Updated: Tire makers react to war in Ukraine

AKRON — As the war in Ukraine continues, tire manufacturers across the globe continue to react, both from a production and humanitarian standpoint.

Seven international tire makers have factories in Russia: Bridgestone Corp., Continental A.G., Michelin Group, Nokian Tyres P.L.C., Pirelli Tyre S.p.A., Titan International Inc. and Yokohama Rubber Co. Ltd., along with four domestic companies.

In addition, several others, including Apollo Tyres Ltd., Hankook Tire & Technology Co. Ltd. and Goodyear — have facilities in countries bordering Ukraine.

There are four tire plants located in Ukraine, operated by C.J.S.C. Rosava; Dneproshina J.S.C.; Eurotire Inc.; and Valsa Bila Tserkva Tire Factory. None is ranked among the top 25 global tire makers, according to Tire Business figures.

Several tire makers have released statements about the situation. Here is a rundown of what each has reported, by tire maker

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Michelin announced June 29 that it would end tire production in Russia.

The French-based tire maker said it is "technically impossible to resume production, due in particular to supply issues, amid a context of general uncertainty," and thus will transfer all Russian operations by the end of 2022.

Michelin said it is considering transferring control of its Russian operations to current local management, in order to provide "the most favorable framework possible" for the 750 employees at the Davydovo plant, located about 100 kilometers from Moscow.

Michelin said March 17 that it was suspending its industrial activity in Russia — including suspending production of passenger tires and truck retreads at its factory in Davydovo, where it employs 750 — as well as halting exports to the country.

Earlie rthat month, Michelin said it was suspending production at some of its European plants for a few days in the coming weeks, in the wake of the ongoing conflict in Ukraine and its impact on supply chain.

To optimize operations and adapt flow management, Michelin said it was suspending manufacturing at certain plants, with each site deciding specific duration and implementation individually.

Michelin operates 51 tire factories globally in 18 countries.

June 28, Nokian announced its board of directors had approved a "controlled exit" from Russia, explaining that the country's ongoing war in Ukraine and subsequent sanctions make it "no longer feasible nor sustainable" to continue operating there.

"After a thorough consideration and assessment of various options, we have decided to rebuild Nokian Tyres without a presence in Russia and focus on growth opportunities in our other core markets," Jukka Moisio, Nokian president and CEO said in a statement issued after the June 28 board meeting."This was not an easy decision given we have over 1,600 dedicated employees in Russia whose expertise we highly value as well as many long-standing customer and supplier relations built over the past 17 years."

That announcement reverses Nokian's March decision to continue operating  its passenger car tire production plant in Vsevolozhsk, Russia, stating it's better for the factory to remain in its control amid President Vladimir Putin's threats of nationalization.

In April, the Nokia, Finland-based company said they were expediting upgrades at plants in the U.S. and Finland, as well as committing $117 million to a new European factory.

In February, Nokian said all tires sold in the Nordic countries in the future will be produced in Nokia, and all tires sold in North America will be produced in Dayton, Tenn., as well as in Nokia, the company said, saying it aims to become "geographically more diversified in its manufacturing operations."

Titan, which operates a factory in Volgograd, Russia, said in May it had halted investment in that operation due to the ongoing war and global sanctions on Moscow, according to the company's first quarter 10-Q filing with the Securities and Exchange Commission.

JSC Voltyre-Prom in Volgograd in southwest Russia, is operating at lower levels in compliance with international sanctions on Russia, Titan said.

 Titan emphasized that it was not selling products to the Russian military or other government agencies but remained committed to the role it plays in keeping the food and essential goods moving, including through its tire operation in Volgograd.

Earlier, Titan President and CEO Paul Reitz said Titan is "accustomed to solving problems and overcoming challenges, and our financial results and growth demonstrate that. I have confidence that we will continue to manage any challenges ahead."

The company stressed that its Russian business accounts for only about 5% of its global sales and therefore should have little impact on the firm's overall performance.

