Tuesday, June 20, 2006

Lego Production Leaving Enfield

Lego is going to be moving production done in Enfield to Mexico, and is scaling back the distribution center in town.
Danish toy maker Lego Group said Tuesday it will end its production in Enfield, Conn., and lay off 300 people there in early 2007, while some 900 employees in Denmark will also be sacked over the next three years.

The production in Enfield is to be moved to Mexico, the group said in a statement. Along with the 300 production layoffs, the distribution facility in Enfield will also be affected, Lego said, without providing details. (AP)

This is going to hurt. Lego is a big part of life in Enfield.

Source

"Lego to lay off 1,200 in Denmark, U.S.; move production." Associated Press 20 June, 2006.

39 comments:

GMR said...

I'm surprised they make so much in Denmark and Connecticut, which are both high-cost places. 900 Danish workers will be replaced with Czech workers working for a Singapore company that subcontracts Lego manufacturing. The Enfield jobs will go to Mexico.

I'd imagine it's not just wages, but also electricity, benefits, etc. that make Connecticut and Denmark uncompetitive.

CTKnows said...

Governor will be disappointed .. sounds like another task force in the making

BRubenstein said...

GC..thank NAFTA,CAFTA and Presidents Clinton and Bush for the decision to leave Enfield.

disgruntled_republican said...

BR-

Thank you for including Clinton to your post.

This is devastating to Enfield. It also is not the first time jobs have been lost from Lego. They moved most of their invection molding out about 5 years ago. In defense of both local and state officials Lego marches to the beat of their own drummer and there isn't much they could have said or done to change this outcome.

Brian Durand said...

Dan Malloy released a statement on the job losses announced today:

Connecticut today lost nearly 600 jobs as two large, long-time Connecticut employers announced they were moving jobs out of the state. The job losses announced today of 300 workers in Groton at Pfizer and 300 more layoffs in Enfield at the Lego production facility join a staggering list of jobs that are leaving the state -- nearly 5,000 job losses announced just this year alone.

The announcements today are devastating, and they highlight Gov. Rell's dismal record in leading our state's economy.


Continued here.

disgruntled_republican said...

Brian Durand -

I dont know about the Pfizer jobs but with Lego your assesment is not really fair. That being said, let me point out I not only defending Rell but also the Mayor who I beleive is a friend of your campaign, is he not?

Lego, as I previously posted, marches to the beat of thier own drummer and their isn't much anyone could have done to stop it from happeneing.

That said, I understand that your job is to create spin so I will take these comments as just that.

BRubenstein said...

Disgruntled...im not one to "cover" my fellow Democrats..when they make a mistake i admit it...

turfgrrl said...

I wonder how the rest of the toy industry is faring considering that many plastics are petroleum based.

disgruntled_republican said...

And I appreciate it. Saved me from having to type it and look "partisan"

disgruntled_republican said...

turfgrrl-

Lego's issues go well beyond the cost of petroleum

TSCowperthwait said...

I'm not sure that Dan malloy should be ripping anyone about job loss. In 2002-2003 the Stamford metro area lost approximately 4,400 jobs, or 2.2 percent of all jobs.

A Different Anonymous (No! Really!) said...

Brian:

You can spin all you want, but you're going to have to work a hell of a lot harder than that to spin away an unemployment rate that's a full percentage point below the national average and -- despite the job losses you tally -- a net gain in jobs over the last two years.

Mr. Reality said...

Dan Malloy must have said more than what was written Brian. I hope he included in there what he thinks should be done to prevent jobs from leaving our state.

Brian Durand said...

disgruntled -- I really don't think it's spin. What we've seen is a frightening trend of jobs leaving the state, and I think it's right that the Governor is taken to task on her record. Look at the list of recent job losses at the bottom of my link.

TSC -- Stamford has grown about 5,000 jobs since Dan took office. His record on that front speaks for itself in my opinion.

mr. reality -- I'd urge you to read Dan's proposal on jobs here.(it's a PDF)

A Different Anonymous (No! Really!) said...

Brian Durand said (while failing to respond to my comment above): Stamford has grown about 5,000 jobs since Dan took office. His record on that front speaks for itself in my opinion.

Then I take it you agree that Rell's record of 26,000 new jobs speaks for itself too, Brian?

TSCowperthwait said...

Thanks, A Different Anonymous. You beat me to the punch.

disgruntled_republican said...

And Brian says what to that?

And my dear Brian, perhaps you did not read my post...I said in the instance of Lego it is not fair to lay it on Rell...and if it is her fault I am be sure that you will let Mr. Tallarita know that he, as Mayor of Enfield, is at fault as well in the eyes of the Malloy campaign. But you won't say that either will you?

Goon Squad said...
This comment has been removed by a blog administrator.
Goon Squad said...

Rell has created 26,000 jobs?

Someone might want to tell the state Department of Labor.

State's Job Total Declines
June 16, 2006


The state now has 1.67 million jobs, according to the labor department - the amount it thought it had had in August 2005 before a revision to the 2005 payroll figures pushed the initial estimate downward.

