Expansion is child's play for Lego in Kladno
Danish industry giant is building new facilities in the Czech Republic
Posted: March 20, 2013
Even from the outside, the Lego plant in Kladno looks different from the average industrial facility.
While the large gray warehouse-style buildings are, in size and shape, nothing out of the ordinary, decorating the facade are the outlines of figures. These are supersized versions of the ubiquitous Lego figures that have been mainstays of the children's toy market for more than four decades.
By the time visitors reach the main entrance, their attention is focused on characters closer to real life than the shapes on the building walls. Next to the lobby they see a family - a man, a woman and a child - dressed in traditional Czech clothing and offering some of the country's culinary delicacies.
These people are not flesh and blood, however: They have been fashioned from the Lego bricks that pre-date Lego figures by almost two decades.
Inside, the theme continues. At the back of one office stands a dramatically sculpted life-size model of Spider-Man made from Lego bricks, while in the corner of another is a model of Woody, the cheery cowboy from the Toy Story franchise.
Woody's sunny mood seems to sum up the fortunes of Lego, which is far from fading away in this technology-driven era, despite having a core product that is 63 years old.
Since 2008, when many European companies started struggling with recession, this privately owned Danish company has seen its global sales almost triple with growth of at least 15 percent a year. In 2012, revenue jumped a quarter to $4.04 billion, even though, in the first half of the year, the toy market globally contracted 4 percent. Among toymakers, only Mattel and Hasbro are larger.
"[Sales] are growing hugely, and we've had great success in the past five or six years; there is no doubt about it," says Carsten Rasmussen, the general manager of the Kladno processing and packing facility and the company's senior vice president for EU packing.
"In 2005, we were a company that was struggling. At that time, I don't believe we were doing a good job at prioritizing. We were putting our bets on too many things. So we focused on our core market: boys aged 5 to 11."
A series of astute tie-ups with outside brands, among them Star Wars, Lord of the Rings and Harry Potter, have helped sales to grow. The company has also created its own fantasy worlds, notably Ninjago, which is linked to a television series. Lego has also branched out into video games.
Yet the company has not forgotten the more traditional, utilitarian toys that children delight in: fire trucks, big ships, trains and the like that are sold under the wildly successful Lego City brand. The world of toys may keep changing, but certain elements appear to remain constant.
"If you take boys, they like to build physical things in their digital world," Rasmussen says. "They like the brick, to have a physical thing to play with. And where there's a story, you can build the story."
Lego's recent success has brought rich rewards in employment terms to Kladno, where the work force, numbering about 2,100, of which some 1,500 are permanent staff, now represents about one-fifth of the company's global headcount.
"We take good care of our people, but we want improvements every day," Rasmussen says.
The facility carries out final processing of the plastic components made at molding plants in Denmark, Mexico and Hungary. Processing might involve printing the face on small figures, or attaching several components together to make, for example, a horse or the mouth of a mechanical digger.
Pieces are bagged and put into boxes by hand or machine to make the final kits, which are distributed from a center in Jirny, a village to the east of Prague.
The Kladno plant opened in 1999 but really began to expand in 2006, when mass production of boxed toy sets started. It now gets through about 25 billion bricks each year and produces 20 million boxed sets.
"It's a lot of different bricks of different shapes we have to handle, and [the plant must] get them in the right quantity and quality," says Rasmussen, who as well as a standard business card, also gives out a mini Lego figure of himself complete with glasses and brown hair and, printed on the figure's back, his contact details.
The plant is now "one of our big operations in the world" and is "still expanding," he says.
That much is clear, with contractors currently creating a new building, just a year after the plant's second main block opened.
Earlier this year, Lego announced it would close processing and packing operations at Billund in Denmark, transferring them abroad to sites including Kladno, leaving the headquarters to focus on molding. There are as yet no plans to begin brick manufacturing in the Czech Republic.
Rasmussen says the key advantage of a base in the Czech Republic is geography: The country's position in the center of Europe means the plant is close to many of Lego's key markets.
"We look at competency and stability, and we look at costs, but cost is not the first priority; it's distance to our customers," Rasmussen says.
Although the company downplays the influence of cost, the savings are likely to be considerable. According to Eurostat, in 2011 the average hourly wage across all industries in Denmark was 38.60 euros, while in the Czech Republic it was 10.50 euros.
Processing staff at the plant say they enjoy the work. Among the jobs that 30-year-old Jana Katarínská does is assembling parts of toy mechanical diggers. She has a target of producing 235 an hour.
"It's really not difficult; it's almost like playing," she says. "We do something different every day. It's not too stereotypical. I enjoy the job, truly, and I like to come here."
Certainly the working environment appears pleasant; noise levels are modest, and workstations are not packed tightly together. The plant runs 24 hours a day, seven days a week, with eight-hour shifts on weekdays and 12-hour shifts at weekends, the latter said to be popular with students.
For a company that highlights young boys as its main market, some of the components that travel along the conveyor belts in the processing plant have a surprising twist. White cats, arriving at the plant without decoration, have an attractive feline face and a pink bow tie printed on them before they are packed.
They are destined for inclusion in Lego Friends toy sets, a range launched a year ago that broke new ground: It was targeted at girls. Gender campaigners may have complained the range perpetuated stereotypes, but children voted with their feet by buying the toys en masse.
In a statement released to coincide with the announcement of its 2012 financial results in February, Lego said Friends had sold "much better than expected," with production double the number predicted.
Rasmussen, a Lego veteran who has worked for the company for 13 years, locally as well as abroad, in the United States and Hong Kong, says the elder two of his three daughters enjoy the toys.
"It's going very well, and we hope it will continue to grow in the years to come," he says of the new range.
Just as Lego is broadening its target market in terms of gender, so it is looking to expand geographically, with Asia key for growth.
This was reflected in a recent announcement that the company was building its first factory in China, a $130 million facility to act as "a supply base for future growth in Asia."
Russia and Central and Eastern Europe are also being targeted for expansion.
The European growth in particular means the Kladno operation is likely to keep expanding as the company continues to defy the global slump.
"We need to stay relevant all the time. That's our task for the next 100 years," Rasmussen says.
Daniel Bardsley can be reached at