NOKIA, Finland—Nokian Tyres P.L.C. continues to evaluate sites for a third plant in Europe despite major cutbacks announced recently in Finland, but the decision won't be made until the first half of 2016, according to a senior company official.
Nokian, which has plants in Finland and Russia, disclosed in April it was scouting locations in Eastern Europe for a new plant to support growth in central Europe, which represents about a quarter of the firm's global sales.
Besides Eastern Europe, Nokian also is evaluating the potential for sites in North America and Asia—most possibly China—according to Antti-Jussi Tahtinen, vice president, marketing and communications.
Regarding North America as a location, Nokian CEO Ari Lehtoranta told analysts during a first quarter conference call, “If growth in North America would prove to be sustainable, it might make sense to put it there.”
Tahtinen also confirmed that Nokian has completed installing a 14th production line at its plant in Vsevolozhsk, Russia, near St. Petersburg, although it is not running at full capacity yet.
That plant opened in 2005 and has since been expanded to 15 million tires annually. Mixing capacity there would be expanded as well.
Back in Finland, Nokian has notified workers at its headquarters plant in Nokia that it is seeking to cut up to 150 jobs there, in line with planned production cutbacks necessitated by the weakened economic picture in the company's key markets in Russia and eastern Europe.
Nokian said it hopes to realize operating savings of $8.7 million through the job cuts at the plant, which employs 900.
The company did not say how much it intends to throttle back passenger tire production nor whether the job cuts would be permanent. Besides passenger tires, the plant in central Finland also makes light truck, farm, off-road and industrial tires and is rated at 76,000 metric tons output per year.
Nokian downgraded its outlook for 2015 because of the weakened economic situation in Russia and CIS countries.
“Car tire sales have continued to decline in these areas. The weakened economic situation and the planned production cuts at the Nokia plant have created the need to rationalize operations and execute structural changes,” the company announcement said.
Despite the job cuts, the factory in Nokia “remains important not only for the volumes it produces but also in developing new products and production processes,” Lehtoranta said.