Gifts / Sports & Toys

The Lego Group said recently that it will spend $1 billion to build a 1.7 million-square-foot factory in Virginia, which will be the company's only factory in the United States and its seventh factory in the world.

Lego said the new factory is expected to create more than 1,700 jobs within 10 years. The factory is expected to start construction this fall, with production expected to begin in the second half of 2025. Lego said a temporary packaging base will be operational in early 2024.

The factory is expected to be carbon neutral and an on-site solar park will meet the factory's energy needs, Lego said.

This is the second carbon-neutral factory recently announced by LEGO - in December last year, LEGO signed a memorandum with Vietnam-Singapore Industrial Park Joint Venture Co., Ltd. to cooperate in the construction of LEGO's first carbon-neutral factory in Vietnam. The new factory is proposed to be built in Binh Duong Province, which is about 50 kilometers away from Ho Chi Minh City, the capital of Vietnam. It covers an area of 44 hectares and the total investment is expected to exceed US$1 billion. The factory is scheduled to start construction in the second half of 2022, officially start production in the first half of 2024, and create as many as 4,000 jobs over the next 15 years.

As the world's No. 1 toy giant, LEGO's performance has continued to grow in recent years. In 2021, the company's revenue will increase by 27% year-on-year to 55.3 billion Danish kroner (about 8.1 billion US dollars / 51.2 billion yuan), and consumer sales will increase by 22% in the same period; Net profit reached 13.3 billion Danish kroner (about 1.95 billion US dollars / 12.3 billion yuan).

Currently, LEGO's global supply chain includes factories in China, the Czech Republic, Hungary, Mexico and the company's home country, Denmark, covering Europe, the Middle East, Africa, the Americas and Asia. Build factories to shorten shipping distances.

In recent years, China has become one of the fastest growing markets for LEGO. Data shows that in 2021, the company will open 165 LEGO-branded brick-and-mortar stores, of which more than 90 will be in China. All 5 LEGO flagship stores in Asia are currently in the Chinese market. On October 1, 2021, the sixth LEGO brand flagship store in mainland China opened in Guangzhou Grandview Plaza, which is also the world's largest LEGO brand flagship store so far. As of December 31, 2021, the total number of LEGO stores worldwide reached 832, with China accounting for 41%. In the future, LEGO also plans to introduce more stores in China.

With the expansion of the Chinese market, LEGO is also actively increasing the production capacity and new equipment of the Jiaxing factory in China. In January, the LEGO Group announced that it would expand operations at its factory in Jiaxing, China, to create more capacity. The factory, which opened in 2016 and employs about 1,200 people, mainly supplies LEGO products to the Chinese and Asian markets. The expansion project will include the addition of a high-bay automated warehouse, injection molding facilities and workshops for processing Lego bricks. A total of 42,000 square meters will be expanded on the existing basis, and the potential production capacity will be significantly increased. At present, the factory expansion project has begun and is expected to be completed in 2024.

Although LEGO is growing rapidly in the Chinese market, with the rise of domestic building block brands in recent years, it will inevitably face greater challenges in the future. As the main battlefield of Lego, the European and American markets will not relax. The establishment of the US factory will undoubtedly meet the growing demand of the US market to the greatest extent.

It is reported that the LEGO Group will also be supported by a series of incentive policies in the United States, including a $56 million operating benefit grant and a site development grant pending legislative approval, which is expected to be as high as $19 million.