AP

New US Lego factory raises concerns about North American HQ

Jun 19, 2022, 12:07 AM | Updated: 12:12 pm

ENFIELD, Conn. (AP) — Lego Group’s recent announcement that it will build a new factory in Virginia has focused attention on the company’s North American headquarters in Connecticut, with some industry watchers saying it may not be a good sign for the company’s future in the state.

The Denmark-based global toymaker announced last week it plans to invest more than $1 billion to build a factory in suburban Richmond, to open in 2025. The facility will be the company’s seventh globally and its first in the U.S.

A company spokesperson said the decision would have no impact on the size and scope of the Enfield headquarters, and a spokesperson for Democratic Gov. Ned Lamont told Hearst Connecticut Media that Lego’s senior leadership had affirmed its commitment to keep the office in the state.

“It is commonplace for corporations to invest and expand in multiple states — and they do so for a wide variety of strategic reasons,” Max Reiss told the news outlet. “Lego has been and continues to be a fantastic partner with our state and we look forward to strengthening this relationship now and into the future.”

Still, the development raises the question of whether the headquarters might eventually move to Virginia, Fred Carstensen, a professor of finance and economics at the University of Connecticut, told Hearst.

“They better be worried,” Carstensen said of state officials. “Physical proximity of a headquarters to manufacturing facilities is definitely a factor companies consider.”

A number of factors could have persuaded the company to locate the factory elsewhere, said Donald Klepper-Smith, an economist with DataCore Partners.

“Economic development these days speaks to cost structures,” Klepper-Smith told Hearst. “Forty percent of your long term job growth is a function of the cost of doing business. And when it comes to Connecticut, businesses are being incentivized to look elsewhere.”

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New US Lego factory raises concerns about North American HQ