Nokian eyes 2021 recovery following solid Q3 performance

NASHVILLE, Tenn.—Nokian Tyres Inc. management is expressing optimism about 2021 following favorable third-quarter financial results and the resumption of production at its year-old factory in Dayton, Tenn.

"I am a strong believer that people will be driving even more in the future," Tommi Heinonen, North American director of sales, said during a recent company podcast, "so they can stay safe in their nice, clean cars instead of going to airports. I expect that tire demand will be there—when people have been locked down, there's a need to travel again. Cars are the safest way to do it."

Heinonen, who's been involved in sales for North America since 2010, stressed that there have been "positive things going on" throughout 2020, including "a lot of creative ideas and new ways of doing business. When times are challenging, people will always find a way to do business."

After the industry—Nokian included—experienced a significant downturn in travel last spring, the company saw a recovery in certain markets. In North America, for example, Nokian reported 25 percent sales growth in the third quarter versus 2019, to $63.4 million, and the fourth quarter typically is one of the company's strongest due to its strong position in winter tires.

Revenue generated in North America for the nine months, however, was down 16.2 percent, reflecting the 51 percent drop in sales in the second quarter, when the company was forced to shut its recently opened U.S. plant for several weeks.

Nokian, like many other tire makers, was forced to get creative with customer relationships in 2020 in response to the pandemic and the business restrictions that came with it, Heinonen said.

Among other things, the company redesigned its training seminars for virtual delivery, and sales representatives took their show on the road where appropriate, driving recreational vehicles to customers' shops and hosting socially distanced seminars around the campfire and at drive-in movie theaters.

"We tried to help our customers and they stayed loyal to us, even during tough times," Heinonen said. "Our dealers trusted us and gave a fair share of their business to us. Our partnerships stayed strong and carried us through difficult times."

Nokian modified sales programs to provide increased flexibility when necessary and reworked its dealer co-op program to allow dollars to be dedicated for philanthropic purposes, not just marketing uses, as a way to help customers serve their communities amidst the adversity.

On the product front, Nokian launched the One HT light truck/SUV tire in January, and Heinonen said sales have "exceeded benchmarks."

"We have been doing very well when it comes to new products," he added, "and look forward to future products in North America."

Since restarting production at the Dayton factory in early May, Nokian has continued to ramp up production and has nearly doubled its workforce there over the course of the year.

"Starting production in Dayton makes us really proud and is the cornerstone of our growth in North America," Heinonen said. "We can help our dealers by producing locally in the United States and shortening the lead time for products. That's the most important thing that happened for us in 2020."

The factory also earned ISO 9001 quality certification less than a year after opening, and it became the first tire production facility in the world to earn LEED v4 Silver certification, recognizing it as a low emissions, energy-efficient facility.

Heinonen, the vice president of sales for North America since May 2018, has been with Nokian since 2000. He was named general manager/managing director for North America in 2010.