Fifteen years after laying off 300 workers, shuttering its factory in the U.S. and moving production to Mexico to cut costs, Lego is back to making toys in America.
The Denmark-based toy company, which makes the colorful plastic building blocks that kids have played with for nine decades, said on Wednesday that it plans to invest more than $1 billion in a new manufacturing plant in Virginia.
The move will allow it to shorten the distance that its products have to travel to reach the U.S., one of its biggest markets, it said, and thereby avoid the global supply chain chaos that has resulted in major delays and increased costs during the pandemic.
“This allows us to rapidly respond to changing consumer demand,” chief operations officer Carsten Rasmussen said in a statement.
Companies that have outsourced production to Asia in recent decades have been scrambling to keep shelves stocked in the last two years, exposing their reliance on a global supply chain that has been overwhelmed by a surge in consumer demand and crippled by pandemic-related lockdowns. In the time it took for items to arrive from Asia, many retailers have discovered that consumer preferences shifted. Target, Walmart and others now say they suddenly have too much of the wrong kind of inventory, and will have to offer discounts to clear it.
Lego will begin construction on the 1.7 million square foot facility in the fall of 2022, with toy production expected to begin in 2025. It will hire more than 1,760 people in the next decade to work at the carbon-neutral factory, which will have 100% of its energy needs matched by renewable energy generated by an onsite solar park.
The company has done well during the pandemic, as parents and kids turned to its toy sets for entertainment while stuck at home. Last year, revenue jumped 27% to $8 billion.
Its previous factory in the U.S. was closed in 2007. It still makes toys in Mexico, and plans to expand its operations there to support additional capacity.