Mid-Year Report: Nokian continues N.A. plant investment

Nokian Tyres P.L.C. continues to invest in its North American tire plant in Dayton, Tenn., adding a third shift in mid-May and ramping up for a fourth shift to start in July. Tommi Heinonen, vice president of sales, Nokian Tyres North America, said the company intends to make one million tires at the factory this year.

Heinonen said the tire maker will roll out several new products later this year.

How would you describe business thus far in 2021?

What a recovery! In my over 20 years in business I have not seen such demand growth.

What is the one thing you would like customers to know about how your company handled the pandemic?

Despite the challenging situation in spring 2020, we never stopped investing in our future and our mutual growth with customers. Ramp-up at our Dayton, Tenn., factory continued amidst many challenges.

Do you expect any supply difficulties in the second half of the year?

Our supply is catching up to demand every week, and big help is coming from Dayton, where we will soon be producing tires 24/7.

We have worked hard to meet increased demand and overcome external logistical challenges, and the situation should return to normal soon.

Has problems with containers and ports impacted business? Are you seeing any improvement?

As with many tire manufacturers, that issue has impacted us since we have two factories in Europe. The situation is getting better, but we have put creative solutions in place to keep disruptions to our customers as low as possible in the meantime.

What are some of the pleasant surprises you are seeing?

Personally, I have been very happy seeing—again—the value of relationships. This was not a surprise, but the past year has confirmed again that people do the business. We have always built our business on long-term partnerships, and in tough times the value of relationships was again proven.

Nokian's "Haaka Ring" tire test center recently opened in Spain, a $73 million investment. What is the signature part of this facility?

This test center gives us another competitive advantage. We have been testing tires in multiple tracks but of course owning and controlling a state-of-the-art test center is a game changer.

For North American customers, it will mean shorter development time for new all-season tires on company-owned tracks where conditions resemble those in many parts of North America.

The signature track is a four-mile oval that allows testing at speeds as high as 185 miles per hour.

Sustainability has been part of Nokian's DNA. What are some of your most recent achievements in this area? Why is that so important to the company?

Of course we are very proud of our LEED-certified buildings at our Dayton factory. Our production building there is the first in the world to earn LEED v4 Silver Certification.

But as said, for Nokian Tyres sustainability is not just one or two single acts per year. We were green before it was in fashion and everything we do is based on sustainability—including releasing our first EV-dedicated winter tire this season, the Nokian Hakkapeliitta 10 EV.

We are also planting 50,000 trees in the United States this year in a partnership with POWDR and One Tree Planted. This will help with areas that have suffered from deforestation and wildfires, and it will help keep future journeys beautiful.

You are in the middle of increasing the work force as well as capacity at the plant in Dayton. Can you provide an update on the plant in general? How many are currently employed there?

We have today about 300 employees in Dayton. Third shift just started May 17, and fourth shift will start in July, at which point we will be making tires 24/7.

We aim to make 1 million tires at the factory this year, and we are well on our way to hitting our long-term production and workforce goals there.

Of all the innovations on the market today, which is the one must-have for your dealers? Why?

We have focused on giving drivers peace of mind through new services that emphasize our tires' durability. For instance, our new Nokian Tyres One passenger tire comes with a Pothole Protection program that gives drivers and dealers an extra layer of security.

We offer this program because we trust the technology we have put into this new tire—aramid fibers, which provide extreme toughness to help protect from road hazards.

For us, innovation is driven by our desire to make driving feel secure and predictable. We think that approach also allows consumers to rely on tire dealers.

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

Let's be honest: there is only one true "all-season" tire, and it is the all-weather tire.

That segment is growing in popularity as dealers help drivers understand how all-weather tires allow them to forget the forecast.

Demand for light truck tires is also increasing, and we are increasing steadily our LT offering through products like the Nokian Tyres One HT.

What sector offers the most growth potential? How have you addressed that?

We believe that all-weather tires are a great opportunity in areas which do not live in winter but visit winter. All-weather tires protect drivers better than all-season tires in unpredictable winter weather.

Once consumers have tried all-weather tires, they tend to return to the dealers who helped them find that year-round peace of mind. So all-weather products don't just protect drivers, they also protect dealers' relationships with those drivers.

Nokian recently released both the Nokian One all-season product for the LTs and SUVs, as well as the Hakkapeliitta 10 winter tire for passenger cars and SUVs. How has each of the products been received in the market? What are dealers/customers telling you about it?

Our latest product launches have been extremely successful. Nokian Tyres One sales have outperformed our estimates, and winter booking orders for the Nokian Hakkapeliitta 10 family are high. We are also very happy to hear positive comments from our dealers, which confirms that we are on the right track.

Do you expect to roll out any additional products in 2021? What will they be and what sector will they serve?

2021 will be another big year for us. We will be launching new products later this year that serve growing segments of the market.

Most every tire maker has raised prices multiple times over the past six months. What has been the overriding factor in these increases? Why?

General cost level. Raw materials, labor, logistics … these all have been impacting tire prices over the past six months.

Do you expect any major investments in the next six months or year, in either personnel, distribution facilities or capacity expansions?

For us this is clear: We are still investing in our Dayton factory to ramp it up to its ultimate capacity approaching 4 million annual units. 2021 will be a record year for new product launches.

We need more people both in the field and in our back office. We are also all the time improving our own distribution network and just opened a 600,000-tire warehouse in Chicago.

This kind of investments are continuing.

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

Short-term unbalance of supply and demand is a concern. Longer term we all are working with the same challenges and opportunities: balancing supply, securing the best possible products to end users in a cost-efficient way.

I sleep very well, thank you for asking!