Lego sells Enfield complex for $58.9 million, leases office space

[johnsocal]

http://www.journalinquirer.com/site/printe...newsid=17665125

Lego sells Enfield complex for $58.9 million, leases office space

By:Howard French , Journal Inquirer

Lego Systems Inc. has sold its Enfield buildings and leased back space in some of them for its operations, which are the Danish toymaker's North American headquarters, company spokesman Michael McNally said today.

McNally declined to identify the buyer or to disclose any details of the transaction.

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But Enfield Town Clerk Suzanne Olechnicki said today that land records identify the buyer as Equity Industrial Enfield Limited Partnership, based in Needham, Mass. The partnership paid $58,880,848 for the buildings in the transaction, which took place Thursday.

"The buildings were recently sold, and we have entered into a long-term lease on those we will continue to occupy, which are Compass House on Taylor Road and the small building on Print Shop Road," McNally said. "The Lego Creative Childcare Center will remain in the small building at the corner of Moody and Taylor roads.

"We are very happy to have found a buyer who was amenable to our desire to remain at our campus in Enfield," he said.

Lego in June announced that it would sell its Enfield buildings and lay off nearly 300 of its Enfield workers - roughly 44 percent - through March of this year. Lego also said it will close its Enfield packaging operation and subcontract all warehousing, packaging, and distribution to an international company based in Singapore.

Cuts at its headquarters in Denmark will be even larger, with 75 percent of the 1,200 employees there expected to lose their jobs in 2007, the company announced.

The layoff decision was part of the company's ongoing efforts to slash business costs, Lego officials said.

The action will result in the layoff of as many as 290 of the Enfield operation's 650 employees, according to Lego officials, who said that all workers let go will be paid regular wages through the end of March. They also will be given a severance package including a lump-sum payment based on the number of years employed, company officials said.

Included in the sale were the distribution center and manufacturing plant. All of the warehousing and packing work previously done in Enfield has been subcontracted to Flextronics Corp., which will handle the work at its plant in Juarez, Mexico, according to Lego's announcement in June.

Distribution of North American products also has been subcontracted to Exel Inc., a wholly-owned entity of Germany's Deutsche Post World Net. Under terms of the deal, Lego products will be distributed from Exel's new warehouse in Alliance, Texas, in the Dallas-Fort Worth area, which is to open this month. Full distribution of Lego products will start in April.

Also, Lego's direct-to-consumer sales division announced a partnership with PFSweb Inc. to fill Internet orders of Lego products from its catalog and online store, according to a statement in December from Lego Systems President Soren Torp Laursen.

Beginning in April, Lego orders will be fulfilled from the company's warehouse in Memphis, Tenn.

Financial terms of the deal were not disclosed.

The Enfield changes also are part of the company's overall supply chain plan announced in late 2004 Since the 2004 announcement, the company has closed and moved its plant in Switzerland to its factory in the Czech Republic.

At its headquarters in Billund, Denmark, Lego also has said that it plans to gradually shift production to Flextronics' plants in eastern Europe over the next three years, affecting up to 900 of the 1,200 current production jobs in Denmark.

In addition, Flextronics took over operations at the Lego factory in the Czech Republic in August, company officials said.

Lego ended all manufacturing at its Enfield plant in 2000, farming that work out to its plants overseas, leaving only the North American headquarters corporate functions in Enfield, along with the packing and distribution work that has now been ended as well.

Once the layoffs are completed in March, the Enfield work force will total about 360, according to McNally.

Lego also has announced plans to close its existing five distribution centers in Denmark, Germany, and France, which will mean an additional 213 Lego job cuts.

For more info about the company who will be running LEGO's online store in 2007 check out - http://digital50.com/news/items/BW/2001/07...-to-consum.html

More info about the company who will be making the actual LEGO bricks in 2007 visit- http://www.flextronics.com/en/AboutUs/tabid/53/Default.aspx

[dillthepill]

Interesting. Thanks for pointing this out. *y*

[Grrr]

Lego only has 4500 employees worldwide? - That's insane - and seems to be dropping at a rate of knots.

59 million should be a nice cashflow injection - particularly as everything seems to be outsourced now so their unforseen costs can be that high anymore.

[gylman]

Although it is not perfect, I have found Lego's S@H to be the most reliable online place to buy stuff in the past. Yes, yes, occasionally we get the dinged box, but I buy tons of stuff online, and I can't think of a better experience on average than S@H. I hope this PFSWeb company doesn't screw that up.

In general I am nervous about the whole outsourcing thing.... but on the other hand we do want the company to survive so I guess there is no choice.

[KMOI]

I hear ya, Gyl. This report is making me pretty nervous, especially since LEGO hasn't officially announced where their "call center" will be. I sent in a cheque for a replacement part December the 22nd and I just got it back with a label that says "Box closed, unable to forward, return to sender." Of all the rotten luck! :'-(

I really hope Shop@Home doesn't change much. They've done a stellar job thus far and if they torpedo it now, well... Guess this is the beginning of the end for LEGO's stellar service. :-(

[Minifig Lecturer]

They should spend less money on their cardboard boxes and multiple instruction leaflets.

[JINZONINGEN73]

I can't think of a better experience on average than S@H.

That sums the employees up in Connecticut perfectly.

They're nice people who give a damn.

I really hope the missing/broken parts replacement aspect of their customer service doesn't fall into the crapper.

*sad*

[Zaktan of the Shadows]

...

Sounds good and bad. Thanks.

...

-ZotS

[pianodude2494]

Hmmm...interesting. Thanks for the news! :-)