Trump threats no Mexico bar — Lego

Despite White House signals, Lego, which sells Mexico-made building blocks to the US, says there is no reason to prepare for a breakdown in trade relations because it is unclear whether US President Donald Trump will act on his threats.

“We don’t see signs that we need to do that at the moment,” Lego CEO Bali Padda said.

The government of Lego’s home country, Denmark, has voiced a similar view.

Danish Foreign Minister Anders Samuelsen said Trump’s outbursts on Twitter could not be seen as a substitute for a legislative process needed for real changes to occur.

Samuelsen has said that behind-the-scenes diplomacy indicates the world order will not be as radically upended as some of Trump’s pronouncements might suggest.

Padda, who took over from Jorgen Vig Knudstorp as CEO in January, says fearing the worst is just based on “speculation at the moment. We would rather wait to see what happens.”

Even without a trade war, Lego is already facing challenges in the US, its biggest market. Amid rising competition, the toymaker’s revenue stagnated in 2016, marking the first time “in many years” that Lego had not recorded US growth, Padda said. In 2015, the company’s US sales grew in “double-digit” percentage terms.

Lego’s two biggest global rivals, Hasbro and Mattel, are both American. To stay competitive in the US, the Danish company in 2015 unveiled plans to expand its Monterrey facility in Mexico — its only production unit in the Americas — by adding 3,000 jobs there.

Keeping production costs down is key, if Lego is to stay competitive. “Our ambition is to grow ahead of the toy industry,” Padda said. That goal includes a significant presence in China, which Trump has blasted for keeping its currency cheap.

“We are focusing a lot on China and will continue to do that,” Padda said.

“We grew from a consumer sales point of view 25%-30% in China [in 2016].”

For Lego, a more urgent issue than a potential trade war is how to respond to a revolution in consumer behaviour.

Online shopping is the future and retailers who fail to prepare face a grim future.

“With the shopper changing behaviour, we have focused quite a bit on e-commerce,” Padda said. Lego was “working with new partners in that area”, he said.