Lego Not Afraid of Mexican Drug War

[mrfootball]

Article about Lego's new factory in Monterrey, Mexico...interesting quote:

According to company estimates, production costs are about 20 per cent less than elsewhere. Meanwhile, the Mexican plant boasts just 43 defective pieces per million compared with 114 in the case of its Hungarian plant, and 350 in Denmark.

http://blogs.ft.com/beyond-brics/2011/07/29/lego-is-not-afraid-of-mexicos-drug-violence/#axzz1Teg0zHjg

[Lego Otaku]

Article about Lego's new factory in Monterrey, Mexico...interesting quote:

According to company estimates, production costs are about 20 per cent less than elsewhere. Meanwhile, the Mexican plant boasts just 43 defective pieces per million compared with 114 in the case of its Hungarian plant, and 350 in Denmark.

http://blogs.ft.com/beyond-brics/2011/07/29/lego-is-not-afraid-of-mexicos-drug-violence/#axzz1Teg0zHjg

Cheaper than China? I hope the quality of pieces are more in line with most European factories than with Chinese factory. Bad enough we get an occasional flame blaming "inferior Chinese crap" that we don't need Mexican haters.

[mrfootball]

Cheaper than China? I hope the quality of pieces are more in line with most European factories than with Chinese factory. Bad enough we get an occasional flame blaming "inferior Chinese crap" that we don't need Mexican haters.

Sounded like a globalist propaganda piece to me.

[Aanchir]

Article about Lego's new factory in Monterrey, Mexico...interesting quote:

According to company estimates, production costs are about 20 per cent less than elsewhere. Meanwhile, the Mexican plant boasts just 43 defective pieces per million compared with 114 in the case of its Hungarian plant, and 350 in Denmark.

http://blogs.ft.com/beyond-brics/2011/07/29/lego-is-not-afraid-of-mexicos-drug-violence/#axzz1Teg0zHjg

This is an interesting read! It's rare that we read much about LEGO's Mexican plant, and it's nice to see such a positive portrayal of it from an economic perspective.

Now, I'm not hugely cynical about this, but since I'm sure some people will be I'd like to point out something that others might observe: fewer defective parts in the Mexican plant could be a consequence of lax standards regarding what is considered "defective" rather than actual improvements. Also, the plant in Denmark tends to handle more technically-demanding parts like BIONICLE parts, or so I have read. So it's possible that there are other factors besides efficiency that affect these statistics.

But as I said, I'm not that cynical about this. It's easy to believe that a factory built in 2008 would be far more efficient than LEGO's older factories, and as I always point out about the Chinese plant, there's no reason to think the laborers in non-European countries value quality less than those in European production facilities.

The thing about production costs being lower is interesting, and I hope that those lower costs don't come at the expense of laborers being underpaid for their work. Even if the quality of the parts coming out of that facility is good, I'd like to believe LEGO will be a positive presence in communities worldwide, as they have been in their European production sites. Again, though, a newer plant with greater efficiency probably plays a significant role in these lower costs.

[Brickdoctor]

Cheaper than China?

The article says:

The result for Lego is that when it comes to supplying the North American market, it is both cheaper and more productive to manufacture in Mexico.

I assume that if you also consider transportation costs, it's cheaper to supply the Americas from the Mexico plant.

[Joebot]

The thing about production costs being lower is interesting, and I hope that those lower costs don't come at the expense of laborers being underpaid for their work. Even if the quality of the parts coming out of that facility is good, I'd like to believe LEGO will be a positive presence in communities worldwide, as they have been in their European production sites. Again, though, a newer plant with greater efficiency probably plays a significant role in these lower costs.

Of course the workers are underpaid. That's the whole point of offshoring operations like this one. You send the work to another country where you can get thirty cents on the dollar for labor, and you don't have to deal with unions. Every manufacturing company in the world does this exact same thing for the exact same reason -- cheap, underpaid labor. Don't think that just because TLC makes cute little toys that they're not any different.

[vexorian]

Cheaper than China? I hope the quality of pieces are more in line with most European factories than with Chinese factory.

Meanwhile, the Mexican plant boasts just 43 defective pieces per million compared with 114 in the case of its Hungarian plant, and 350 in Denmark.

[def]

Of course the workers are underpaid. That's the whole point of offshoring operations like this one. You send the work to another country where you can get thirty cents on the dollar for labor, and you don't have to deal with unions. Every manufacturing company in the world does this exact same thing for the exact same reason -- cheap, underpaid labor. Don't think that just because TLC makes cute little toys that they're not any different.

There's truth to what you're saying, but the people there also appreciate the work; it's better than delivering tortillas for a living.

I'm no fan of corporate culture, but I need to make a distinction between companies building their own factories in cheap labour countries and simply outsourcing it to the cheapest bidder. Companies like, for example, Nike or Apple, outsource their labour, and when problems go down in those factories (ie. worker suicide), they just say they didn't know about it, and that it wasn't under their control. With Lego having their own factories, they are taking a certain level of responsibility for the production and the workers, the latter being the important part.

