More restructuring and changes at TLC

Post by **rogue27** » Thu Oct 21, 2004 1:10 pm

You can read about it here:
http://www.lego.com/eng/info/default.as ... ycode=2057

Interesting. It seems that one of the factors that sparked these changes is that their yearly sales are expected to drop to 8b in 2004 from 8.4b in 2003. I wonder if this 5% drop in sales is caused by the insignificant AFOL market that doesn't want the new grays...

Sure, bad set designs and high prices are likely culprits as well, but those factors have remained constant for the last several years and can't be blamed for the drop in sales.

*EDIT*
I removed "Kjeld Retires" from the subject line because it was a bit misleading, and I do not want to sound like the front page of a tabloid.

I foolishly wrote the subject before I had finished reading the article, and I let the hype generated by the LUGNET post where I found this article get to me. I did not get to the part where it says he just stepped down to a different position when I first posted this. I also did not realize that he stepped up to CEO in 2003. I figured he was always there.

Sorry for the misleading subject.

The Tennis Ball Kid · Post by **The Tennis Ball Kid** » Thu Oct 21, 2004 1:48 pm

This means that LEGO Company believes it is unlikely to reach the break even point which was the target for 2004.

This is due, in particular, to the fact that the very important American market and the Japanese market have not yet demonstrated the positive progress expected at the start of the year. In addition, the general competitive situation in the toy market remains acute, which has increased pressure on prices.

Hmmm, I wonder what happened at the start of the year that caused such a thing to happen? It can't be as Rogue said the AFOLs, because we know that they are such a small portion of TLC's sales that ticking them off by doing something like e.g.: eliminating the backwards compatibility of all the gray bricks in the new sets, couldn't possibly hurt sales. Could it be teenagers who caused this sudden drop in sales? No, because we know that "the vast majority of teens.." aren't buying LEGO anyway. Hmmm.....

What got me ROTFL was that you could download hi-res pics of these people...why?

Yes, I'm feeling bitter about the color change. My birthday is coming up in a couple weeks and for the first time in my life there aren't any LEGO sets that I'm asking for...

Post by **architect** » Thu Oct 21, 2004 3:24 pm

The statement "Kjeld retires" is a bit misleading. Is he not just taking a different position in the board? This is much like his job prior to the disasterous 2003 at LEGO which caused him to briefly take the helm of the company and set it back on course.

Time will tell if the "action plan" will be successful in keeping LEGO stable and improving growth (or reducing losses) in the USA. It does seem that LEGO is doing a poor job at competing with MB here. Better quality products, displays, and more competitive pricing with certain sets would appeal to North Americans. We will have to see if any major changes are made at how LEGO is marketed here.

Ben E.

medib · Post by **medib** » Thu Oct 21, 2004 4:35 pm

He steps down as CEO of the company. I guess he thought if he had control
of day-to-day decisions, he could personally turn the company around.

The problems are beyond his control, I guess, and I assume that he would
like more personal time (perhaps to play with his own lego!!)

He still is the Vice Chairman of the board, and defacto owner of Lego.
So he still has a big hand in some of the decisions at Lego, just not
the day-to-day ones.

JPinoy · Post by **JPinoy** » Thu Oct 21, 2004 5:15 pm

*uses powers to send a telepathic message to Lego corporate execs....* "If you build Military, Ancients, better Castles, bring back System Pirates... they (sales) will come."

Post by **Formendacil** » Thu Oct 21, 2004 5:54 pm

Well, I can't say that they shouldn't have expected to see this coming.

We have warned them...

High prices, sets with less BUILDING pieces, incompatible colours....

Scrap new grey, scrap overdone boxes and instructions, and put more pieces in the boxes. Even if you leave the price as it is, it will still be worth it.

Of course, they didn't listen back then to us. So whys hould they now?

Oh..

And personally, I don' think Kjeld's retirement will make an appreciable difference. He's still ultimately in charge, the machinery running TLC is still the same.

Post by **Bruce N H** » Thu Oct 21, 2004 7:49 pm

Hey,

Interesting. I wonder where this will lead? I'm a little concerned about the selling off the Legoland parks. On the one hand this could mean that they (and, let's face it, for me this means LLCA) will end up being Disneyland clones with a little area off to the side devoted to LEGO, thus (IMO) destroying the parks? Or will it mean that they could make some positive changes to encourage older kids to come, both reinvigorating the parks and expanding their marketing to TFOLs? Time will tell.

