Lego to Cut Jobs in U.S., Denmark

Lego Group, whose iconic plastic building blocks have entertained millions of children for more than 70 years, said Tuesday that it would eliminate 1,200 jobs to remold itself in an era when kids prefer playing with electronic gadgets.

The company, one of the last to produce toys in the U.S., plans to close its manufacturing plant in Enfield, Conn., and lay off 300 employees in early 2007. Work done at the Enfield plant will be shifted to Mexico, where costs are lower, Lego said.

At Lego’s headquarters and plant in Billund, Denmark, as many as 900 production employees will lose their jobs over the next three years as nearly a third of the domestic production is shifted to the Czech Republic.

Some Lego products, including the popular Lego Technic and Bionicle, will continue to be made in Billund, which presently has 3,000 employees.

“This is the last essential element in the restructuring of the group’s supply line,” Lego CEO Joergen Vig Knudstorp said.

Chris Byrne, a New York-based independent toy analyst, called Lego’s restructuring “an inevitable shakeout of doing business in a dynamic industry.”

Toy makers such as Lego have struggled in recent years. Children are moving from traditional toys to video games and digital music players. Companies including Mattel Inc. and Hasbro Inc. have responded with their own kid-friendly versions of electronic gadgets but overall industry efforts haven’t yet reversed falling sales.

Sales of traditional toys fell 4% to $21.3 billion in 2005, down from $22.1 billion in 2004, according to market research firm NPD Group Inc.

Lego sold its Legoland amusement parks in Carlsbad, Calif.; Windsor, Britain; Munich, Germany; and Billund to the U.S. private equity group Blackstone Capital Partners in 2005.