The Land Where Lego Comes to Life

Nov. 16, 2009— -- In the small Danish town of Billund, approximately 19 billion Lego pieces are made every year -- that's 2 million pieces each hour.

Billund is home to Lego's international headquarters. There's an international airport -- one of only two in the whole country -- built only because Lego is here. Legoland castle's ramparts dominate the skyline.

There is Lego, Lego everywhere.

"It's part of life, it's part of daily life for the children," said Kirsten Stadelhofer, who works at the Lego museum in town. "They grow up with Lego bricks."

One in four people in Billund works for Lego. Every new employee must visit that Lego museum. Here in Billund the Lego brick is treated like a religious icon.

There's also something called an "Ideas House," where the Lego brick was invented in 1955. (By the way, they invented the wheel -- the Lego wheel -- in 1962.)

Lego, which means "play well" in Danish, was founded during the Great Depression of the 1930s by Ole Kirk Chrisatiansen, a struggling carpenter who decided to make toys to survive. He began with yo-yos and wooden ducks before moving on to wooden fire trucks and the like. Eventually the company began producing the bricks that we know today. World domination soon followed.

There are now 62 Lego bricks for every human being on this planet. There are more Lego men on Earth than there are Americans.

But in recent years, Lego, facing competition from Mattel and Hasbro, looked like it might have been left behind in the digital age.

By 2004 Lego had debts of nearly $1 billion. Christiansen's descendents, who still ran the business, saw sales slump 40 percent in just two years. Lego had lost its way.

Then, Jorgen Vik Knudsdorp, a former management consultant, was handed the reins by the family. The new CEO fired 1,000 people and streamlined production.

The company once made 13,000 different pieces; now they make only 6,000. (Most pieces, by the way, are used in multiple different models.)

Unpopular products -- many of them aimed at girls -- were discontinued. Knudsdorp sold the Legoland amusement parks to Merlin Entertainments Group, a company that he says actually knows how to run a theme park.

Knudsdorp felt that Lego had diversified too much and had lost sight of the foundation of its success: the basic Lego brick.

"When we were struggling I was thinking, jeez, I don't know whether the Lego brick is part of the future," said Vik Knudsdorp.

But, he figured, even in an age of TV and video games, kids do still want to play with their hands. To appeal to the new generation, Lego has moved away from the purer, simpler designs of yesteryear. Now, there are frequent tie-ins with video games and there are spinoffs from popular culture. There is "Star Wars" Lego, "Harry Potter" Lego and "Spongebob Squarepants" Lego, to captivate the kids.

"If you're not competitive, children will go somewhere else," says Knudsdorp. "They're quite disloyal in that sense," he added with a wry smile. "What our research tells us is that normally they will spend 15 minutes or less on any toy they get."