More troubling, in the Lugnet thread Arne Nielsen reports a story from Danish TV that production will move to China. I worry about what this will mean for quality control.

Bruce

kajo163 · Post by **kajo163** » Thu Oct 21, 2004 9:13 pm

"More troubling, in the Lugnet thread Arne Nielsen reports a story from Danish TV that production will move to China. I worry about what this will mean for quality control."

Please tell me this is'nt true. That's horrible news! Not only would that lower the quality to megablock-level, to actually make profit they'd still have to have expensive sets.

Sigh, I guess they'll have to learn the hard way, again!

joel

Mr. D · Post by **Mr. D** » Thu Oct 21, 2004 11:27 pm

Well, I really don't know what to say. I guess I'm encouraged for three reasons: 1.) They have a plan, and it's working so far, 2.) New leadership (hopefully) means smarter leadership (such as listening to AFOLs), 3.) There financial position is improving. I am a little concerned about the outsourcing and the selling off of LEGOland parks, though.

Section8 · Post by **Section8** » Fri Oct 22, 2004 12:30 am

As some of you may attest to, it seems like LEGO can't release a new retail-level set without creating a new piece specifically for it. Ok, that may be an exaggeration, but seriously, I've read in The World of Lego Toys (pub. 1988 for those of you wondering) that LEGO's molds are incredibly expensive ($50,000 each?) and only spit out around 8 or so pieces per run. So a bunch of new molds per year would be quite expensive. Perhaps this is part of the reason for LEGO's financial situation. Maybe they could cut costs by finding more ways to use what they already can make, and maybe bring back old molds (a certain type of instrument used to throw hay around comes to mind) instead of making new ones.

And it's obvious, but I'm going to say it anyways: LEGO bricks are made of plastic, plastic comes from oil, oil ain't cheap right now. But I know this is not their number one concern right now.

Emperor James · Post by **Emperor James** » Fri Oct 22, 2004 12:58 am

Hmmmm... this is interesting. Maybe if TLC would stop expressly not listening to AFOLs, they would start making money. But, I agree with Bruce: moving production to China is extremely perplexing.

Commander Redbeard · Post by **Commander Redbeard** » Fri Oct 22, 2004 1:15 am

To CHINA?! I always prided myself that LEGO was made in good ol' Denmark... **Sniff** Are you serious??

TheOrk · Post by **TheOrk** » Fri Oct 22, 2004 2:25 am

.......C,China?

Bad set designs, high prices PLUS bad quailty?!?!?!?!?
If that happens I'm switching the swear word megabloks with LEGO.

JPinoy · Post by **JPinoy** » Fri Oct 22, 2004 5:10 am

Why jump to the conclusion that Lego going into China = bad quality? Did you know that more and more knock-off products are becoming harder to tell the difference between the made in China knock-offs and the real thing?

Anyhow, since production is going into China, that mean Lego HAS control of the production quality. All the factory in China needs are the molds for the bricks, and the right ABS plastic recipe to make the parts.

If the Chinese can build things that lasts as long as the Great Wall, as massive as something like the 3 Gorges Dam, or as tall as something like the Shanghai World Financial Center.... don't count out their capability in creating quality products.

Besides, as more and more foriegn companies from other parts of Asia, Europe, the Americas, and "Oceania" come to China for manufacturing reasons, it only means that the quality of the Made In China labelled products will only get better.

IF, the Chinese Lego factory does mess up imagine this scenario...... they mess up by making the old grays instead of the bleys Lego told them to make.

Best of all, with Lego entering China..... that only means that:
SHIFTY-BRICK WILL SOON DIE OFF!!!

The Blue Knight · Post by **The Blue Knight** » Mon Oct 25, 2004 6:20 am

All these things (staggering losses, even in Krone [sp?], management changes, new directions, shifting production out of Denmark, etc.) add up to a troubling picture. Lego seems to be playing catch up ball with MB! Inconcievable only a decade ago.

I think they need more "generic" pieces. By that I mean pieces that are not theme-only. I can swallow the use of big baseplates like CRAPPs to cut costs, but we need more "builders" as I call them, and less of the single use stuff. Of course prices drive it all. Lego needs a break right now, let's all hope they can pull it together soon.