Nokian sees growth for 'all-weather' segment

It's been a busy year for Nokian Tyres North America. The Finnish tire maker broke ground on its first North American facility in Dayton, Tenn.; announced plans to move its North American headquarters to Nashville, Tenn., from Colchester, Vt.; and revamped its branding strategy. Hans Dyhrman, Nokian's director of marketing, told Tire Business that the company is focused on continued sales growth.

Q: How would you describe business thus far in 2018?

A: Although we haven't reported on the second quarter yet, as we reported in our first quarter report, we experienced 5.4-percent growth in net sales for Nokian Tires in North America.

Q: What are some of the pleasant surprises you are seeing in the industry? What has surprised you most?

A: There is a growing number of brands offering tires that are safer in more conditions: all-season tires with the Severe Service Emblem (three-peak mountain snowflake). Nokian Tyres calls this category "all-weather," and it is an area that we successfully pioneered for a couple decades. As other companies come out with all-season products that meet the minimum standards for the Severe Service Emblem, this brings more attention to this category and growth for the overall segment.

Q: Where do you see the industry markets heading during the last half of 2018?

A: The industry is well positioned to see growth in both units shipped and revenue through the remainder of the year.

Q: What kind of trends are you seeing in the marketplace? How is your company reacting to them?

A: Consolidation continues to be one of the biggest trends in the market this year. As a premium supplier, we prefer to work directly with our customers. In doing so, we're better able to provide the products, services and support their businesses need to be successful.

Q: What sectors look to be strong? Are they sustainable for the future?

A: The CUV and SUV markets continue to grow in terms of aftermarket tire sales and does not appear to be slowing down. This is in part due to new car sales remaining strong in these categories.

Q: What sectors are struggling? Do you expect them to rebound?

A: In the sectors we service, we see a lot of strength in the market.

Q: Has the threat of tariffs affected your business? How so?

A: We haven't experienced a noticeable change.

Q: Do you foresee any price hikes in the second half of the year?

A: The Consumer Price Index indicates there is upward pressure in the market, not just in tires but in many goods. If you look at everything from general business expenses to raw material costs, the prices are going up.

Q: How is the move of your North American headquarters progressing?

A: Temporary offices are already open in downtown Nashville. We're making progress with the transition, including new hires in Nashville, in addition to some employees relocating from Vermont this summer. We do expect to be complete by spring of 2019.

Q: What kind of progress has been made on construction of the new plant in Dayton, Tenn.? Does it remain on schedule?

A: The plant is on schedule to be producing tires for sale at the beginning of 2020. In just over a year since the original announcement, the site has been completely transformed and is well on its way to producing state-of-the-art tires. There is a lot of action at the site, and foundations are simultaneously being poured for multiple portions of the facility.

Q: Has the brand redesign been fully implemented? How are customers reacting to it?

A: We are not yet fully implemented, but will be by fall 2019. So far, we have received strong praise, as the style is a better reflection of our life-driven philosophy, is in tune with modern consumers and shows our commitment to safety in all conditions.

Q: What are some of the challenges of the industry going forward? What keeps you up at night?

A: Overall, there is a lot of production capacity, which may lead some companies to make short-term decisions that compromise the quality and safety of the products. This is a compromise that Nokian Tyres will not make as we maintain the highest standards.

Q: How have the tax cuts affected how you do business?

A: We have not noticed any effect.