Nokian CEO: Tenn. plant cushions effects of tariffs

NOKIA, Finland — The threat of U.S. tariffs on products produced abroad isn't a major concern for Nokian Tyres P.LC., thanks to its tire plant in Dayton, Tenn.

Seventy days into his role as CEO and president of the Finnish tire maker, Paolo Pompei said U.S. dealers should know they now can rely on the tire maker for a "full range of products to deliver and support them during their daily activities in the market," as a U.S.-based supplier.

The statement came just a couple of hours before President Donald Trump announced plans to double tariffs on all steel and aluminum products imported from Canada to 50%, in retaliation for Ontario putting a 25% tariff on electricity coming into the U.S. The U.S. increase on steel and aluminum was effective March 11.

Pompei noted that "suppliers that are not based in North America will probably struggle in the next few years, not being there, not being (in the U.S.) ... and in some way penalized by the tariff, but we are there now with a full product range so we can support the development of the sales in the North American market."

He said the Tennessee plant provides U.S. dealers better service and shorter lead times.

"I can see that our customer base is really pleased about what we have done, because they see day-by-day that we are now able, really, to give them a better service in a very nice product range, to promote in the market."

Pompei and Nokian Tyres' Chief Financial Officer Niko Haavisto, who was appointed to his position in late 2023, addressed a variety of topics related to the company and its North American operations during a webcast held with a group of global media on March 11.

Nokian's company-altering decision to close and ultimately sell its plant in Vsevolozhsk, Russia — as a result of Russia's invasion of Ukraine in February 2022 — directly impacted the North American tire market, according to Pompei.

The Russian plant, sold to Russian energy and petrochemicals producer P.J.S.C. Tatneft for approximately $307 million nearly two years ago, accounted for between 70% and 80% of Nokian's global tire supply.

That lost capacity prompted the tire maker not only to build another tire factory — a $720 million "zero-emission" greenfield plant in Oradea, Romania — but also to shift North American-focused product lines from Russia to its Dayton facility.

The Oradea plant, which mainly will serve Central European markets, began production mid-year 2024, and Pompei revealed that it soon will begin to manufacture commercial tires with up to 30% renewable and recyclable material content that aligns with the company's roadmap to reach 50% by 2050.

This year, Nokian expects production in Oradea to reach approximately 1 million units, with the capacity to produce 6 million tires by 2027-2028.

Pompei said Nokian reorganized the Dayton production facility, adding a new production mix required to meet local demand.

In addition, he said that the "step two investments that will give us additional capacity in the next month" are well underway in Dayton, part of its original investment in the Tennessee plant. He said the plant is producing at around 65% capacity and is on track to reach full capacity by year-end.

"Things are changing every day, but this can be an advantage when we talk about U.S. production, considering what is going on at the moment," Pompei said. "To be local for the U.S. market is becoming extremely important and strategic, and we have a solid, strong manufacturing footprint now that can support the local market."

Last October, the Nokia, Finland-based tire maker said it set a monthly production record for the month in Dayton, while boosting its workforce there to around 500.

Nokian originally said the Dayton factory would produce 4 million units at full capacity. Nearly every tire that Nokian sells in North America, with the exception of its winter tires, are produced at the Dayton plant.

Nokian Tyres, he said, is positioned so that the company can supply tires, including winter products, to the "important" Canadian market from its plant in Finland, thus avoiding the tariffs.

"We will need, obviously, to play different cards, depending on the development of the tariffs when we talk about supplying Canada," he said.

"At least today, we have a very flexible go-to-market approach that can give us the possibility to bring product from different directions."

Another hurdle the company faces in the U.S. market is brand awareness.

Pompei, who previously was president of Yokohama Trelleborg Wheel Systems, admitted the situation with the Russian plant limited the company's ability to more fully develop a sales network and instead focus more on existing customers.

With that behind it, Nokian now can "extend our demographical presence and extend our sales, also having the access to a wider customer, customer base and new products," Pompei said, pointing out Nokian's recent re-emergence in the ultra-high performance (UHP), all-season category with the launch of the Surpass AS01, designed for the North American market.

He noted that the tire maker must continue to emphasize safety and sustainability, two core characteristics of its value proposition important to customers.

"We will need to communicate a lot," he said. "And we need to improve our sales and marketing efforts in raising the value of the brand, and in particular, making the consumer aware about our superior product performance and at the same time about our innovation capabilities. It's a long journey. It's not a journey that we developing one day. But I will say we are doing quite well."

With some of the major challenges behind it, the company is focused on improving productivity and cost efficiencies as executives aim to achieve profitable growth.

In February, the company said it posted higher sales and earnings in 2024 versus 2023, due largely to "solid growth" in central Europe. Pre-tax operating earnings grew 7.6% to $200.4 million on sales of $1.4 billion, up 9.9% over 2023.

A significant increase in sales of passenger tires, driven by "robust growth" in central Europe drove those numbers, although North America was "particularly soft" in the fourth quarter.

Pompei said he is pleased with the company's double-digit "organic" sales growth in 2024, especially in the aftermath of the Russian exit, growth he noted that surpassed competitors.

"Changes that we made to our organization and leadership in the beginning of 2025 will help us become more consumer-centric and achieve global synergies and operational excellence in everything we do," he said.

"Nokian Tyres is set to drive profitable growth and deliver innovative, sustainable products while enhancing productivity and efficiency to create something we can all be proud of."