Nokian anticipates disruptions, shifting some production out of Russia

NOKIA, Finland—Reacting to the Russian invasion of Ukraine, Nokian Tyres P.L.C. is preparing for potential disruptions.

The Finnish tire maker in an official statement Feb. 25, said all of its operations are running normally and that its previous plans to move main production lines from Russia to Finland and the U.S. should help to mitigate impacts resulting from Russia's invasion of Ukraine.

Nokian's crisis management team is engaged in addressing supply chain issues as they arise.

"We are also monitoring closely the development of sanctions and potential counter-sanctions," Nokian said. "We have activated our contingency plans to mitigate the financial and operational impacts to our business. For example, we are shipping tires closer to our customers, securing the raw material supply to our factories, transferring production of selected key product lines from Russia to Finland and to the US, and securing transport capacity from Russia with existing and new service providers.

The company said all of its heavy tire production is done in Finland.

The tire maker said its plant, located in Vsevolozhsk, Russia, near St. Petersburg, is operating at full capacity, and that the shift in production to Finland and the U.S. had begun in September—months before the invasion—as part of its growth strategy.

The Russian factory has 1,600 employees, according the the company, reporting net sales in Russia and Asia of around $378 million.

"As a company, Nokian Tyres has followed the situation in Ukraine with great sadness and we hope for a quick diplomatic solution to this tragedy," Nokian said. "For us, the safety of our employees is number one priority. We will do everything we can to support our Nokian Tyres team in this situation."

Nokian is one of seven international tire companies with factories in Russia. Bridgestone Corp., Continental A.G., Michelin, Pirelli & C. S.p.A., Titan International Inc. and Yokohama Rubber Co. Ltd. are the others, along with four domestic makers.

None of the other tire maker have commented on what actions they have taken or might take in light of the situation.

Last month, Pirelli CEO Marco Tronchetti Provera led a business call with Russian President Vladimir Putin in which Italian business leaders discussed "developing and exploring new opportunities and building a new dialogue."

According to data from the U.S. Census Bureau, U.S. imports of tires from Russia last year were valued at $47.1 million (1.14 million units), or less than 0.3 percent of total imports, while imports from Ukraine totaled $12.6 million (450,930 units).

Roughly 75 percent of Russian imports ($35 million, 901,000 units) were passenger tire units, and 94 percent of Ukraine imports were in the passenger tire category.

There are four tire manufacturers in Ukraine: C.J.S.C. Rosava; Dneproshina J.S.C.; Eurotire Inc.; and Valsa Bila Tserkva Tire Factory.