Earlier this year, Titan shored up its business in Europe by securing an off-take-supply deal with an as-yet unnamed Turkish tire maker for Goodyear-branded radial agricultural tires for sale throughout Europe. The Russian plant produces only bias-ply tires.

Continental A.G. temporarily resumed production of passenger tires at its factory in Kaluga, Russia, in mid-April, in an effort to protect local workers.

According to German newspaper Frankfurter Allgemeine Zeitung and Reuters, the tire maker said its "employees and managers in Russia face severe criminal consequences should we refrain from serving local demand."

Conti said the move did not impact sanctions imposed on Russia for its invasion of Ukraine.

The company said tires were made for civilians "as a matter of principle" and was not done to drive profits.

On March 9, Continental said it had suspended production of tires temporarily at its Russian, and halted imports and exports of products to and from Russia company wide.

Continental said March 7 it is able to meet supply obligations "at the moment. However, we expect the supply situation for raw materials required for tire production in Europe to gradually deteriorate in light of the sanctions imposed and the further worsening of logistics bottlenecks."

Continental said it had activated corresponding contingency plans that include safety stocks and alternative suppliers.

In a video posted on Conti's website, Chairman Nikolai Setzer said the company is taking efforts to support its staff at the Kaluga plant affected by the suspension.

In the video, Setzer stressed that Conti as a company supports diplomatic efforts and "all combat operations must end as quickly as possible."

The Hanover-based company stressed that at this moment, it is not possible to predict what further economic effects the current crisis will have for the company or its customers.

"We are monitoring the current situation very closely and are constantly reviewing all options available to us," it added.

Pirelli March 17 announced it was throttling back its activities 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.

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."

Earlier, Pirelli spokesperson told Tire Business that the Italian tire maker was "continuing its activities while monitoring the situation through a permanent crisis committee."

Pirelli operates two plants in Russia: one in Kirov, in the western part of the country, and another in Veronezh, in southwestern Russia.

Pirelli announced it has donated $550,000 to help Ukrainian refugees stricken by the war.

In addition, the company said it will establish a bank account accessible to its employees to collect their donations.

"Pirelli forcefully condemns what is happening and its thoughts are with the people who are suffering," the company said.

In a statement to Tire Business on March 18, Yokohama Rubber Co. Ltd. said it was halting production at the passenger tire plant run by its Russian subsidiary, L.L.C. Yokohama R.P.Z., in Lipetsk, Russia.

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 Tokoyo-based company said it "will continue to collect information from its bases around the world and take appropriate measures as needed."

Bridgestone Corp. announced March 14 that it will suspend production of tires in Russia and halt exports to the country in response to the ongoing conflict in Ukraine.

The company said it will stop production at the passenger car tire plant in Ulyanovsk, Russia, by March 18, "after the necessary preparations."

It will also immediately freeze any new capital investment at the facility and halt exports of tires to Russia.

"We condemn any form of violence and hope that peace can quickly be re-established. Our primary concern in this crisis, is the safety of our employees and their families," the company said.

Tire Business will keep readers updated with the latest news and information.

March 15, the The European Tyre & Rubber Manufacturers' Association (ETRMA) said it was closely following developments in Ukraine and gathering information to assist the industry, while hoping for an early, diplomatic end to the crisis.

An initial round of inquiries among members has shown that "the top priority concerns the safety and security of the people directly affected," Fazilet Cinaralp, secretary general of the ETRMA, told European Rubber Journal.

According to data from the U.S. Census Bureau, the U.S. has relatively little trade with either Russia or Ukraine in tires.

U.S. imports of tires from Russia last year were valued at $47.1 million (1.14 million units), or less than 0.3% of total imports, while imports from Ukraine totaled $12.6 million (450,930 units).

Roughly 75% of Russian imports ($35 million, 901,000 units) were passenger tire units, and 94% of Ukraine imports were in the passenger tire category.