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Lego to speculate $1bn in new Vietnam manufacturing unit

Danish toymaker Lego is to speculate greater than $1bn in constructing a manufacturing unit in Vietnam to reply to elevated demand in Asia, and to make its provide chain extra resilient following a collection of shocks from Covid-19.

The manufacturing unit, which will probably be Lego’s first carbon impartial facility, will probably be constructed 50km from the capital of Ho Chi Minh Metropolis beginning within the second half of subsequent yr with the primary manufacturing scheduled for 2024.

It is going to be the sixth manufacturing unit for the world’s largest toymaker following one in China, three in Europe, and one in Mexico, and can principally serve south-east Asian international locations as Lego seems to be to capitalise on the rise of the middle-class within the area.

“Our technique is to have our manufacturing regionally, and adapt to adjustments in demand regionally. It has actually helped our resilience this yr. So the place can we see development? Within the south-east Asian area above all,” Carsten Rasmussen, Lego’s chief working officer, advised the Monetary Occasions.

Lego’s development has accelerated all through the Covid-19 pandemic, reaching a zenith within the first half of this yr when revenues elevated 46 per cent, cementing its place forward of Mattel and Hasbro of the US because the biggest-selling and most worthwhile toymaker.

After conquering European after which US houses, the privately held Danish group has set its sights on Asia, increasing quickly in China with tons of of own-brand shops in addition to a manufacturing unit in Jiaxing that opened in 2016.

Lego spent the previous 18 months exploring places in south-east Asia and acquired a “excellent deal” from Vietnam, in keeping with Rasmussen, who pointed to the nation’s abilities and openness on sustainability in addition to its closeness to different international locations to scale back lead instances. It’ll create about 4,000 jobs over the following 15 years as Lego regularly scales up the plant.

“We’re actually taking a look at the long run and investing for the long run. There’s a huge potential for us in Asia and China . . . After all, it helps with resilience however that isn’t the first argument,” added Rasmussen.

Lego’s current Chinese language plant will sooner or later principally produce for China, Korea and Japan whereas the brand new Vietnamese facility will serve the remainder of Asia.

The funding will probably be welcome information for Vietnam, the place exports are one of many essential drivers of financial development, and which has in recent times positioned itself amongst overseas buyers as a decrease price manufacturing various to China. Vietnam and the EU signed a free commerce settlement in 2019.

The south-east Asian nation, nonetheless, has had a tough yr due to powerful measures meant to comprise a file variety of Covid-19 instances, which locked down the nation’s essential manufacturing hub in and round Ho Chi Minh Metropolis for almost three months, inflicting disruption to producers comparable to Nike, Intel, Ikea and Toyota.

Lego’s carbon impartial manufacturing unit will depend on photo voltaic panels on the manufacturing unit and a close-by photo voltaic venture that ought to match the plant’s vitality wants, because the group invests closely in additional sustainable manufacturing. Vietnam is attempting to shift its vitality combine to renewables, particularly solar energy, to scale back its reliance on coal-fired energy crops, and the south is the nation’s sunniest area.

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Written by colin

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