Lego is so popular that there are 62 little coloured blocks for every person on the planet. Yet only five years ago this family business was on the brink of ruin. Jon Henley reports from the Danish town where it all began
It’s quite easy, wandering around the small town of Billund, to start believing in the existence of a Lego god. You can’t help but feel a master intelligence is at work here — the place is so manifestly wholesome, the street plan so well ordered, the pavements so tidy. Unostentatious automobiles proceed slowly along all but empty roads, stopping politely for pedestrians nowhere near a zebra crossing. A jovial red-and-yellow Lego giant points towards the town centre; huge coloured bricks lie scattered as if awaiting deployment in some exemplary new civic amenity (except that, being Denmark, it’s not immediately apparent what else the town might need).
I half expect to be plucked from the pavement, brushed up a bit and plumped down in front of the smart rectangular building labelled Head Office: Lego A/S. My goal here is to find out how, in the teeth of global recession and barely five years since it was being read the last rites, one of the world’s best-loved brands has come back from the dead. For Lego, born of an earlier and tougher depression, is positively revelling in this one: the little studded, primary-coloured bricks are selling like never before.
Its home town, though, is a bit too much for some people. “I couldn’t ever live here,” admits Mads Nipper, who looks and — when it comes to plastic bricks — acts about 12, but turns out to be one of the company’s executive vice-presidents. “I’m nuts about Lego, believe me; I eat, sleep and breathe the stuff. But there’s a bit too much of it around here even for me.”
Charlotte Simonsen, the company’s spokeswoman, says more than 400-million people will play with Lego this year. After 50-odd years of production, there are apparently 62 Lego bricks for every man, woman and child on the planet. And most of us, I’d imagine, would say we felt pretty warmly towards these little chunks of injection-moulded acrylonitrile butadiene styrene.
Ole Kirk Christiansen — born in 1891 — was the inventor of Lego; his descendants still own the company today. He was a journeyman carpenter, son of a farm labourer, one child among 13. Kirsten Stadelhofer, a Lego employee for more than 30 years (“Plenty of people here,” she says, “do 40.”), tells me Ole Kirk’s story. In 1916 he bought a small workshop, the Billund Maskinsnedkeri. In it he produced furniture, tools, stepladders, ironing boards, footstools and, sometime in 1932, in the middle of the Great Depression, toys. To cheer the children up, he said.
Christiansen was by all accounts a good man, bespectacled, balding, universally liked. In 1934 he decided his growing company needed a rather catchier name than Billund Maskins-nedkeri and alighted on Lego, a contraction of the Danish leg godt, or play well. (It can also be construed to mean “I put together” in Latin.) At that stage he and his half-dozen employees turned out brightly coloured wooden cars, fire engines, pull-along chickens and quacking ducks. Christiansen was smart: when a 1930s yo-yo craze died he sawed his stock in half. Each yo-yo made two wheels for a toy truck.
In 1947 Lego bought Denmark’s first injection-moulding machine and began making toys with some plastic components. Its first big 100% plastic hit was a model Ferguson tractor, produced for Christmas 1951. Then, in 1949, Christiansen came across some intriguing English-made plastic building blocks called Kiddicraft, designed by Hilary Harry Fisher Page, with little round studs on the top. Inspired, Lego started producing its own automatically binding bricks.
The Lego System of Play — how virtuous it sounds now — was launched, to widespread indifference, in 1955. It consisted of 28 building sets, eight vehicles, various supplementary components, all interchangeable (as they still are; Lego bricks from the 1950s connect with their 2009 counterparts). The problem was none of it really stuck together: the bricks were hollow.
After much painful experimentation, Godtfred, by now vice-president, patented the studs-and-tubes mechanism that made the system stable in January 1958. A toy that grasps simply, brilliantly even, what millions of children (and their parents) want, that today sells seven sets a second and has twice been named Toy of the Century, was born.
It would be nice to say Lego hasn’t looked back since, but it wouldn’t be true. At first it seemed as though the company could do no wrong. In 1962 it expanded fast and furiously into Sweden, Belgium, France, Britain and the United States. The first Legoland, in Billund, opened in 1968, drawing an unprecedented 625 000 visitors in its inaugural summer to somewhere even the locals concede is quite a long way from anywhere.
In the 1990s came the licensed products: Star Wars, Harry Potter, Bob the Builder, SpongeBob SquarePants, Indiana Jones. And then things started to go awry.
“We’d lost sight of what we were good at,” says Simonsen. “There were other reasons too: the market was changing fast, children were getting older younger, computer games were really taking off.”
Suddenly, unthinkably, Lego was losing money. And not in a small way: after several years of increasingly heavy losses, in January 2004 the company reported a record deficit of Dkr1.4-billion (almost R2-billion). Crippling debts amounted to more than Dkr5-billion. There was fevered speculation that the Christiansen family (now, confusingly, spelled Kristiansen) would be forced to flog it, or large parts of it, to some all-American, plastic-fantastic interloper such as Mattel. All Denmark mourned.
Instead, Kjeld Kirk Kristiansen, Ole Kirk’s grandson, took a deep breath and appointed a 36-year-old former McKinsey’s management consultant called Jorgen Vig Knudstorp to dismantle Lego’s sprawling house brick by brick, then put it back together again. Assets, including the Legoland theme parks, were sold. Whole product lines (particularly those for girls, with whom Lego has always had trouble engaging) were axed. More than 1 000 of the company’s 3 500 jobs in Billund went, a shocking experience for a town whose pristine, ultra-automated factories produce about 36 000 Lego elements every minute — but one that seems, astonishingly, to have been accepted.
Five years after reporting its heaviest-ever loss, last month Lego said its net profit for 2008 had soared 32% to DKr1.35-billion, on sales up a healthy 18.7%. Part of this recession-busting feat, Nipper concedes, is down to the fact that in times of trouble consumers — in this case, parents — turn to “the well known, the safe, the durable.
But also, he insists, Lego is again cool for kids. “Kids are ruthless little bastards,” he says, only half in jest. “If they don’t like the product, then at the end of the day the best marketing and distribution and all the rest of it won’t make any difference. All you’ll be doing is controlling the damage. What counts, all that counts, is that you’re at the top of kids’ wish lists. Which is, now, where we are again.”
How to stay there, though, amid the combined onslaught of PlayStation and Xbox and Nintendo? It won’t be easy. Nipper says Lego is confident children will continue to play with physical toys, although the company is active in the world of virtual play: an independent partner develops and markets successful console games based on Lego’s Star Wars and Indiana Jones ranges, and Lego itself will be launching a children’s MMOG — massively multiplayer online game — called Lego Universe next year.
Its ultimate goal, though, is somehow to integrate physical and virtual play. It is part of the way there: the website factory.lego.com allows you to download simple 3D design software, create a Lego toy online, then order the parts to build it — and there’s a pretty funky robot, Mindstorms, for older children and adults, which communicates wirelessly with your computer and can be programmed to climb stairs, say, or select only the green M&Ms from a pile.
But for now Lego is looking to a completely new venture. A British designer, Cephas Howard (who previously worked at the Guardian) has overseen the development of a series of 10 games, made mostly of existing Lego bricks and other components. First, you have to build them. Then, once you’ve played them, you can tinker with the board (by rebuilding it differently) or the dice, and see how the game changes. They won’t be out until August, and much surrounding them is still secret.
“When I was a kid,” Howard says, “I had two passions: Lego and board games. Lego was great for imagination and creativity, but it was a solitary occupation. Board games were great for socialising, but they’re not very creative. It seemed to me that if you combine the two, you might be on to something.”
Howard’s games haven’t been launched yet, but already they’re hoovering up innovation prizes at leading toy fairs. That Lego god, I’d say, is smiling. —