Nokian Tyres Russia plant
NOKIA, Finland — The recent sanctions imposed on Russia by the European Union (EU) as a result of Russia's war against Ukraine has pushed Nokian Tyres P.L.C. to expedite its plans to increase capacity at its plants in Dayton, Tenn., and Nokia, Finland.
In a statement issued on April 11, the Finnish tire maker said the EU sanctions prohibit the import of tires from Russia to the EU, prohibit the export of some raw materials from the EU to Russia and restrict transportation to and from Russia.
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Those sanctions, Nokian said, will have a "significant impact" on Nokian's ability to manufacture tires in Russia as well as sell tires in Russia and in the EU, "specifically in Central Europe."
Nokian said its goal is that all tires sold in Nordic countries will be manufactured in Nokia, while all tires sold in the U.S. will be manufactured in the plant in Tennessee or in Nokia.
Nokian continues to operate its passenger tire plant in Vsevolozhsk, Russia, in an effort to thwart Russian efforts to nationalize manufacturing facilities there to retaliate against companies that pull out of the country.
Nokian Tyres Dayton, Tenn., plant.
Nokian said it has not sold tires to the Russian army, and that the Russian Federation is not a Nokian customer.
Earlier this month, Nokian said it was ramping up plans to build a second factory in Europe to replace the capacity at its 16-year-old plant in Russia.
To expedite those plans, management is eliminating the dividend payment this year and will re-allocate the $117 million it would have paid out toward the construction of the new plant in Europe. A site for the new plant, nor a timeline to name that site, has been not disclosed.
According to Nokian, Russia represented approximately 20% of Nokian's net sales in 2021, and approximately 80% of Nokian's passenger tires were produced in Russia.
The company said that approximately half of the raw materials used for tires made in Russia come from outside of Russia. Nokian said the availability of raw materials, as well as difficult logistics, "will have a significant impact on the company's capability to continue production in Russia."
The EU sanctions will have no impact on Nokian's Heavy Tyres business unit, the company said, as all Nokian's heavy tires are produced in Finland. Sales and distribution of heavy tires to Russia already has been terminated earlier this year.
Nokian said it will not provide any further information "on the subject at this point but will announce any material direct impacts as appropriate and in a timely manner."
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