Six top tire makers halt Russian production amid war

AKRON, Ohio — Tire manufacturers are doing their part to make business difficult for Russia while supporting Ukraine and its refugees as a result of the Russian invasion of Ukraine.

With the war entering its second month, Pirelli & C. S.p.A. and Yokohama Rubber Co. Ltd. became the latest tire makers to idle production in Russia.

Milan, Italy-based Pirelli & C. S.p.A. announced March 19 it was throttling back activities at its two plants in Russia, amid the ongoing war in Ukraine and continued supply-chain disruptions in the region, and has set up a "crisis committee" to monitor ongoing developments there.

Likewise, Yokohama said March 18 it was halting production at the passenger tire plant run by its Russian subsidiary, L.L.C. Yokohama R.P.Z., in Lipetsk, Russia.

With these announcements, Pirelli and Yokohoma joined other top tier tire makers Bridgestone Corp., Continental A.G., Group Michelin and Nokian Tyres P.L.C. in halting or reducing production in Russia.

Titan International Inc., which operates a farm tire plant in Volgograd, Russia, has not commented publicly on the operating status of that plant.

The tire makers' actions coincided to a large degree with comments by Russian officials that they will nationalize the assets of Western companies that are at least 25% foreign-owned that pull out of their country, creating economic peril to those businesses while perhaps preserving the jobs for Russians who work there.

A Russian law being considered would force a company that refuses to resume operations to sell its shares, or those shares could be auctioned off. According to media reports, nearly 400 companies have announced some sort of production change as a result of the ongoing war.

Andrei Turchak, secretary of the United Russia Party's General Council, said foreign firms' shutting operations was a "war" against the citizens of Russia as part of a statement published in early March. According to Reuters, the statement singled out privately owned Finnish food companies Fazer, Valio and Paulig, which had announced they were shutting operations in Russia.

"This is an extreme measure, but we will not tolerate being stabbed in the back, and we will protect our people. This is a real war, not against Russia as a whole, but against our citizens," Turchak said.

"We will take tough retaliatory measures, acting in accordance with the laws of war."

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In a statement linked to the release of its fiscal 2021 financial results, Pirelli said activities of the factories in Russia "will be progressively limited to those needed to guarantee the financing of salaries and social services for employees in Russia" and "investments in the local market, excluding those linked to security, have been halted."

Pirelli operates two tire plants in Russia, in Kirov in west-central Russia and Voronezh in eastern Russia just 200 miles from the Ukraine border. It acquired the plants in 2012 from Russian petrochemical company Sibur Holdings.

The two plants together have 2,500 employees

In a brief statement to Tire Business, Yokohama said it "sincerely hopes that the situation in Russia and Ukraine will be resolved as soon as possible, and that peace and the safety of all people will be secured."

"Our greatest priority is to fulfill our responsibilities to all stakeholders, including Group employees and their families, customers, sales agents and business partners, and we are paying close attention to the developing situation," the company continued.The Tokyo-based company said it "will continue to collect information from its bases around the world and take appropriate measures as needed."

Yokohama R.P.Z. was established in December 2008, becoming the first tire plant operated by a Japanese maker in Russia. According to Yokohoma, capacity there is 1.6 million tires a year, a 2.3-fold increase from the plant's capacity upon the start of operations in 2012.

Nokian, meanwhile, issued a update on its Russian plant on March 22, revealing that the Nokia, Finland-based company continues to manufacture some passenger tires at its plant in Vsevolozhsk, Russia, in order to ensure "the factory is operated and controlled by Nokian Tyres also in the future."

Nokian's Russian plant, located near St. Petersburg, has 1,600 employees. Nokian reports annual revenue from sales in Russia and Asia of around $378 million.

"We do not want to speculate on how the situation in general will evolve. We will announce any material direct impacts to Nokian Tyres as appropriate and in a timely manner. We continue to assess the situation and are prepared for rapid responses when needed. While continuing to operate, Nokian said it no long will invest in Russian production.

Previously, Nokian announced it had shifted production from Russia to its factories in Finland and Dayton, Tenn. It reiterated that all tires sold in the Nordic countries in the near future will be produced in Finland, and all tires sold in North America would be made either in Finland or Dayton.

The company said it is "actively looking for additional capacity and aims to become geographically more diversified in its manufacturing operations."

Nokian said all of its heavy tires are designed and manufactured in Finland, while truck and bus tires are designed in Finland and produced in the European Union.

"We don't accept orders for heavy tires from Russia," the company said, noting it is "actively looking for additional capacity and aims to become geographically more diversified in its manufacturing operations."

In the statement, Nokian said it won't speculate on how the general situation will evolve and is hoping for a quick, diplomatic solution to the conflict.

"We will announce any material direct impacts to Nokian Tyres as appropriate and in a timely manner. We continue to assess the situation and are prepared for rapid responses when needed."

"We are in daily contact with our Ukrainian team, and we have helped and continue to help our employees and their families to stay safe," the company said. "Over half of our Ukrainian employees are male and cannot leave the country, but we assist them in any way possible given the current situation."

The company earlier donated roughly $111,000 to UNICEF to help Ukrainian children affected by the war.

Pirelli, which stated recently it was "against this war," donated $550,000 to Ukrainian citizenry relief efforts and facilitating the collection of funds among employees.