[vexorian]

"Lower wage than the US" does not necessarily mean underpaid. You have to consider cost of life as well.

If for example, people in my country were paid half of what US workers get paid to do the same thing, they would be feeling like millionaires. Yet the corporation would be spending 50% of it. Makes me realize it is too bad this place is so unfriendly to businesses...

Edited August 1, 2011 by vexorian

[Aanchir]

"Lower wage than the US" does not necessarily mean underpaid. You have to consider cost of life as well.

If for example, people in my country were paid half of what US workers get paid to do the same thing, they would be feeling like millionaires. Yet the corporation would be spending 50% of it. Makes me realize it is too bad this place is so unfriendly to businesses...

Well said. I wasn't trying to suggest TLG wasn't paying lower wages, but they have a good reputation as an employer in the European countries where they manufacture, and I'd like to believe that extends to their non-European production facilities as well.

[davee123]

"Lower wage than the US" does not necessarily mean underpaid. You have to consider cost of life as well.

Yeah, there are a lot of considerations, some of which may also not boil down to direct paychecks, either. Like, what health benefits are required for workers? What safety regulations have to be met on the premises? What levels of insurance are required for the factory? What social services are expected to be met? (Cafeteria, air conditioning, parking, etc).

DaveE

[CP5670]

Of course the workers are underpaid. That's the whole point of offshoring operations like this one. You send the work to another country where you can get thirty cents on the dollar for labor, and you don't have to deal with unions. Every manufacturing company in the world does this exact same thing for the exact same reason -- cheap, underpaid labor. Don't think that just because TLC makes cute little toys that they're not any different.

Yes, people are giving TLG too much credit here. They may or may not have good wages and working conditions by Mexican standards, but this kind of offshoring is done only for one reason, and that is to reduce costs. Nothing wrong with that, but let's not pretend that they are better than the average company.

Edited August 1, 2011 by CP5670

[Blondie-Wan]

Yes, people are giving TLG too much credit here. They may or may not have good wages and working conditions by Mexican standards, but this kind of offshoring is done only for one reason, and that is to reduce costs. Nothing wrong with that, but let's not pretend that they are better than the average company.

Well, let's not pretend that just because they might seek to reduce costs it makes them worse than the average company, either. I think it's entirely possible for a company to both seek to be a good corporate citizen in terms of treating its employees well, paying them fairly, adopting good environmental practices, etc., and at the same time seek to decrease costs and maximize revenues by outsourcing to whatever countries can produce the product at low costs, among other things.

[Joebot]

Well, let's not pretend that just because they might seek to reduce costs it makes them worse than the average company, either. I think it's entirely possible for a company to both seek to be a good corporate citizen in terms of treating its employees well, paying them fairly, adopting good environmental practices, etc., and at the same time seek to decrease costs and maximize revenues by outsourcing to whatever countries can produce the product at low costs, among other things.

Just because everybody does it, doesn't make it okay. Technically what TLC has done is "offshoring," not "outsourcing," since the employees in Mexico and China and so forth are employees of TLC, not of some other company that they've contracted to do the work.

But whatever it's called, it still sucks as a business practice. A few years back, my employer laid off 200 people here in the U.S., and opened a new branch in Central America. I didn't personally lose my job, but I watched a lot of friends and co-workers lose their jobs so that the company could pad the bottom line by hiring cheap labor. The message this sends to employees is loud and clear -- you are replaceable. Your education, training, and expertise mean nothing.

I would imagine that the people in Denmark who lost their jobs when TLC sent their manufacturing operations overseas probably felt likewise.

[vexorian]

But whatever it's called, it still sucks as a business practice.

AFAIK The China case is outsourcing. But why would off-shoring suck as a business practice? It surely sucks for the workers of the first factories, but if TLG want to cut costs by having plants that are closer to the US then that's what happens.

A few years back, my employer laid off 200 people here in the U.S., and opened a new branch in Central America. I didn't personally lose my job, but I watched a lot of friends and co-workers lose their jobs so that the company could pad the bottom line by hiring cheap labor. The message this sends to employees is loud and clear -- you are replaceable. Your education, training, and expertise mean nothing.

I would imagine that the people in Denmark who lost their jobs when TLC sent their manufacturing operations overseas probably felt likewise.

Yes, and it is bad for the replaced employees. But there are two sides to the story and it is that the new employees got new jobs. It does not suck as business practice because it cuts costs. And if it is possible to find a work the same level as yours across another continent then you really are replaceable.

If the statistics about this Mexican plant actually having less quality issues than the Denmark one are true, then it is just plainly the case of Mexican plant being a lot more competitive (ie: more quality for less cost) than Denmark.

but this kind of offshoring is done only for one reason, and that is to reduce costs.

Has anyone stated otherwise in this thread?

