Within two and a half years, Lego will close the part of their Billund factory in which it decorates and packages Lego bricks, leaving hundreds of employees without a job.
Lego expects to make a total of 380 positions redundant by the summer of 2015, including 75 in 2013 and a further 200 positions in 2014. The jobs will be outsourced to factories in eastern Europe and Mexico, although some employees will be trained to assume other positions within the company.
“Some employees will leave us through a natural departure, while others can perhaps develop new competencies and find work in other areas of the Lego group,” Jørgen Vig Knudstorp, the chief executive of Lego, said in a press release. “But, unfortunately, we can’t avoid laying off some employees.”
The decision to shut down part of the production in Billund is part of Lego’s long-term strategy to have the packaging plants closer to their core markets in order to reduce delivery times.
“In the future, we will concentrate our production and packaging efforts in Lego factories in the Czech Republic, Hungary and in Monterrey, Mexico, where we pack and decorate most of the products we sell today,” Carsten Rasmussen, senior vice president said in the press release.
Rasmussen, who is responsible for Lego’s packaging and production in Europe, said that 90 percent of all Lego bricks made or decorated in Billund are shipped to other Lego factories to be packaged in boxes.
“That’s why we need to have production closer to our big packaging plants. And when we close down production in Denmark, it doesn’t make sense to invest any further in the packaging plant in Billund, which will also be closed,” Rasmussen said.
The move, however, does not translate directly into Lego closing down production in Denmark. According to its leadership, Lego still sees Billund as a central hub when it comes to their moulding technology. The company is planning to invest hundreds of millions of kroner in their factory in Billund in future years. Because of this, Lego believes that the number of employees in Billund will remain the same or even rise in the future, despite the closure of the packaging plant and production line.
Lego, which was founded in 1932, is the world’s third largest producer of toys and employs about 10,000 people worldwide.