Lego will build a $1bn factory for the global supply chain in Vietnam

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Lego also made significant investments in China

Lego announced that it will build a new factory in Vietnam in order to meet the growing demand in Asia for its products.

The toymaking giant said it will invest more than $1bn (£760m) in the project, which will be near the country’s main business hub of Ho Chi Minh City.

After opening a factory in China five year ago, this will be the second Asian plant for the Danish firm.

Since 2019, the company has enjoyed a double-digit increase in regional growth.

Lego chief operations officer Carsten Ramussen stated that the Vietnamese government has supported his efforts to help him build his first carbon-neutral factory.

The site’s construction is expected to begin next year. Plans are to offset its energy use with solar panels installed on its roof or on a farm nearby.

Production will begin at this plant in 2024. The facility is projected to provide up to 4,000 job opportunities over the next 15-years.

The latest in Lego’s decade long strategy of building plants near key market markets. This comes as companies across the globe have had to deal with global supply chains issues since the outbreak of coronavirus.

According to the company, “This allows us to react quickly to shifting consumer demands, shortens our supply chains, and minimizes the environmental impact from shipping long distances.”

While the company claimed that the decision to construct the plant in Vietnam was not influenced by supply chain disruptions recently, some experts say it could be an example for other businesses struggling to reach customers.

They’re doing what they should do a long time ago. That is to hedge our bets. Paula Rosenblum (managing partner at RSR Research) says that if you can see demand moving in a particular direction you have to be prepared for it.

Many multinational corporations with factories in Vietnam have faced challenges over the last two years.

Covid-19 was able to spread throughout factories, disrupting production at Nike’s biggest plants.

Logistics experts believe that Vietnam’s recent difficulties could be a learning experience for other countries.

Megan Benger, a consultant at TMX stated that Vietnam has learned a lot about managing the risks of Covid epidemics and maintaining its production capability during the last wave.

She said, “We think that these lessons will likely keep the country in good stead for future outbreaks.”

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Source: BBC.com

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