On an annual basis, Connecticut payrolls increased by 7,000, or 0.4 percent, from May 2005 to May 2006, a full percentage point lower than the national pace of job growth.


Feel free to read the full article here -

http://www.courant.com/business/hc-jobs0616.artjun16,0,335708.story?coll=hc-headlines-business

turfgrrl said...

disgruntled_republican,

Well we could say the decline in the number of retail toy stores world wide, the pressures of walmart pricing of course, but what I was hearing industry wide, was that resin prices were deeply affecting toy manufacturers. LEGO has been selling off its molding operations in Switzerland and Germany for awhile, so this seems part of a long term trend. Care to elaborate?

bluecoat said...

-- Stamford has grown about 5,000 jobs since Dan took office. His record on that front speaks for itself in my opinion. based largely on tax breaks and state subsidies that wooed financial firms out of NYC...and now they are all whining there's a transportation problem worse than ever that the state needs to psend money oon to solve...CT needs a program to retain businesses and improve the quality/pay scale of jobs here in CT because as ADA points out we are at full employment...and nobody - MJR, DM or JDS - have a program for that..

Authentic Connecticut Republican said...

BRubenstein said... "....thank NAFTA...."

Never one to let facts get in the way are you?

Connecticut had gained over
10,000 jobs due to NAFTA as of 1999 and seeing as CT's number one export location is now Mexico it's a safe bet the number's higher now.

GMR said...

I'm not sure what Rell or anyone else could have done to prevent these jobs from leaving. I don't know the case with Pfizer, but Lego isn't moving to another state, it's moving to another country. A country with much lower wage rates, laxer environmental rules, etc.

There's only so much a governor can do in this case. Just like Granholm is probably getting shaken down for the auto industry decline in Michigan. Sure, they all take credit when times are good...

First, if Connecticut's job creation rate is 1% less than the country as a whole, that means nothing without knowing how much Connecticut's population grew relative to the country at large. If Connecticut's job growth was 1% less than the nation, but Connecticut's population growth was also 1% less, then Connecticut is basically keeping on track.

What can a state government do to ensure good job growth? A bunch of things, but many of these are longer-term things. It can lower the tax rate, build a better infrastructure, lower regulation, etc.

Connecticut's infrastructure is not great, but a lot of that is NIMBY opposition. Highways are incredibly crowded, and the freight train infrastructure has never been good (I've heard rumours that this is because back in the 1800s, NY industrialists wouldn't allow freight trains to have bridges across the Hudson or some such thing; no idea if that's true or urban legend). But expanding highways is incredibly difficult politically: look at the fierce resistance to Super 7 from Norwalk to Danbury.

Connecticut's electricity rates are damned high: I think higher than just about any other state than Hawaii. And I've heard that our workmen's compensation plans are also quite expensive.

Real estate is expensive in many parts of the state as well. The high housing costs mean workers demand more money, which makes operating a business more expensive.

There isn't really a quick fix to a lot of these things. And some are in direct contention with each other: taxes and infrastructure, for instance. I also don't have all the answers, but for Malloy to blame Rell when a foreign company moves operations out of the US to another country seems a bit silly.

Yes, Stamford jobs have increased while Malloy has been mayor, but many of these have been achieved through various tax holidays, which I am totally against. I do not understand why UBS, for instance, should pay no property tax, while a deli has to. UBS is a better known name, but when the city government starts to decide which businesses it likes and which it doesn't, the whole situation becomes really muddled, and the corporation is the only one that wins in the end (it would have to put those people somewhere, but can now play the municipalities off one another). Essentially, the regular citizens of Stamford are subsidizing a large foreign bank.

turfgrrl said...

bluecoat ,

The traffic issues in lower fairfield county seem to stem more from the lack of affordable housing in the area than the increase in jobs. I suspect that over a 20 year time frame, there isn't a net gain in jobs for the area. But I'm not sure, it's just one of those things that I think about ... in traffic.

What all three candidates should be concerned with is that there is an exodus of young people statewide, because of both lack of entry-level information industry jobs and housing in addition to the other high cost of living, low availability of amenities. Strangely, I think Rowland actually understood this even though the whole "you belong in ct" thing was kind of dopey.

disgruntled_republican said...

turfgrrl -

And all that may be true but the problem with Lego is bad management. Look at the business decisions they have made in the past 10 years and not much of what they have done makes sense. They never allowed their product to grow and change with technology and have lost a large portion of what was their market share to other companies because of it. It goes well beyond that though.

You can question my all you want on it. Those of us who live in Enfield (where Lego is) have seen this time and time again. Next time you meet anyone "in the know" from Enfield ask them their thoughts...

Brian Durand said...

disgruntled,

I think the point is that there is a statewide trend of jobs leaving of late, as you can see from the 13 or so towns listed in the Mayor's statement today (as well as from articles like the one linked by ABC). And yes, I do look to the Governor -- and not Mayor Tallarita -- for answers on that because it is happening in many cities, not just Enfield.

CT_Defender said...

