April 15, 2023
Manufacturing Trends and Lego at the Forefront
Last year, LEGO Group announced that they invested $1 billion to build a manufacturing facility in Chesterfield County, Virginia and to expand on their current factory in Mexico. This factory will be LEGO Group’s first manufacturing facility in the United States, paving the way for reshoring and showcasing the opportunities the US has for domestic manufacturing. As the seventh factory globally, this will also expand the LEGO group’s global manufacturing network by bringing in over 1,700 jobs to the United States. The factory will operate as a carbon-neutral facility, consisting of a solar park to power operations helping minimize energy consumption.
LEGO Group’s CEO Niels Christiansen stated, “We were impressed with all that Virginia has to offer, from access to a skilled workforce, support for high-quality manufacturers, and great transport links”. Opening another manufacturing facility can have various positive effects on the manufacturing industry such as:
- Job creation
- Supply chain optimization
- Increased production capacity
As previously stated, LEGO Group’s new manufacturing facility in Virginia is expected to bring in over 1,700 jobs. An article by NPR states “It’s been a very good year for U.S. manufacturing. Factories added 467,000 jobs in the last 12 months and factory production in September was the highest in 14 years, according to the Federal Reserve.” Building and operating a new manufacturing facility typically requires hiring workers for various roles, ultimately creating job opportunities in the industry.
In addition, the opening of a new manufacturing facility can stimulate economic activity in the area it is located. Opening a new manufacturing plant does not mean job creation stops at the manufacturing floor. A new manufacturing plant means more jobs in all areas of business. According to the Economic Policy Institute, the rebuilding of United States manufacturing will result in an added 2.5 million U.S. manufacturing jobs by 2024. As the facility begins to produce goods, it will create demand for related goods and services, such as packaging, marketing, and transportation leading to a creation of more jobs throughout the local economy.
Supply chain optimization
Lastly, when companies open another manufacturing facility they can optimize their supply chain by bringing production closer to its customers or sources of raw materials. This can positively impact the industry by improving delivery times, reducing transportation costs, and increasing efficiency. In fact, in a 2022 survey by Deloitte, shipping delays had the biggest impact on manufacturers’ supply chains in the past 12-18 months.
Carsten Rasmussen, the Chief Operations Officer of the LEGO Group stated, “Our factories are located close to our biggest markets which shortens the distance our products have to travel. This allows us to rapidly respond to changing consumer demand and helps manage our carbon footprint. Our new factory in the US and expanded capacity at our existing site in Mexico means we will be able to best support long-term growth in the Americas.”
Increased Production Capacity
Opening another manufacturing facility can expand production capabilities because it allows companies to increase the amount of goods they produce in a period of time. This is due to the new facility having its own production lines, equipment, and workforce, which can work with other facilities to produce more goods. According to Manufacturing Tomorrow, without making wholesale production changes, factories can improve process efficiency with machine learning (ML). ML can increase production capacity by up to 20% while lowering material consumption rates by 4%.
The Lasting Impacts
The LEGO Group opening its first manufacturing facility in the United States will positively impact the company and the manufacturing industry as a whole. With this manufacturing facility being their first one in the United States, they plan on not only expanding the LEGO group’s global manufacturing network, but also shortening the supply chain and supporting long-term growth in the US.
American companies are now starting to produce more goods within the United States in order to rely less on global supply chains. According to Insider.com, GE Appliances is investing in expanding US production to make products closer to customers and create more American jobs and Intel is investing $12 billion on two chip factories near Phoenix that are due to open in 2024.