Friday, January 12, 2007

About the selling of LEGO offices in Enfield...

So the headline hit, and it did bring up some questions for me.

The scorecard so far:

1. LEGO moved out production from Enfield to Mexico.
2. LEGO offices were sold in Enfield and are being leased.
3. A LEGO Distribution center is going to be in Texas.
4. LEGO production in Billund got mostly moved out to Czechoslovakia (and no, I didn't spell that right)

So what's going on? Globalization.

Everyone has to remember that when a person buys a LEGO set, you are not only buying the bricks, you are also paying for machines and people who all are a part in designing, producing, and shipping a set. It's not just the plastic, cardboard, paper, and stickers - it's MUCH more. So when there is a downward push on prices, something HAS to give.

Denmark has just about the highest production wages in the world, because it's a pretty highly developed country (go there, and you'll see what I mean - it's a wonderful place). While that is good for employees, for a company it's an expense that has to be balanced.

With the state LEGO was in previous years, costs became an issue, so production began to get outsourced. It's much better cost-wise to have another company make parts than produce yourself, especially if there are things like equipment involved. It's also better if wages are lower, which can be found  if you look.

The problem, however, as people as noticed, is quality can and will drop if not enough attention is paid. Ironically, that's because the production cost is lower. So oversight is required - which requires some investment. So an additional expense is made.

But some consumers are leaving the brand because it's deemed to expensive, so there is pressure to push down the business has to reduce costs somewhere. If any of us don't buy a set, it impacts LEGO. If sets are bought only on discount, it makes an impact.

The good news is that the LEGO group is getting profitable again. What is happening now is that the company is working to become more nimble. Less expenses means more money to invest in new sets and products. TLG s working to streamline itself, and business wise, it's a smart thing to do.

the point I am making? It might be an idea to take a larger view on the company before reacting to news. After all, the most important thing is that the LEGO Group grow, and that cannot be done without some miscues and goofs. As long as new sets come out, I will look and I will buy what I like. And if the company wants feedback, I'm more than happy to give it.

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