Nokian, Sentury reach tire manufacturing deal

NOKIA, Finland—Nokian Tyres P.L.C. has struck a deal with China's Qingdao Sentury Tire Co. Ltd. for Qingdao to make Nokian-brand tires under contract in China for Nokian to sell in central Europe.

Nokian said it is designing the tires and testing tires to be manufactured under this agreement. Production is set to start in the first half of 2023, with the first tires scheduled to reach the market in the second half.

Securing the production off-take agreement will allow Nokian to serve markets previously handled by tires made in Nokian's Russian factory, which is being sold in the wake of Russia's invasion of and continuing war with Ukraine.

Nokian also said it is negotiating additional contract manufacturing agreements, but did not specify partners. In all, Nokian said it anticipates securing off-take production agreements totaling up to 3 million units a year through 2027.

Qingdao Sentury will build the tire at its plant in Qingdao, Shandong, where annual capacity is rated at 15 million units. Sentury operates a second factory in Rayong, Thailand, and has plans to build a third in Spain.

Nokian said it will audit Sentury Tire's Qingdao plant regularly according to its quality, sustainability and safety requirements,

This new source of supply is in addition to production at Nokian's factories in Dayton, Tenn., and at its headquarters in Nokia.

At the same time, Nokian noted that it is advancing efforts to increase its own production capacities, including the previously announced plan to build a$650-million plant in Romania."We have started to build the new Nokian Tyres without production in Russia, and contract manufacturing is an essential part of these plans," President and CEO Jukka Moisio said.

"With the new factory in Romania, increasing capacity in Finland and the U.S. and the contract manufacturing [agreement], we are laying a strong foundation for Nokian Tyres' future growth," he added.

Nokian is considered the No. 19 tire maker worldwide, with fiscal 2021 tire-related sales of $1.93 billion, according to Rubber News' annual Top 75 Tire Makers ranking.

Qingdao Sentury, which goes to market with the Delinte, Groundspeed, Landsail and Sentury brands, is considered considered No. 39 worldwide, with 2021 sales of $811 million.