Brick by Brick
It must be a strange sight for a young child, to be confronted by a pile of plastic bricks, with no instructions as to what to do. Perhaps unsurprisingly, many small children find the big and brightly coloured blocks fun to play with, and pile on top of one another. Then they begin to fit them together and eventually find there are ways to connect wheels to their creations. Moving toys! Around 6 or seven years of age, they find there is another, smaller set of blocks, still interlocking and still using primary colours (although some other shades are included). Soon, they discover they are being given bigger boxes, and each contains an assembly of component blocks with which they are able to build much larger structures, ranging from houses and commercial stores through to racing cars and familiar places, a diverse range including models to build of such places as the Eiffel Tower, Neuschwanstein Castle, and the Antarctic exploration vessel Endurance. Of course, not all children as they grew up abandon their hobby and continue to use their Lego collection to become AFOLs, Adult Fans of Lego, thereby remaining as lifetime Lego builders (LLBs?).!
Lego first appeared in 1932, and at that time it comprised wooden toys made in the workshop of a carpenter from Billund, in Denmark. By 1934 the founder, Ole Kirk Christiansen, had named his company ‘Lego’, a name which was based on the Danish phrase leg godt (meaning ‘Play Well’). Several years later Lego began producing plastic toys, and by 1949 it commenced a new product line, an early version of the now familiar interlocking bricks, and called them “Automatic Binding Bricks”. They were initially manufactured from cellulose acetate, offering an enhancement of traditional stackable wooden blocks of the time. The company adopted Christiansen’s motto, “only the best is good enough”, a comment still reinforced by the company today. The motto was to serve as a way to encourage his employees never to skimp on quality, a value in which he believed very strongly. By 1951, plastic toys accounted for half of the company’s output, even though many had initially believed plastic would never be able to replace traditional wooden toys.
Lego was first sold in Denmark in 1957, and the company expanded its sales across Europe towards the end of the 1950s, before expanding outside the European continent from the 1960s. It was Christiansen’s son, Godtfred, who saw the immense potential in Lego bricks in becoming a system for creative play. However, the bricks still had problems: their locking ability was rather limited, nor were they particularly versatile. In 1958, a new modern brick design was developed; using ABS for manufacturing, which allowed the company to make use of an attractively coloured manufacturing material five years later. ABS, Acrylonitrile Butadiene Styrene, is a durable, tough plastic which Lego has used since 1963 for most of its bricks. Duplo, an alternative for younger children based on larger bricks was introduced in 1969 becoming a range of blocks whose lengths measure twice the width, height, and depth of standard Lego blocks and are aimed towards younger children.
Lego pieces of all varieties constitute a universal system. Despite variations in the design and the purposes of individual pieces over the years, each remains compatible in some way with existing pieces. Bricks from 1958 still interlock with those made today, and sets for younger children are compatible with those made for teenagers. As an aside, it turns out that six bricks with 2 × 4 studs can be combined in 915,103,765 ways. This ‘simple’ system makes massive manufacturing demands: when two pieces are engaged, they must fit firmly yet be easily disassembled.
Despite various mis-steps and challenges, overall the company grew and grew. On 7 June 1968, Legoland Park opened in Billund, featuring elaborate miniature towns built entirely from Lego bricks. The three-acre (12,000 m2) theme park attracted 625,000 visitors in its first year alone. Over the next two decades, the theme park grew to more than eight times its original size and eventually attracted close to a million visitors annually. Sales of Lego sets also reached more than eighteen million units in 1968. This pattern of growth was increased in the following year, 1969, when the Duplo system came into shops.
Designed to be used by younger children, Duplo bricks are much larger than Lego bricks, safer for young children (preventing them from eating them!), and the two systems are compatible: Lego bricks can be fitted neatly onto Duplo bricks. Indeed, the name Duplo comes from the Latin word duplus, which translates literally as double, meaning that a Duplo brick is exactly twice the dimension of a Lego building brick (2× height by 2× width by 2× depth) so that a Duplo brick is eight times the volume of the Lego brick alternative.
Despite overall growth, like any business Lego has had its ups and downs over the years. However, The Guardian reported that by August of this year Lego had recorded sales of £4bn and sales rose by 12%. Their Chief Executive suggested this recent surge in growth could be the result of parents’ desire to keep children – and themselves – away from smartphones, helped by strong sales of its Botanicals and Formula One grand prix-themed sets.
CEO Christiansen said:
“We see ourselves as competing for children’s time. The most important thing is to provide relevant and exciting experiences” and has seen the company signing deals to produce toys linked to the Bluey and Pokémon cartoon series and launching the She Built That campaign to encourage girls to use Lego creatively. The company has seen success with its Botanicals range of plant-inspired building sets for adults, especially for Valentine’s Day and Easter.
