Nordic Business Report-June 22, 2006-LEGO Group announces major restructuring of production
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The Danish toys maker LEGO Group announced on Tuesday (20 June) that it has decided to outsource most of its production to Flextronics over the next three years.
LEGO Group said that the restructuring will involve phasing out the group's current production in Connecticut, US, and the transfer of operations to Flextronics' factory in Mexico.
The relocation, which also covers LEGO Group's US distribution operations, will affect some 300 employees.
LEGO Group will also outsource certain production operations currently taking place in Billund in Denmark, transferring the operations to Flextronics' facilities in Eastern Europe. These changes are expected to reduce LEGO Group's headcount in Billund from the current 1,200 to 300.
"This is the last major step in our process of restructuring of the Group's supply chain, which has been implemented since 2004 with the purpose of cutting total production costs by DKK1bn," said Jorgen Vig Knudstorp, president and CEO of LEGO Group.
"With the restructuring process, we want to improve our profitability while at the same time strengthening our competitive edge in an increasingly competitive market," Knudstorp added.
One Danish krone (DKK) is worth approximately 0.09 British pounds (GBP).
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