as the first chief executive from outside the controlling family, said; “With the restructuring process we want to improve our profitability while at the same time strengthening our competitive edge in an increasingly competitive market.”