Nokian breaks ground on first North American tire plant

DAYTON, Tenn.—The finish line may be two years away for Nokian Tyre P.L.C.'s journey to produce its first tire in North America, but the Finnish company took a major step toward that goal on Sept. 20.

A gathering of close to 200 guests, including dignitaries from near and far, broke ground on the tire maker's third tire manufacturing facility, jump-starting the company's stated goal of doubling sales in North America within five years.

With temperatures—and the humidity index—hovering near the 90s, recently appointed President and CEO Hille Korhonen joined Tennessee Gov. Bill Haslam and a contingent of state, county and local politicians to celebrate the groundbreaking. The ceremony was held under a large tent pitched on the plant's future site, located outside of Dayton, a small community with a little more than 7,000 residents, located about 35 miles from Chattanooga in southeast Tennessee.

"This is really a historical moment for Nokian Tyres," Korhonen said as earthmovers growled in the distance. "I'm so proud of the company. We are so excited to get things moving. Through this almost $400 million U.S. investment, we are showing our commitment long term to serve our customers and to become members of this society."

After two years of discussion focused on building a plant in North America, the Nokian board of directors greenlighted the $360 million facility in May. It will produce passenger, SUV and light truck tires specifically for North American consumers, and is scheduled to go on-stream in 2020. Officials say it will have 400 employees and an eventual capacity of 4 million tires per year.

The facility is expected to span 830,000 square feet and will include a warehouse that is expected to store 600,000 tires.

The Tennessee State Building Board Commission recently approved a $28.4 million grant that will finance infrastructure, site development, equipment, construction and related work, according to terms of the grant.

"We have been looking forward to today for a long time. This not only is a really big deal in Rhea County (Dayton is the county seat of Rhea County), but it's also a big deal for the state of Tennessee," Haslam said. "Nokian is a world-class company, committed to producing a great product in a sustainable way."

The location will have highway and rail transportation available nearby. The plot of land is large enough to accommodate three times the planned facility's size.

"We are not only investing in the factory, we are also investing in people," Korhonen said as many onlookers waved Nokian-branded hand fans to stifle the heat. "We will be investing more into products, product development, marketing, and also making us part of this society."

Antti Vanska, Finland's deputy chief of mission and the second highest ranking official at the Finnish Embassy, said the factory only solidifies the strong relationship between the countries. He said the U.S. is Finland's third biggest country for exports.

"Finland is an open and modern economy," Vanska said. "Free international trade and free investments are the backbone of our economy. This is great day for both countries."

Nokian, ranked No. 19 in Rubber & Plastics News' 2017 Global Tire Report with 2016 tire sales of $1.38 billion, also announced a series of initiatives designed to grow the company's brand, particularly in North America.

Among them:

• The company is releasing its latest product, an all-season tire called the eNTYRE C/S, for the North American SUV and CUV markets. The tire will be made at Nokian's plants in Russia and Finland before production is shifted completely to Dayton. The tire, which offers a 65,000-mile treadwear warranty, will be available in January.

"We already have 11 product groups specific to North America," Korhonen said. "And we will be building more as we ramp up the factory."

• Nokian will be constructing a test track facility in Spain, its first outside of Finland. The company is doing its due diligence now, according to Korhonen, and likely will begin construction in 2018.

• The Nokian Authorized Dealer Program is set to launch soon. While the specifics of the program are being finalized, executives said the program will offer market support for dealers in several areas.

• The company will continue to expand its marketing and branding efforts, as it strives to increase brand awareness. That will include ramping up its online and social media presence. However, Korhonen said the company has no plans at present to offer online tire sales directly to consumers.

"We are building on our heritage and values and core competence, understanding what that means, and we are continuing our journey," Korhonen said. "The values our company has are something special. We have great team spirit, we raise the bar high, we do things together, and we want to be the best in the world."