LEGO's Vietnam Factory: Boosting Procurement Resilience
The LEGO Group has opened its newest production hub, LEGO Manufacturing Vietnam, in Binh Duong province. This facility marks LEGO's sixth factory globally and its second in Asia.
With a commitment of US$1bn over the next 15 years and an anticipated workforce of 4,000, this factory plays a central role in optimising the company's procurement and supply chain strategy for the Asia-Pacific region, setting a noteworthy standard for sustainability practices within the company.
CEO Niels B Christiansen describes the plant's opening as "an exciting milestone" and highlights the facility as "state-of-the-art," designed to enhance the delivery of "more LEGO play experiences to children and our fans in the Asia-Pacific region through increased manufacturing capacity."
Procurement Strategy for Regional Resilience
The establishment of LEGO Manufacturing Vietnam is a key element in the company's strategy to manufacture close to its markets. This approach is already in practice in North America with production in Mexico and a forthcoming plant in Virginia, now mirrored in Asia with the Vietnamese site.
Global trade dynamics present challenges as increased import duties inflate costs, prompting companies to reconsider their manufacturing locations. In response to uncertainty, while some manufacturers pivot from China to Vietnam, others express concern the tariff landscape enforced by the US government. A 46% tariff on Vietnamese goods entering the US was something to consider, but this has since been paused for 90-days, and reduced to just 10%.
Christiansen remains unfazed, as he was speaking before this 90-days pause was implemented, he noted in an interview with Bloomberg News, "We typically produce within the region that we sell." This regional model is integral to LEGO's procurement stability, particularly as Vietnam faces new US import duties.
He remains optimistic about the market's future: "So even if the market gets impacted a bit, I still have the hope that we can continue to gain market share and perform stronger. It won’t change our strategy."
To further support the regional distribution, LEGO plans to inaugurate a second Asian distribution centre in Dong Nai province. Managed by the logistics firm Kuehne+Nagel, preparations for the initial shipments are already underway. The objective is to enhance procurement agility and flexibility throughout the supply chain.
Sustainable Procurement and Manufacturing
LEGO Manufacturing Vietnam stands as the company's most environmentally sustainable plant to date. Outfitted with 12,400 rooftop solar panels, the factory aims to operate entirely on renewable energy by early 2026. This goal is supported by an agreement with Vietnam-Singapore Industrial Park (VSIP) to establish an energy centre on adjacent land, featuring Vietnam's first large-scale battery storage system, expected to be functional by the end of 2025.
Chief Operations Officer Carsten Rasmussen comments: "I am extremely proud of our environmental sustainability progress in Vietnam, strengthening our positive impact locally while supporting our global ambitions." He emphasises the collaboration with local entities to "establish frameworks and policies that can serve other companies looking to increase their own use of renewable energy."
The factory's buildings have achieved top-level green certifications. The administrative centre and play pavilion are awarded LEED Platinum status, a globally recognised standard for eco-friendly construction, while core buildings, including moulding and packing facilities, have received LEED Gold certification.
This facility is also the first LEGO operation to replace plastic pre-pack bags with paper-based alternatives, aligning with the company's aim to eliminate waste sent to landfill from all its production sites.
Investing in Human Capital and Community
The Vietnam factory showcases LEGO’s ‘Future Factory Workplace’ ethos, featuring inclusive design, eco-friendly workspaces, prayer and lactation rooms, wellness areas and play spaces. Extensive training is pivotal to LEGO's strategy, with over 100 international trainers offering on-site mentorship and new recruits getting hands-on learning experiences at other LEGO factories.
LEGO's outreach stretches beyond the factory's confines, investing in education programs across Vietnam set to engage over 60,000 children by 2025. Initiatives incorporate the LEGO Braille Bricks program with the National Centre for Special Education, the Build the Change initiative alongside LIFE Centre and the Girls Unstoppable project in partnership with Save the Children International, already impacting over 9,000 children in Quang Binh Province.
By intertwining environmental commitments with supply chain resilience and community empowerment, LEGO strives to achieve both operational efficiency and societal contributions.
Explore the latest edition of Procurement Magazine and be part of the conversation at our global conference series, Procurement & Supply Chain LIVE.
Discover all our upcoming events and secure your tickets today.
Procurement Magazine is a BizClik brand
