90-day layoffs part of cost savings plan for Nokian

NOKIA, Finland — After just about a week of negotiations,nearly 160 employees at Nokian Tyres Ltd.'s heavy tire factory in Nokia have agreed to take 90-day temporary layoffs.

The layoffs, Nokian said, will be implemented at some point during the 2023 calendar year.

The move is part of a broader effort to help stabilize financial grounding in the wake of waning demand, inflation and economic uncertainty.

To this end, Nokian plans to cut back production of its heavy tires, but has not specified how much production it plans to cut.

The factory in Nokia has been undergoing an expansion for the past five years to meet growing demand for its heavy tire products, including truck and bus, ag, forestry and other OTR application tires. That project aimed to increase capacity for heavy tires by 50% to 32,000 metric tons.

The heavy tires business represents roughly 15% of Nokian's annual sales.

Overall, it has been a tumultuous 15 months for Nokian, which has completely redefined its global manufacturing footprint in the wake of Russia's invasion of and subsequent war with Ukraine.

The on-going war has led the Finnish tire maker to cease operations in Russia and discontinue its sales there. Tire Business noted that Russia and Asia represented around one fifth of the tire maker's global sales.

In March, the tire maker divested its manufacturing operations and assets to Russian energy and chemicals maker P.J.S.C. Tatneft, in a deal worth roughly $307 million.

The facility included in the sale opened in 2005. By 2021, it accounted for about 80 percent of Nokian's passenger tire production.

To help meet demand for its products, Nokian is working to bring additional tire capacity online both in Dayton, Tenn., and a greenfield factory in Romania. Nokian just broke ground on the Romanian facility, which it said will be the industry's first zero-carbon emissions plant.

As Nokian works to bring that facility online, it is working to meet demand through contract manufacturing agreements, such as the one established last fall with Sentury Tire Co. Ltd.