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Nokian Tyres seeks N. American growth

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SAARISEKA, Finland—Nokian Tyres P.L.C. is targeting double-digit growth in North America this year for the third straight year, and management is counting on one new all-weather and two new winter tire products to help dealers expand their sales potential and the company to attract new customers in key areas.

That's the message Tommi Heinonen, North America general manager for Nokia, Finland-based Nokian Tyres, conveyed to Tire Business during a recent four-day tour of Nokian's Finland facilities—including the 1,500-acre Ivalo winter testing grounds near Saariseka—by about 70 U.S. and Canadian dealership representatives.

Nokian's sales in North America grew about 11 percent last year to $145 million, or about 7 percent of global sales. Nokian management sees the market potential for North America as twice that of the Nordic countries, which account for about a third of global sales, or roughly $500 million.

The latest product upgrades for North America are two additions to the Hakkapeliitta winter tire family—Hakkapeliitta R2 and R2 SUV—and a new tire in the expanding All Weather Plus product line, the WR G3 all-season. (See sidebar below for details.)

Nokian gave the invited U.S. and Canadian dealers a full day of hands-on driving at its Ivalo test center, some 200 miles north of the Arctic Circle and a short drive from the Russian border.

Mr. Heinonen, a 13-year Nokian Tyres veteran who was named to his position last August, said Nokian is looking to grow in North America both by expanding its business with its existing dealers and adding dealers in territories not currently being served.

“Nokian's business has always been, as a cornerstone, exclusivity, so we will respect our commitments to existing customers,” Mr. Heinonen told Tire Business, “but of course there are some 'white spots' on our map where we need new dealers....”

Dealers who participated in the trip collectively praised Nokian for its loyalty to its independent dealer customers and were interested in the firm's plans for expanding the all-weather lines of tires.

Representative of the firm's efforts to expand its dealer base was the presence of Alex Wellborn, CEO of Welborn Tire Group, which operates stores in Houston, McAllen and San Antonio, Texas. Mr. Wellborn took on the Nokian line recently, seeking to have a premium line of tires exclusive to his locations.

In addition to the firm's network of independent dealers throughout the U.S. and Canada, Nokian has started building a network of Vianor-branded company-owned and affiliated retail stores in New England.

That network now spans 35 stores—10 company owned—throughout Maine, Massachusetts, New Hampshire, New York and Vermont, but the company hasn't disclosed plans for further growth.

To support its growth plans in North America, and globally, Nokian has invested heavily in its eight-year-old factory complex in Vsevolozhsk, Russia, where annual manufacturing capacity is expected to reach 15.5 million units this year with the installation of a 13th manufacturing line.

Nokian has invested $915 million in Vsevolozhsk in the past eight years and has budgeted more than $100 million in 2013 for the plant.

In addition, Nokian could add a third factory in Europe, most likely in eastern Europe, to meet the expected rising demand for its products, Hannu Teininen, vice president of sales and logistics, told the visiting North American dealers during a presentation at the firm's headquarters factory in Nokia.

Mr. Teininen said company management has approved funding for a third plant, saying it will be built “whenever it is needed.” Building a plant would take about two years from committing to it to initial production, he added.

The company still builds 4 million to 5 million car tires a year at the plant in Nokia, but that factory—which first opened in 1904 to make rubber boots and other rubber products—is landlocked and saddled with the century-old layout and design. Bicycle tire production began in 1925 and car tires in 1932.

Among the specific passenger tires built there are the run-flat versions of several product lines. Nokian also builds truck, forestry and other heavy-duty OTR tires at that plant, where Nokian invested $40 million in 2011-12 in modernization measures.
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