Lego to cut 8% of workforce

It’s our hobby but for over 18,000 people Lego is their livelihood, so this is really not good to hear.

For the first time in a decade revenues have fallen at Lego.

According to today’s Financial Times:

Revenues fell by 5 per cent in the first half to DKr14.9bn ($2.4bn) while operating profit dropped 6 per cent to DKr4.4bn.

Jorgen Vig Knudstorp, Lego executive chairman, said:

“We have now pressed the reset-button for the entire Group. This means we will build a smaller and less complex organisation than we have today, which will simplify our business model in order to reach more children. It will also impact our costs. Finally, in some markets the reset entails addressing a clean-up of inventories across the entire value chain. The work is well under way.”

Looking at some of the replies to Sky News’ Tweet about this, a lot of people are complaining that Lego is way too expensive, and well, yes it is BUT Lego put a lot into Marketing, which customers (and not just AFOL’s) get the benefit of – Lego Club Magazine (which is sent in the post – working in Marketing I know that the cost of producing, printing and dispatching this must be huge!), FREE monthly builds in-store, FREE gifts with purchase.

Where will the jobs go from?

Anyone who’s had to contact Lego Customer Service will know that they are a dream to deal with.  The same with staff in Lego stores.  I really hope that the 1,400 jobs which are being cut won’t reflect a decline in the great service these guys offer.

Similarly, if more of the manufacturing moves to China will we see standards fall and more issues with pieces breaking?  I hope not.

Will we see a reduction in theme’s?

Licensing costs a fortune so maybe.  I doubt we’ll see a move away from the big hitters like Star Wars and Disney, but themes like Spongebob and Angry Birds – we might not see similar to those.

But at the end of the day, none of this really matters – what theme’s we lose, if we don’t get so many freebies anymore;  today 1,400 people have learned that they will no longer have a job and that’s the worst possible outcome.

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