Lego lets go of Swiss production

Lego is letting 300 workers go Keystone

The Danish toy maker Lego is to close its factories in central Switzerland, with the loss of 307 jobs.

This content was published on August 31, 2005 - 16:03

Lego said on Wednesday high costs were one of the main reasons for moving production to eastern Europe by the middle of next year.

The planned move foresees the closure of the facility at Willisau, where 239 staff will lose their jobs.

Production at the plant, which paints the Duplo toy series for pre-school children, is expected to transfer to the group's factory at Kladno in the Czech Republic.

"Obviously high costs in Switzerland have been a key factor in deciding to transfer production to eastern Europe," commented Lars Altemark, a Lego senior vice president, in a statement.

"And to derive maximum benefit from our cost reductions it is also important to move whole units – as we now plan to do with Swiss production."

Tooling works

The group is expected at the same time to close its Swiss tooling works at Steinhausen in canton Zug.

It said the works was no longer able to use its capacity to the full and higher cost levels could no longer compete with prices in eastern Europe and China.

Lego is to try to find a new owner for the plant over the next few months. If this is not possible, the facility, which employs 68 people, is expected to close at the end of next January.

The group's European headquarters for marketing and sales in Baar, also in canton Zug, will be transferred to Denmark on July 1 next year.

But there will be no job losses because the staff of about 20 are Danes and will be returning home.

The company, whose plastic bricks have entertained generations of children, is struggling to return to profit amid cut-throat competition in toys.

Last year, net losses more than doubled to a record $310.6 million (SFr393.7 million), after large write-down charges.

In July, Lego sold its Legoland theme parks to private-equity firm Blackstone for €375 million (SFr580.6 million) and a 30-per-cent share in a new entertainment group.

The Legoland parks are in Denmark, Britain, the United States and Germany.

swissinfo with agencies

Key facts

Founded in 1932 Lego is the world's fourth-largest maker of toys.
The name Lego comes from the Danish words "Leg Godt", which means "Play well." In Latin it means "I put together".
The company made a record net loss of SFr393.7 million last year.
The Lego group is a privately held, family-owned company, based in Billund, Denmark.

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