Edited August 2, 2011 by vexorian

[Brickdoctor]

I would imagine that the people in Denmark who lost their jobs when TLC sent their manufacturing operations overseas probably felt likewise.

Though as far as I know, TLG didn't close any plants in Denmark in order to open the one in Mexico. That was an addition to increase production at a cheaper cost, not make the current production cheaper.

[Front]

First of all. I don't believe much I read in an article about a company, when the article does not even show the products of that company in a picture.

They can't even show real LEGO products, why should I trust the written information ?

LEGO has produced bricks for many years in USA, and now does it in Mexico. What's the difference, it was in both cases done to be close to the NA market. And in both cases labour is less costly than in Denmark.

I for one is glad to have a lot of colleages in Mexico, and is proud that LEGO are giving jobs to a lot of Mexicans.

Front aka

Erland, Part Design

Edited August 3, 2011 by Front

[Tazmaniac]

Of course the workers are underpaid. That's the whole point of offshoring operations like this one. You send the work to another country where you can get thirty cents on the dollar for labor, and you don't have to deal with unions. Every manufacturing company in the world does this exact same thing for the exact same reason -- cheap, underpaid labor. Don't think that just because TLC makes cute little toys that they're not any different.

Don't be so quick to throw LEGO in the "big bad corporate" basket, when confronted by Greenpeace about their use of unsustainable paper products TLG were quick to air their position on the matter.

This gives some insight into the social conscience of TLG, making it hard for me to believe they would pay their employees less than the local award wage.

[Joebot]

Yes, and it is bad for the replaced employees. But there are two sides to the story and it is that the new employees got new jobs.

Really?!?! ALL of them got new jobs? You know this for a fact?? At the same salary as their old jobs? And with the same benefits?? That is amazing.

It does not suck as business practice because it cuts costs. And if it is possible to find a work the same level as yours across another continent then you really are replaceable.

With that kind of callous attitude, I can only assume that you must be in senior management.

Don't be so quick to throw LEGO in the "big bad corporate" basket, when confronted by Greenpeace about their use of unsustainable paper products TLG were quick to air their position on the matter.

This gives some insight into the social conscience of TLG, making it hard for me to believe they would pay their employees less than the local award wage.

Don't you go cluttering up my principled rant with your "facts!"

Okay, that's a fair point, and TLG has certainly shown themselves to have a social conscience. This issue of offshoring is one that hits close to home for me. I've seen good friends and co-workers lose their jobs because of it. I understand the financial reality of why companies do it ... but that doesn't mean I have to like it, or even agree with it.

[treeboy]

Really?!?! ALL of them got new jobs? You know this for a fact?? At the same salary as their old jobs? And with the same benefits?? That is amazing.

I think what was meant was the new Mexican employee's of TLG got jobs.

With that kind of callous attitude, I can only assume that you must be in senior management.

It's funny how your job and the jobs of your friends are so important, but have you considered that it is someones job to ensure the product is produced efficiently and accurately within a certain budget? Now what about their job?

Don't you go cluttering up my principled rant with your "facts!"

The principle of entitlement.

This issue of offshoring is one that hits close to home for me.

Clearly! However, TLG is in it for money just like you go to your job for the money. If you could make more money somewhere else wouldn't you consider changing jobs/employers?

[CP5670]

Has anyone stated otherwise in this thread?

Most people here are only saying that they are good corporate citizens or something to that effect, which entirely misses the point. Mind you, I can certainly see why TLG (or any other company) does this, and it is indeed a good business strategy.

This gives some insight into the social conscience of TLG, making it hard for me to believe they would pay their employees less than the local award wage.

The few Glassdoor reviews on TLG are a mixed bag and indicate otherwise as far as the pay goes (although they have other good things to say).

[Joebot]

Clearly! However, TLG is in it for money just like you go to your job for the money. If you could make more money somewhere else wouldn't you consider changing jobs/employers?

That's certainly true. It does go both ways. As corporations increasingly treat employees like replaceable, fungible parts, employees have less loyalty, and are more inclined to take a job down the street for an extra nickel or two. There was a time, not that long ago, when people stayed with a single employer for their entire career.

Getting back to the original post (says the guy who highjacked the thread ...), TLC deserves a lot of credit for not letting the quality slip in their offshores operations. Quality is typically the first thing to go when you start cutting corners on your employees.

[22kane]

Whether you like it or not Lego is a large corporation and this is what large corporations do. Outsourcing for a cheap labor force to gain a higher profitability is the name of the game. In America alone most of the large manufacturer companies that started here now have their labor force in a completely different country. From what I know Lego hasn't abandoned any of their original factories in favor of Mexico and hopefully they don't. With this plant in Mexico they can supply North America without the use of container ships which sends the profit higher. They probably even got some kick-backs from setting up shop from the Mexican government. This is big business, that's how it goes.

I personally don't have an issue with it. I'm not a "buy American" screaming good ol' boy and never will be. Would I like them to share the savings with their consumers like myself? Yes, please. But it won't happen. The rich get richer I guess.