Success Stories: LEGO Reborn
LEGO Master Model Builder Erik Varszegi's homage to "The Hobbit," built in the Enfield model shop.
When Danish carpenter Ole Kirk Kristiansen started making wooden building blocks in his small workshop in 1932, little did he realize that, 80 years later, they would’ve been named “Toy of the Century,” and that his LEGO company (named from the Danish words “Leg Godt” or “Play Well”) would be the world’s third-largest toymaker, a global enterprise with annual sales of nearly $4 billion.
But it hasn’t been all happy, nonstop building over the company’s run—in the mid 1990s, sales slipped as cheaper imitators flooded the market and video games dramatically increased their hold on kids. Despite making key profitable partnerships for playsets linked to successful movie franchises such as Star Wars and Harry Potter, by the turn of the 21st century, LEGO’s empire began to crumble, and it hovered near the edge of bankruptcy.
That’s when drastic steps were taken to reorganize and streamline the company, moves which greatly impacted Enfield, where LEGO had set up its North American operations in 1975. The Enfield manufacturing plant was shut down in 2000, and in 2006 the distribution center was closed. The toll: 290 Connecticut jobs lost. The corporate offices, however, remained.
It took a few years, but the new internal business strategies worked, and LEGO has seen its fortunes reverse. Now the toymaker is once again a player in the global toy market—sales are up 24 percent annually over the last three years, and profits have grown 41 percent overall.
“We are laser-focused on understanding children and everything that they love,” says Michael McNally, LEGO’s brand-relations director. “With so many options available to today’s kids, it’s critical that we stay relevant in their multitasking mix.”
It also helps that in the era of hyperactive point-shoot-and-destroy video games, LEGO blocks provide a calmer creative alternative, “hands-on, minds-on” fun, as McNally refers to it. “As kids build, they feel the joy of the creative, constructive process, and when they complete a model they feel a strong pride of accomplishment, which fuels their desire to continue building,” he says. “We know parents love the value for money that LEGO sets deliver and they’re willing to invest in a toy that grows with children and keeps them playing for years, not just hours.”
All of which means that LEGO is once again helping boost the state’s economy. In 2010, an 80,000-square-foot addition was added to the Enfield headquarters, and the number of jobs there has doubled to 600 since the low point in 2007, with more hirings planned as the company’s success dictates.
LEGO also continues to innovate and tap into new markets. A year ago, it introduced its somewhat controversial Friends line, a product line targeted specifically at young girls that features five female characters, suburban-type playsets and lots of pink and purple blocks. The line has been a huge hit, tripling the number of girls who now buy and play with LEGO blocks.
The company has also opened retail stores around the globe, and has branched into LEGO-themed television—such as its popular animated “LEGO Ninjago: Masters of Spinjitzu” series on Cartoon Network—as well as other movie and video-game production. It also stages large interactive family-friendly events including LEGO Kidsfest, which will return to Hartford in December. Like one of its own playsets, LEGO continues to grow and add blocks.
“We’re very fortunate to span several generations now in the U.S., with kids loving LEGO building as much as their parents did growing up,” says McNally as the company continues to anticipate a bright future. “We’re focused on reaching even more children with new LEGO themes and stories, exciting events and engaging experiences, and our lineup for 2013 is phenomenal.”