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Lego for labour
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Tue, 01 Jul 2008 09:00
Cloned by the thousands, Harrison Ford's head bobs rhythmically along the conveyor belt at Lego's mainDenmark, representing hope factory in that the colourful toy brick-maker will not move all of its production abroad.
With the launch of its new toy, inspired by the latest Indiana Jones movie, the world's fifth largest toy-maker has managed to reassure at least some of its Danish employees they still have a future with the company, which has increasingly been moving jobs to countries where labour is cheaper.
"They say Indiana Jones never dies," said Charlotte Bueland as she single-handedly monitored five massive machines in the ultra-modern factory building.
"Let's just hope that is also the case for Lego at Billund," the western Danish town where the iconic toy maker is headquartered.
Facing harsh competition, the Danish toy-maker has in recent years relocated many Denmark-based jobs to countries where salaries are far lower. But Billerud
employees have so far refrained from demonstrations or strikes.
Compelled by global market conditions, they have instead taken a pragmatic approach and opted to negotiate with management for better conditions for those who are forced to leave and those who remain behind.
"Relocations are inevitable in the short term because we cannot compete with countries where the salaries are low," acknowledged Brian Lyst, who heads up the local branch of the powerful 3F union.
Family company Lego, whose name comes from the first two letters of the Danish words "Leg godt" or "play well" in English, was founded before the invention of the famous block, by Ole Kristiansen in 1932.
When the firm launched its colourful plastic bricks in 1958, they quickly rocketed to planetary success.
A half-century later more than 400-million children and adults play with the bricks each year, spending five-billion hours annually putting them together and pulling
them apart.
At the end of the 1990s however, Lego experienced a severe crisis as fierce competition from interactive electronic and computer games brought the Danish company to its knees for the first time in its history.
The company had diversified into theme parks and branded products, including clothing, books, watches and multimedia games, but reported millions of dollars (euros) in losses in 1998, 2000, 2003 and 2004.
Following a harsh restructuring, including massive lay-offs, the closure of production sites and a refocusing on the core-business of building blocks, Lego in 2006 managed to scramble back into the black.
It was a drastically changed company that emerged from the crisis.
Lego's Billerud plant's production unit, which in the 1980s counted some 2500 employees, today has only about 1000 workers to keep the wheels in motion, and by 2012, only 300 to 400 are scheduled to remain.
The Danish plant does not
however risk disappearing altogether, according to Lego President Joergen Vig Knudstorp, who took over the helm in 2004 and has been largely credited with rescuing the company.
"Billerud will in the future be maintained as a strategic base housing the (company's) greatest expertise within research and product development," he told AFP.
He admitted however that the plant will in the future count only 20 percent of Lego's employees, down from 45 percent today.
"We will continue relocating and developing expertise abroad as we continue to reduce our costs in an increasingly competitive market," he said.
Such statements make employee representative Berit Flindt Pedersen worry about Billerud's future.
Salaries can be 10 times lower
"We know that there will be fewer and fewer employees here," she said.
She said she would never forget "that black day in June 2006 when the management announced they would cut 900 jobs over the
period of three to four years, and move them to the Czech Republic," where salaries can be 10 times lower than in Denmark.
But even as Danish jobs have been moved to the Czech Republic, Hungary, Poland and Mexico, Billerud's workers have launched no mass protests or strikes, instead contenting themselves with the extra perks their unions have been able to obtain from management.
They have for instance secured a "loyalty bonus" of 16 kroner extra an hour through 30 June, 2009 as management scrambles to keep spooked employees from deserting the company before their jobs have been moved.
A small building at Billerud called Fremtidshuset, or House of the Future, is not a workshop for building futuristic Lego toys, but instead a workshop opened in a joint management-union effort in 2006 to help employees affected by the lay-offs, offering them training and counseling on other job opportunities.
"We help those who have been laid off by training
them for other jobs, and those who have not by helping them increase their skill-level so they can hold onto their job," said head of Fremtidshuset Villy Markman, who has worked for Lego for 33 years.
Union representative Lyst agreed with this approach to the crisis and called for the rights afforded Danish Lego workers to be moved along with their jobs when they are transferred abroad.
"The most important thing is to make sure the working conditions are acceptable wherever Lego toys are made and that the social dialogue with Lego is also transferred abroad," he said.