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Highlights:
- Toy maker Lego to set up a massive factory in the US to cater to the market in the region.
- Proposed Lego factory to generate employment.
- The new Virginia factory will be Lego’s seventh venture at a global level.
The world’s largest toymaker Lego announced on Wednesday about investing US$1 billion in a new factory in the US to address a growing demand for its brick in the region.
The new factory, which will come up in Chesterfield County, Va., outside Richmond, will generate employment for 1,760 people.
The proposed plant will augment Lego’s supply-chain strategy of making most of the bricks and other toy parts in factories closer to major markets.
As several industries are plagued by supply chain disruptions, first due to the Covid-19 pandemic and then due to the Russian invasion of Ukraine, the Lego factory is seen as a smart decision by the company to overcome this handicap.
Most of Lego’s supplies to the US market are fulfilled from its factory in Monterrey, Mexico. This factory has been renovated and upgraded to meet the supply-demand.
Lego had a factory in the US in Connecticut, which was shut down in 2006 as a cost-cutting measure at that time. However, the company still retained its US head office in Enfield, Connecticut.
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New factory to cater to US and Mexico market
“We invest ahead of demand,” Lego COO Carsten Rasmussen said. “We see great potential in the U.S. and Mexico.” The new factory is aimed at meeting the demand in the US, which will also help in supplying to markets in Mexico, Brazil, and other Southern American places.
Construction of the new factory is likely to start in the fall, while the production is expected to begin in the second half of 2025. The new site would have a temporary packaging site coming up in a nearby area in 2024, which will create 500 jobs.
Bottom Line:
The company will expend the stipulated US$1 billion over the next 10 years to create employment and roll-out equipment. The announcement by the toymaker coincides with the Fed’s 75 basis points interest rates hike on Wednesday, the highest after 1994.