Is it me or are all of you blind to the 900 pound gorilla in the room, The Connecticut general assembly, you want to blame the Rell! What about the the Dem control House and Senate?...

Why aren't we going after their policies..like not reducing the gas tax last session...We had a 719 million dollar surplus and the assembly found no way to protect jobs in this state...

The worst thing that could happen to the Dems in this state if they win the Gov's office then they would have no one to hide behind or blame when thier policies continue to sufficate small business and scare big business away...laughable...

bluecoat said...

GMR says correctly: Essentially, the regular citizens of Stamford are subsidizing a large foreign bank but leaves out that so are the citizens of CT and Jodi has clung to continuing the policies that put us there...and please turffy, according to Malloy he has worked out the affordable housing issue to perfection BUT not the traffic and transportation issues he has helped to create...

bluecoat said...

and turrfy: there is an exodus of young people statewide is rarely backed by the facts as being a problem; CT has always exported and imported people - its a small state and many who live here don't even work here....Rowland used it as an excuse to give tons of money to the building industry for UCONN 2000, etc...Rentschler field has been excellent in improving education just as UCONN sports has doen a great job in supporting CT born athletes....

Wrath of Conn said...

"BUT not the traffic and transportation issues he has helped to create..."

Ah yes, the "Stamford is bad because it created jobs and jobs mean more people and people drive cars and cars create traffic" argument.

The bluecoat traffic rememdy: force all jobs out of Connecticut.

bluecoat said...

No you dumbass WOC; the solution is to stop the policies of giveaways that create problems that the govt. then has to pay for by sending the tax collector out to those who live and do business here...

bluecoat said...

DG: some folks don't understand that not every business decision has to do SOLELY with the government where they do business -the biggest problems in this state are 1)high taxes - and irrational tax policy - for everybody who doesn't get a special deal and 2)lousy energy and transportation infrastructure - nothing has been done to address either of those issues the right way in 20 years....because the Incumbent party doesn't know how to get govt. doing what it's supposed to do...

turfgrrl said...

bluecoat,

You can argue that the population drops in sub 35 year olds is simply due to the overall trends in a nationally aging population. But the Denvers, Atlantas and Phoenix's of the world have growing populations in that age range, and not so surprisingly that is where the job growth is. Information technology jobs are not being created in CT. It's a complex problem. I agree with your energy and infrastructure points, and somewhat with the tax system. There's also an aging mindset about what to do about it, reliance on big companies creating big jobs instead of small companies creating cascading job growth.

Chris MC said...

No you dumbass WOC
bluecoat's kinda testy there, Wrath. Maybe you better reconsider your decision to post an opinion that differs from his.

But, then again, what the hell does bluecoat believe, anyway? Nothing in particular, it seems.

bluecoat said...

Chris, first WOC's only "opinion" was to spin a wrongful conclusion about what I said just as you did. Secondly, you have been on here longer than I have and you know damn well i beleive in listening to professionals on how to solve technical issues. Unfortunately politicians like malloy, farrell and yourself don't like the answer. I have linked this here on the congestion issue and i have talked about the Commission JDS headed up to stop sprawl...with an article linkedhere I don't agree with any of this stuff in its enetirety but it's based on professional stuff more than CT DLC spin...

dogs said...

Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks.

Anonymous said...

This is a simple equation. The global economy is taking shape and these jobs are too costly to maintain here in the U.S. Too bad Government wasn't trimming the fat. Perhaps we'd have a fighting chance in the world economy. No matter who is in charge, money always flows to the lowest cost producer. Once you understand that, you see why tax and spend Liberal Policies are failing our State. I love the apples to oranges comparison average worker to CEO. The CEO isn't your average worker and commands a premium in this environment. Imagine paying Johnny Damon the same money as a minor league player?

Anonymous said...

I wouldn't pay Johnny Damon squat.

Also, I don't see how the 'tax and spend' vs. 'let the rich keep their money' vs. 'give big business a tax break so the low and medium income people have to pay off the national debt' policies have anything to do with 'money flowing to the lowest cost producer.'

The United States is no longer in a position (under ANY policy) to be a low cost producer anymore. The cost of living is just too high. As a result, money will continue to flow out of the country to poorer countries around the world. Eventually, as our standard of living goes down, the others will go up until all is equal ... then they will all go up together once we're on equal footing.

Anonymous said...

The problems with Lego ran deep.

1) The product was expensive and Mega Blox was alot cheaper in price. The product was not as high quality at the time as Lego was but with the reinvestment of profit into quality over time, it met Lego quality and was still cheaper for the consumer. Other companies have also jumped on the block bandwagon with heavy backing from huge toy companies.

2) You would pass out if you knew what the profit margin was on the kits that are sold.

3) Moving to mexico means more profit and the ability to use the lower costs of production in mexico to lower the kit prices more in sink with whats out on the open market today vs saying we are now selling you that 100 dollar kit for 50 dollars because all along it was only worth 50 dollars. And thats still with a huge profit margin. Hint: The box and the instructions cost more than what the bricks inside cost the company to make.

Save face and make more profit is the name of the game.