The Lego Group (Billund / Denmark; www.lego.com) has announced a substantial reduction in its workforce. By the end of 2017, the Danish toy manufacturer wants to layoff around 1,400 people, corresponding to about 8% of its approximately 18,200 employees. "We are very sorry to make changes, which may interfere with the lives of many of our colleagues," says group chairman Jørgen Vig Knudstorp. "Unfortunately, it is essential for us to make these tough decisions."

There were already suspicions from market observers, when Lego announced the establishment of a new CEO in June. As of 1 October 2017, Niels B. Christiansen will replace the current CEO, Bali Padda, who had already taken Knudstorp's position as CEO at the beginning of the year (see Plasteurope.com of 17.08.2017). Several months ago, the company had also announced worldwide layoffs of 176 factory employees in Monterrey / Mexico (86), in Billund / Denmark (63), in Nyiregyháza / Hungary (9) and in Jiaxing / China (18) – see Plasteurope.com of 11.04.2017.

According to Knudstorp, the increasing complexity of the Lego Group's organisation has made it harder for the group to grow and impacted costs. In the first half of 2017, revenues declined by 5% compared to the previous year's figure to DKK 14.9 bn (EUR 2 bn). The decrease was mainly due to established markets such as in the US and parts of Europe, while the sales figures in growth markets, such as China, increased with double-digit growth. Operating profit fell by 6% to DKK 4.4 bn and net profit went down by 3% to DKK 3.4 bn.

Along with the job cuts and building a "smaller and less complex organisation," Lego also announced adjustments to its formula for product development and marketing. These are elements for the group to potentially counter the developments and see a return to growth.