Let Go by Lego

Europe's Grinched by the new economy:

Frankfurt - With their products cast aside by children in favour of video games or television, the makers of traditional toys are facing a miserable Christmas.

Toy makers in Europe say they are increasingly finding their market eroded by shrinking attention spans and intense competition from Asia.

An electric train set for instance was once top of every little boy's Christmas wish list, but no more.The world leader in electric toy trains, the German firm Maerklin, announced in October that following several years of declining sales it was laying off 400 staff in Germany alone.The company, based in Goeppingen, near Stuttgart, has a long and distinguished history, having started business 140 years ago by producing miniature lead soldiers before diversifying into train sets in 1891.

But Maerklin has learned that tradition counts for nothing."

...even bigger names in the toy world are faring no better.

Lego, the Danish maker of the renowned multi-coloured building bricks, is facing the biggest loss in its history this year, of between 1.5 million and two million Danish kroner, 268 to 356 million dollars) before tax."....

In the last 20 years, Europe has gone from a economy built on small shops to superstores specialising in knockdown prices," [toy industry analyst Sean] MacGowan said."It means manufacturers have been forced into producing at lower prices without really being prepared for it."

Maerklin was once the uncontested number one in its sector, but now has to compete with smaller Chinese manufacturers who already account for two thirds of the global production of toy trains.

And analysts warn the gulf between the 'new' toy industry and the more traditional sector is set to widen, partly because many of the European toy makers are family firms who are reluctant to re-locate to countries with a cheaper labour market.

"We have tried as much as possible to keep our production in Germany," said Maerklin boss Adams."So we raised our prices and now we find ourselves in a situation where the market no longer accepts them."

There must be an anti-Bush angle here somewhere. Let's see, Bush is a Christian....