Nokian expands Russian output by a third

By Richard Higgs, ERJ staff (PRW)

Vsevolozhsk, Russia -- Nokian Tyres plans to raise the production volume at its Russian plant in Vsevolozhsk by a third next year.

In the medium term, the firm intends to double its output in Russia with the national facility eventually reaching a production of 15 million tyres per year.

Today, Nokian of Nokia, Finland, sells around a third of all the tyres it manufactures overall in Russia. Now, thanks to a recovery in the Russian tyre market, it expects to increase that proportion to 50 percent by the year 2015, according to Nokian president and CEO Kim Gran.

There is renewed optimism at Nokian although its sales in Russia last year plunged 55 percent. In the first half of 2010, however, the Finnish firm saw its fortunes reversed with local sales up 72 percent to nearly euro 92m. In the whole of 2009, the Russian operation only achieved sales valued at less than euro 117m.

The upturn in results has been put down to the widespread recovery in consumer demand in Russia and the enhanced creditworthiness of tyre distributors.

The Russian car market has seen an increase in sales of foreign manufactured vehicles and in the premium segment. Since margins are higher in the premium business, Nokian has had to increase its tyre production volume to maintain its market leadership.

Nokian has more than doubled the investment it planned to sink in the Vsevolozhsk plant when it was first launched. The firm originally aimed to invest around euro 140m in the project, but has since spent about €400m, Mr Gran was quoted in press reports as revealing this October.

Since June this year, the Russian tyre plant has been operating nine production lines, each with an annual capacity of one million tyres per year. A substantial part of their output has been exported.

Nokian, which specialises in the manufacture of rugged tyres designed for the harsh conditions of Nordic countries, created the world's first winter tyre in 1934. It also produces tyres for trucks and special heavy machinery used in snow and forest terrain. The present day company was formed in 1988 and last year employed 3,300 overall.

From PRW.com (A Crain publication)