Nokian: U.S. factory drives continued growth

DAYTON, Tenn. — North America continues to be a pivotal region for growth, and Nokian Tyres P.L.C. has ramped up capacity and employment levels at its U.S. facility, located in Dayton, Tenn.

Tommi Heinonen, vice president of sales at Nokian Tyres North America, told Tire Business the plant now employs 350, with more employees expected to be added soon as capacity increases.

The Finland-based manufacturer announced June 28 that its board of directors had approved a "controlled exit" from Russia, citing the ongoing war in Ukraine and subsequent sanctions that make it "no longer feasible nor sustainable" to continue operating in the country.

Nokian continues to produce tires at its Russian plant, the company is in the process of adding capacity at its Finish plant as well as at the plants of its European manufacturing partners.

How would you describe business thus far in 2022?

Business has been good despite external challenges. Our first-quarter sales rose globally by 22% over the same period a year ago, and we continue to see growing demand for our products in North America.

Our Dayton factory is growing at a strong pace, which will help us better serve our customers and drivers in North America. While our company and our industry have encountered many difficult challenges, we are positioned to push through this adversity.

How has the pandemic changed the way you do business?

The pandemic tested our team's agility and resourcefulness, and I am proud of the way we have responded.

Our sales company moved to a work-from-anywhere model that has remained in place, and it has helped us meet the needs of our team members and recruit a wider talent pool. Customers adapted very well to new processes of their own, and we strengthened our partnerships with them by remaining flexible during a difficult time.

Our No. 1 goal was to be there for our customers, and now we are seeing the benefits of that loyalty.

Has there been any improvement with the supply chain?

It is hard to say when the situation will return to normal, but our increase in domestic production at our Dayton factory is helping reduce supply impacts and will only help us more in the future.

The company recently opened a new road entrance at the Dayton plant. What other improvements are being made at the plant?

The Dayton factory has set production records each of the last few months and we are making excellent progress toward reaching full capacity there. We now employ approximately 350 workers there, and that number will grow in the coming years as we reach full capacity.

We continue 24/7 production and have built a positive, productive culture in Dayton. When you combine that with the LEED v4 Silver certification, community involvement and strong safety record, it is clear the Dayton factory is achieving what we hoped it would at this stage.

Others have noticed, too. The Chattanooga Regional Manufacturers Association named us its Company of the Year, and we received a Tennessee Governor's Environmental Stewardship Award for Sustainable Performance last year.

How has the Nokian One been received in the market?

The Nokian Tyres One has beaten sales projections and continues to be a very popular product with dealers and drivers. It has quickly become a cornerstone of our product portfolio, especially since we make it here in the U.S. One major customer with dozens of shops calls it the most popular tire his company sells, and that echoes feedback we have gotten from others.

The Nokian Tyres One is a good example of how we have extended our innovation beyond winter tires and into the North American all-season and all-weather market.

Will the updated Hakkapeliitta winter product be available this year?

Yes, the Nokian Tyres Hakkapeliitta R5 will be available for sale this year in North America. It is the newest non-studded member of our flagship winter tire family. For the first time, we have made a non-studded winter tire just for electric and hybrid vehicles, the Nokian Tyres Hakkapeliitta R5 EV.

All versions of the tire have an innovative new tread pattern and possess extremely low rolling resistance, among the lowest of any winter tire ever made. Last year, we launched the studded Nokian Tyres Hakkapeliitta 10, which has performed well.

What continues to drive your growth? How important is the North American market?

Our growth is driven by new products that are tailored to North American drivers, many of which are also made here in the U.S.

Tires such as the Nokian Tyres One and Nokian Tyres Outpost family help us expand business with existing customers and attract new drivers to our products. And as many of our customers will tell you, once a driver owns a set of our tires, he or she tends to become a loyal customer.

Our focus is on helping our existing customers build those relationships with their drivers, and that has helped us grow our share of business with them. Our production growth in Dayton helps us stabilize supply of many of those products, and it lets us tailor tires to the needs of North American drivers.

What are you telling dealers who are unable to get certain tires?

We are telling them to get their orders in early. Demand for our products is very high, and even in a perfect operating environment, we would encourage them to make timely orders. But we are also doing everything we can to keep supply as strong as possible despite these external challenges.

What are some of the pleasant surprises you are seeing?

It is good to see other companies make sustainability a priority. We have always worked hard to make our products and processes eco-friendly, and we are glad to see other tire companies pursuing that goal, as well.

What kind of trends are you seeing?

We all anticipate big growth in electric vehicle sales in the years ahead. That is why we have begun producing tires made specially for EVs, and to keep making products with low rolling resistance that will help EV drivers increase their range.

Many of our tires are reinforced with highly durable aramid fibers that not only help tires withstand road impacts, but also help them handle the heavier loads of electric vehicles.

What sector offers the most growth potential? How have you addressed that?

We continue to see strong growth in the light truck and SUV segment, and we have responded by introducing the Nokian Tyres Outpost AT and APT this year.

One is an all-terrain tire built for off-road and highway use, and the other is an all-purpose terrain tire that offers a great highway ride but is versatile enough to leave the road, too. This new product family allows us to reach more drivers by expanding the diversity of our product offering and growing our size range, too.

Do you expect to roll out any additional products in 2022?

We cannot divulge what is ahead on our product planning radar, but we are always working to develop new products that respond to the needs of customers and drivers.

What technology will be a game-changer?

Aramid technology has been a game-changer for us, especially as we have used it in a growing number of our products. We began by introducing it only in our light truck and SUV tires, but we now use it in the passenger Nokian Tyres One, too.

We have also begun embedding it beneath the tread of some products. As a highly durable fiber, it offers extreme protection from road hazards without impacting the performance of the tire.

What is the most compelling initiative that your company has or is taking to address sustainability?

We always strive to be an industry leader in sustainability. Most recently, we have emphasized this with new products. In January, we introduced a concept tire that is made of 93% recyclable and renewable materials. The Nokian Tyres Hakkapeliitta R5 will have the lowest rolling resistance of any tire we have ever made.

In addition, we have reduced CO2 emissions from tire production by 40% since 2015. And last year, the administration building at our Dayton factory earned LEED v4 Gold certification.

How do you explain the recent spate of price increases? Will prices stabilize anytime soon?

Inflation, raw materials challenges and supply issues are easy factors to identify. We, too, have raised prices in line with the market. It is hard to forecast when prices will stabilize, but we will continue responding to market changes with agility and with our customers in mind.

What is the status of the planned European plant? Any timeline?

Adding new supply capacity in Europe is a key priority for Nokian Tyres, but we cannot offer a timeline at this time.

Do you expect any other investments in the next six months or year, in either personnel, distribution facilities or capacity expansions?

At this stage in our company's growth, we are focused on strengthening existing capital investments, such as the Dayton factory and our Hakka Ring test facility in Spain. That includes continued investment in equipment and workforce that will help the Dayton factory reach full capacity.

What are some of the challenges of the industry?

How can we keep prices manageable for drivers while working through supply challenges? I think that is the biggest question for our industry at the moment, as we manage the imbalance of supply and demand.

Anything else to add?

While we would never have anticipated some of the challenges we have faced this year, it is clear our company has what it takes to help customers thrive, even during difficult days.

Our balance sheet is strong, our products are very popular, and our partnerships with customers are in a good place. We are eager to use these strengths as a platform for growth in the years ahead.