Will a U.S. factory transform Lego’s supply chain and eco-footprint?
Hoping to support its logistics speed and sustainability goals, Lego Group has developed plans to open its first U.S. manufacturing plant.
The 1.7 million-square-foot factory, costing $1 billion, is set to open in Chesterfield County, south of Richmond, VA, in the second half of 2025, creating more than 1,760 jobs.
The site in Virginia was chosen in part for its access to the country’s transportation networks. The Danish toy manufacturer currently operates six factories worldwide. In the Americas, it also operates a factory in Monterrey, in northeastern Mexico, which is also being expanded to support growth in the U.S. market.
“Our factories are located close to our biggest markets, which shortens the distance our products have to travel,” said Carsten Rasmussen, Lego’s COO, in a statement. “This allows us to rapidly respond to changing consumer demand and helps manage our carbon footprint.”
In December 2020, Lego committed to reducing its carbon emissions by 37 percent by 2032 in line with the goals of the Paris Agreement. Lego said 90 percent of emissions come from the supply chain, including areas such as raw materials and distribution; the remainder relate to energy use at factories, offices and stores.
Supply-chain disruptions over the past two years have driven more Western companies to look at moving production close to home for more resiliency.
A global survey of procurement decision makers taken in March by Forrester Consulting on behalf of Ivalua found 46 percent of organizations have turned to onshoring or nearshoring to minimize the frequency and impact of supply disruptions. Other steps being taken include implementing automated risk-monitoring solutions, increasing inventory and rationalizing supply bases.
According to a recent Wall Street Journal, it could take years to match the supplier networks and availability of raw materials on a scale found in Asian manufacturing hubs.
“Undeniably, China is the single biggest market for all sorts of nuts and bolts, everything from your basic components to sophisticated components,” Kamala Raman, VP, supply chain research & advisory, Gartner, told the WSJ. “You cannot recreate that ecosystem in any other country of the world.”
- The LEGO Group to build US$1 billion, carbon-neutral run factory in Virginia, USA – LEGO Group
- First Lego manufacturing facility in U.S. is coming to Virginia – The Washington Post
- Lego plans to build a factory in the United States. – The New York Times
- Will onshoring really solve supply chain nightmares? – Raconteur
- Are U.S. manufacturing sources an absolute necessity for American retailers today? – RetailWire
- The LEGO Group’s carbon goal approved by Science Based Targets initiative – Lego
- Collaborate or Capsize: Research highlights Supplier Collaboration is Critical to minimize Supply Disruptions – Ivalua
- U.S. Companies Face Hurdles in Moving Production Closer to Home – The Wall Street Journal
DISCUSSION QUESTIONS: Do you see Lego’s logistics resiliency, sustainability ambitions or some other factors benefiting most from opening a factory in the U.S.? Do you expect a significant shift to onshoring and nearshoring among CPG manufacturers?