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10 Facts About Lego Retrenching 1,400 Staff You Need To Know

2017-09-08 , 7:10 pm

I bet you’re familiar with Lego.

We’ve all seen it at some point in our lives – whether it’s playing with the physical blocks, watching it on TV (Lego Movie, anyone?) or playing video games (Harry Potter and Batman Lego games).

Well, it looks like the manufacturers of our childhood past time might have had a bit of a setback because they just retrenched 1,400 of their staff. That’s a whopping 8 percent of their entire staff population!

Here are ten facts about this incident that YOU should know.

1. 5 percent decline

According to Channel News Asia, Lego had reported a fall in sales – a 5 percent decline in mid-year revenue a month – on September 5 (this Tuesday).

This was the first time something like this happened in more than a decade, and it forced Lego to employ some pretty drastic measures. Like retrenching 1,400 of their staff.

2. Total revamp

Lego has pressed the reset button, and they are looking for a return to a leaner and more productive organisation. This is to halt their loss of momentum, and hopefully prevent stagnation or even decline.

3. The chief executive was the sacrificial pawn

Aside from the retrenchment, the Danish toymaker had also removed its chief executive a month prior to the announcement. Ouch. Sucks to be him.

Well, at least there will be a handsome bonus waiting for him. Hopefully.

4. This might be a really bad situation for Lego

They haven’t faced such a daunting test since their close brush with bankruptcy in the early 2000s.

In fact, it’s got to a point where they can’t promise a return to growth in the next two years.

5. Disappointing revenues

Revenues had taken a down turn in its core markets of the US and Europe, after a decade of double-digit growth that involved Lego sets, video games, movies, robots and smartphone apps.

Star Wars lego sales dropped slightly in the first half of the company.

6. Topping Hasbro and Mattel

This comes off the back of a pretty decent first-half in 2017, when they made 14.9 billion Danish crowns (US$2.38 billion), winning My Little Pony producer Hasbro Inc’s sales of US$1.82 billion and Barbie doll maker Mattel Inc’s US$1.71 billion.

7. Shock result

For a company that’s survived the 2008 financial crisis – the global toy market literally shrank – this was a shocking revelation. Why did they suffer losses in such a sudden manner, when they could pull through a global crisis?

Answer: Kids are no longer playing with toys. It’s now all mobile.

8. Investments

But it could have been expected all along. According to them, they invested a lot, including adding 7,000 new positions between 2012 and 2016. However, not all of it turned out to be positive.

In fact, in 2016, revenue growth had slowed down from 25 percent in 2015 to just six percent. That was a warning sign that Lego didn’t take into account, and they are paying the price for it now.

9. Previous experiences

Back when they flirted with bankruptcy, Lego started revamping their core business, firing consultants and hiring new designers to create updated Lego versions. This proved to be a masterstroke, leading them out of the gutters and guiding them towards a golden decade.

10. It’s actually unlisted

Did you know? Lego is actually an unlisted company!

In this age, it’s really rare for major corporations to be unlisted companies.

Thoughts

As someone that grew up with Lego bricks, I sincerely hope that Lego would make a comeback.

Picture this: lego bricks are no longer in production, and there will be no more landmarks, video games and movies.

But as my colleague Boon Hun puts it, stick to Lego bricks, Bro. Leave Batman and Superman alone.

What about you? What do you think?

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This article was first published on goodyfeed.com