Lego is clearly a global business. Recently, sales have begun to grow in China, after a tough start to 2024, and the company expects worldwide sales to continue to rise by about 9% in the second half of the current year given the existence of “strong consumer demand”. The company now has six factories in operation, in Denmark, Hungary, the Czech Republic, Mexico, China, Vietnam, with a further addition planned to open soon in Virginia, USA. It uses an international business model, with several facilities focusing on molding and others on decoration and packaging. The production process involves injecting molten plastic into molds to create bricks, with rigorous quality control checks to identify defects and ensure colour accuracy. The company has to aim for high precision; with the result their approach ensures bricks made today continue to fit with those made back in 1958. The manufacturing process starts with plastic granules heated and injected under high pressure into molds to form bricks. Today, Lego recycles almost all its plastic waste from manufacturing, with non-reusable plastic sold to other industries.
The group has benefitted from its strategy of having manufacturing facilities as close to markets as possible, and also adopting a lean production approach whereby it seeks to produce only what is needed and simultaneously keeping stocks tight. Lego has talked about taking steps such as making some of its toy tyres from a material derived from recycled fishing nets, ropes and engine oil. The company is also introducing e-methanol, a material made from mixing renewable energy and CO2 from biowaste, to create rigid Lego elements such as wheel axles and minifigure hands.
Actually, it is much more than that. According to an article in Sustainability, it seems ‘Lego is Building Towards a More Sustainable Future’ (in a report by James Darley, 7 September 2024), as Lego expands its supply chain, smart choices and thinking are helping the Danish toy company meet its sustainability targets and achieve growth. Surprisingly in a toy industry grappling with market downturns, Lego has not only maintained its position at the top of the tree but has also posted record-breaking results for the first half of 2024. However, Darley reports the Danish toymaker’s success goes beyond profit margins. It is commitment to sustainability, particularly within its supply chain, which is setting new standards for the industry and providing a blueprint for responsible manufacturing.
James Darley writes that a key to this approach is using sustainable materials as the foundation for operational changes. Recently Lego has made major increases in the proportion of sustainable materials it uses in its bricks. During the first half of 2024, the company reported that 30% of all the resin it purchased was certified under the mass balance principle, translating to an estimated 22% of material sourced from renewable and recycled sources. This is a substantial improvement from 2023, when only 18% was certified mass balance, equating to 12% sustainable sources for the full year. Sources suggest that if it continues to make similar year-on-year progress, it could reach the point where its products could be 100% sustainable within the next two decades.
Carsten Rasmussen, COO at the LEGO Group, says:
“We continue to invest in expanding our global supply chain network, maintain a strong focus on harvesting productivity and have made significant progress on our sustainability ambitions by increasing the amount of sustainable raw material used in our products.”
The company has set ambitious targets for the coming years, aiming to purchase more than half of its raw materials from sustainable sources, seeking to reduce its use of virgin fossil materials. At the same time, a key initiative in this area is the launch of a Supplier Sustainability Programme, which mandates that suppliers set emission reduction targets by 2026 and further targets by 2028. Lego has even linked annual carbon emissions reductions to employee bonuses, creating strong incentives for its sustainability team. While Lego seeks to focus on expanding its supply chain, they locate production and distribution facilities close to major markets. Recent developments include opening factories in Vietnam and Virginia.
It’s sustainability initiatives are not just good for the planet, they’re also good for business. The company reported revenue growth of 13% and consumer sales growth of 14% in the first half of 2024, significantly outperforming the toy industry. Operating profit grew by 26% and net profit by 16% compared to the same period in 2023. Niels B Christiansen, the current CEO, emphasises sustainability in the company’s strategy, achieving double-digit growth while significantly increasing sustainable materials in our products.”
Perhaps it is almost superfluous to say it, but the other strength of Lego is design, of course. The company’s product development cycle is focussed on ensuring adherence to the Lego approach and style. Proposals go through a rigorous assessment process before they move to testing and production, ensuring the attractiveness of the kits isn’t compromised . Their CEO notes “We used our solid financial foundation to further increase spending on strategic initiatives, which will support growth now and in the future to enable us to bring learning through play to even more children.” He might have added ‘through offering compelling and engaging products to delight our customers’.
Oh, and one more comment. My partner is a long term AFOL, and I’m a recent convert. It offers a great range of buildings and vehicles to construct, using an astonishing range of building components. Our local Lego store is a place we visit frequently, trying to decide which model we ‘ll build next. Surprised to learn we’re fans?
