Nokian starts off-take with Bridgestone; drops Michelin

By Bruce Davis, ERJ staff

NOKIA, Finland-Nokian Tyres PLC is shifting off-take production of heavy truck tyres to Bridgestone Corp. from Groupe Michelin and has contracted India's Balkrishna Tyres Ltd. to make agricultural tyres.

Starting this quarter, Bridgestone will start making Nokian-brand truck tyres at its plant in Bilbao, Spain. Michelin had been making them at subsidiary plants in Olsztyn, Poland, and Budapest, Hungary, for the past four years. That output amounted to about $11 million in value annually, Nokian said.

Nokian said the change was "natural" since Bridgestone is a shareholder and cooperation between the two firms is increasing. Bridgestone owns a 19-percent share of Nokian.

Nokian's sales of heavy truck tyre sales grew 11 percent last year to represent nearly 11 percent of its $748 million in new tire sales, the firm said.

The deal with Bridgestone is one of three off-take deals Nokian has. Last year it struck contract manufacturing deals with China's GiTi Tire to make Nokian-brand summer passenger tyres for North America and with Slovakia's Matador AS to make summer tyres for sale primarily in central Europe.

The GiTi Tire deal calls for 500 000 tyres in 2005, gradually increasing to 1.5 million. The Matador deal covers 300 000 to 500 000 tyres this year and up to 1 million a year eventually, Nokian said, and involves a $3.7 million investment by Nokian in Matador's Puchov plant.

Nokian also contracts the production of low speed-rated summer tyres to an undisclosed Indonesian company and some light truck/SUV tires in the US.