Rising demand keeps Lego in master builder mould

Photo by Lego A/S Children playing with Lego bricks.

It seems the world can’t get enough Lego bricks. Lucky for customers that the Danish producer of the ABS blocks is obliged to invest heavily to meet demand.

Lego A/S recently announced further expansion in Hungary. It is doubling floor space at its Nyíregyháza, Hungary factory to make way for as many as 786 additional injection moulding presses. This latest project for Hungary is bigger than the one announced last fall when Lego also announced investments in that country and provided more details of its projects in Mexico and Denmark.

Lego is sinking hundreds of millions of euros in the Hungary plant, increasing the scope of the project to include more moulding, packaging, assembly and decorating than it intended just several months ago. The extra expansion stretches out construction time to a 2018 completion. By 2020 Lego could be employing 4,000 at the campus, up from about 2,400 now, if sales grow as anticipated. Floor space could grow to 2.8 million square feet.

The investment in Hungary includes a new injection moulding facility and mold assembly area, more warehousing, a new building for decoration and assembly, new administrative facilities and a building with the sole purpose of managing the consumption of electric power on the campus.

The factory’s appetite for plastics could go beyond the ABS resin needed to mould bricks. Lego’s new, high-bay warehouse will contain 500,000 storage boxes and 40,000 pallets — which could well be made of plastic. A Lego spokesman declined to comment on what material would be used for the boxes and pallets.

Lego senior vice president Jesper Hassellund Mikkelsen indicated the Nyíregyháza site has performed well since it started up in spring of 2014.

“We are close to our consumers and customers across Europe, we are able to attract the skilled labor we need to make high quality Lego products, and we have a positive ongoing collaboration with the government and relevant local and regional authorities,” he stated in an announcement on Lego’s web site.

Lego admitted last fall that it was having trouble filling a flood of orders for the holiday season. It subsequently announced expansions in Mexico, Hungary and Denmark to show it was trying to keep up with demand.

The Monterrey, Mexico, operation is growing with more moulding, assembly and decorating being added in a first phase of expansion begun last November. Further sales growth could spur a move to add as much as 1.8 million square feet of space in Monterrey.

At its Billund, Denmark, headquarters it has begun a major push to find sustainable alternatives to its current resin consumption. A new Sustainable Materials Centre in Billund will employ about 100 people testing potential substitutions for ABS.

Earlier, Lego invested heavily in its Kladno, Czech Republic, plant, one of its four global manufacturing locations. And its Jiaxing, China, factory, a first for Asia, opened last year and will reach full production in 2017. Lego is spending about $470m (€433m) on that project.

“It is our ambition that children all over the world experience creative Lego play, and as we continue to grow our business, we need to ensure that we are able to deliver the Lego sets demanded by consumers all over the world,” noted Bali Pada, executive vice president and chief operating officer, in Lego’s recent announcement.