Tire dealers in North America handling the Nokian brand will be getting Nokian tires made in China starting next year, according to an outsourcing agreement signed by Nokian Tyres P.L.C. and GiTi Tire (China).
The agreement calls for GiTi Tire-also known as Grandtour Tire China-to make 500,000 tires next year and gradually expand that to 1.5 million tires, Nokian said. The production agreement is limited to summer passenger tires initially, Nokian said, and will include some technical assistance covering the production of Nokian-branded products.
Nokian said it sought the deal because demand for its products is growing faster than it can expand its own capacity, according to Kim Gran, president and CEO. Nokian did not say which specific tire lines would be affected. Nokian's summer offerings in North America include the NRHi, NRE, NRVi, NRY and NRZi.
GiTi/Grandtour Tire operates tire plants in Yinchuan, Anhui, Chongqing and Putian/Fujian, China.
Nokian is represented in North America by Nokian Tyres Inc. in LaVergne, Tenn.
Separately, Nokian is extending and expanding its contract manufacturing agreement with Slovakia's Matador A.S. to boost the off-take production for its central European customers to 1 million units annually.
Nokian will invest $3.5 million in new machinery for the Matador factory in Puchov, Slovakia, to solidify Matador's production of Nokian passenger tires. Initially, Matador will boost output to 500,000 units by next year from 300,000 now, Nokian said, and eventually double that to 1 million units.
The manufacturing agreement will be valid until year-end 2009 and after that may be renewed for one year at a time, the companies said. The new agreement replaces a pact signed in January 2003 for the production of S-, T- and H-rated Nokian-branded summer tires, the companies said.