BBC Home
Explore the BBC
BBC News
Launch consoleBBC NEWS CHANNEL
Last Updated: Tuesday, 20 June 2006, 19:39 GMT 20:39 UK
Lego to cut jobs and shift plants
A Lego figure, saluting
After a number of difficult years, Lego has returned to profit
Toy building-block company Lego plans to shift a large part of its domestic production abroad, cutting its workforce by as many as 1,200 jobs.

The Danish firm plans to outsource production to Flextronics, a manufacturer with plants in the Czech Republic and across Eastern Europe.

Lego also will shut its factory in the US, moving production to Mexico.

The changes will be implemented over three years as Lego looks to cut costs amid stiff rivalry in the toy industry.

'Essential element'

Lego has seen electronic toys and cheaper goods crimp demand for its multi-coloured building blocks, which have been used by children and adults to build everything from forts to working cars.

"This is the last essential element in the restructuring of the group's supply line," said Joergen Vig Knudstorp, Lego's chief executive.

"We now see the contour of a new business model, where we go from traditional integrated model to a partnership model. This way we can achieve great financial advantages in a very difficult market," he explained.

Lego said it took into account "cost structure considerations and geographic proximity to the major markets".

The family-owned company had a 2005 pre-tax profit of 702m Danish crowns (64m; $118.6m) compared with a loss of 1.7bn crowns in 2004.

After a number of difficult years, the company decided it needed to cut costs and sold off assets including its Legoland amusement parks in Denmark, the UK, Germany and the US.


SEE ALSO
Lego to shift production overseas
07 Sep 05 |  Business
Troubled Lego sells theme parks
13 Jul 05 |  Business
Is Lego losing out to computers?
12 Apr 05 |  Magazine
Lego tumbles as toy sales slump
08 Jan 04 |  Business
Tired toys try a retro relaunch
25 Sep 03 |  Business
Lego losses: 500 jobs to go
02 Mar 01 |  Business

RELATED INTERNET LINKS
The BBC is not responsible for the content of external internet sites



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific