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Lego breaks ground on first US manufacturing facility

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Re: Lego breaks ground on first US manufacturing facility

#72
post #5

I’m so confused by Lego’s market share. They sell cheap plastic at insane premiums. Why is there not more competition?

I am an adult who has built several Lego kits recently. These include the NASA Saturn rocket, the NASA LEM, a grand piano and a Fender guitar amp combo. The plastic parts are more than just generic shapes; many of them are custom and designed for the specific kit. The plastic itself has a good feel and is durable. The kits are unique and must have required numerous hours of research and development, prototyping and u…

> The plastic parts are more than just generic shapes; many of them are custom and designed for the specific kit.

With Lego, it's surprising how often the parts are NOT designed for a specific kit.

You can look through the parts list at the end of the instruction manual. You'd be surprised how often they've re-used parts you'd think are specific to a kit. With Saturn V in particular, I was SURE the fairing must be a part specific for that kit. Turns out it's the spire from a Hogwarts castle kit. Okay, so that's the only other kit it was used, but still..

If you look at clone kits, they often have more kit-specific parts. I think this is counter-intuitively a part of a strategy based on low-cost. They spend less on extremely precise plastic molds, and designing a kit-specific part can make it easier for designers. They don't have to spend a lot of time thinking of creative ways to re-use existing parts. They don't need to have knowledge of obscure parts they could re-use either.

> The documentation is extensive, high-quality and complete.

And it's easy to find them online if you've lost them, and you can easily find missing parts of bricklink. So you can dump all your Lego in a box, save it for your kids, and be sure that they can still be used, and that you can rebuild the sets if you want.

I saved my Lego from my childhood. I recently took them out to play with my kids and they're still perfectly good. The only thing that doesn't match with modern Lego is the electric stuff.

Re: Lego breaks ground on first US manufacturing facility

#74
post #13
post #5

I’m so confused by Lego’s market share. They sell cheap plastic at insane premiums. Why is there not more competition?

Because they are the best quality, in every dimension, and when something is almost purely a hobby then many people are willing to pay a premium for a friction-free experience. There are other brands that are just fine, but you will occasionally get missing pieces, poor fitment, poor/strange construction etc... With LEGO you'll not get any of those (except the occasional strange construction). I used to buy ~50/50 LE…

I’ll also add their design chops are top of market by a mile. The kinds of things master builders are able to put together honestly boggle my mind. It’s half the reason I buy a set: just to see how they pulled off an odd angled piece or some design flourish. Truly great craftspeople doing their best work.

Re: strange construction, I would actually posit that you will not get any strange construction because _they have laws against it_[1].

1. https://gameofbricks.eu/blogs/news/illegal-lego-building-tec...

Re: Lego breaks ground on first US manufacturing facility

#76
post #46
post #6

Interesting learnings for me from this article: - Lego operates multiple $1B+ factories around the world - they are not just a design and marketing company - 1400 manufacturing jobs in Virginia expected - not just an automated thing. Anyone know what changed economically to justify the high US labor costs? Particularly compared to MX - 100% Carbon neutral via on-site Solar in Virginia (not particularly sunny). No off…

They are also the largest manufacturer of rubber tires in the world https://www.guinnessworldrecords.com/world-records/100909-la...

They're the "largest" manufacturer of tiny little toy car wheels that use a few grams of rubber.

It's a paid ad for LEGO, not a serious record.

Re: Lego breaks ground on first US manufacturing facility

#77
post #6

Interesting learnings for me from this article: - Lego operates multiple $1B+ factories around the world - they are not just a design and marketing company - 1400 manufacturing jobs in Virginia expected - not just an automated thing. Anyone know what changed economically to justify the high US labor costs? Particularly compared to MX - 100% Carbon neutral via on-site Solar in Virginia (not particularly sunny). No off…

Plastics - where are they cheap? That is the answer.

Re: Lego breaks ground on first US manufacturing facility

#78
post #24

Earlier quoted context omitted.

Why do CPUs cost $400 when they only have about $1 worth of sand, aluminum, and other elements in them? Raw material cost is not a good proxy for end user value of finished goods.

People make this mistake all the time. “The iPhone sells for $999, but only costs $320 in materials!” Well, sure. But you aren’t including shipping costs, storage costs, training costs, labor costs, marketing costs, office costs, employee costs, research and development costs, legal costs, patent licensing costs, wasted material costs, environmental costs, electricity costs, packaging costs, margins for resellers, di…

All costs are personnel/employee costs in the end.

Office costs? Those are going to the office owners, who pay themselves. Patent licensing costs? Those are going to the patent owners, who pay themselves. Wasted material costs? Those are going to the material producers, who pay themselves? Electricity costs? Even those are going to the power utilities, who pay themselves. Power utilities pay workers to maintain the power network and buy equipment from manufacturers. Those manufacturers pay themselves. Packaging costs? Those are going to the packaging manufacturers, who pay themselves.

Even the costs of extracting raw materials from the ground? Those are going to the mining companies, who pay their employees to extract the materials, and to the companies selling them mining equipment, who pay their employees to produce the equipment.

Re: Lego breaks ground on first US manufacturing facility

#79
post #45

Earlier quoted context omitted.

Yes. Commodities are priced at cost plus. Differentiated goods are priced based on value delivered.

>Differentiated goods are priced based on value delivered. I prefer “perceived utility” rather than “value delivered”.

Sure, I enjoy semantic rhetoric as much as anyone does.

Re: Lego breaks ground on first US manufacturing facility

#80
A little local color from a resident of Virginia (Charlottesville): Late last year Virginia's Governor Youngkin took significant heat in the legislature and media for quashing a Chinese battery factory that was set to locate in the state.

https://www.virginiamercury.com/2023/01/12/youngkin-halted-f...

https://www.virginiabusiness.com/article/democrats-call-out-...

He said that supporting China's venture was not in the best interests of the U.S. in terms of security.

When the Lego factory was announced,

https://richmond.com/business/local/1-billion-lego-factory-i...

there wasn't a word anywhere about that proposed battery factory.

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