Nokian to increase production in US, Russia ahead of market rebound

Nokia, Finland – Nokian is aiming to bring production capacity at its manufacturing plants in Vsevolozhsk, Russia, and Dayton, Tennesee, up to capacity as part of a post-Covid short-term strategy.

"In North America, we continue to ramp-up the new factory. At the same time, we aim to maximise production in Russia," said president and CEO Jukka Moisio in an 8 Sept conference call to mark his first 100 days in office.

In addition, he said, there will be a focus to increase heavy tire production and efficiencies at the company's oldest plant in Nokia.

In North America, Nokian is working to add a second shift to production at the Dayton manufacturing plant, according to Moisio. 

The plan then is to add a third shift and bring production to capacity to 4 million tires per year within the next three to four years. 

“The investment phase is starting to be behind us," said Moisio, "Now we need to make sure that we benefit from these investments in the best possible way."

"The capacity and capability available will help us increase sales once the market rebounds,” says Moisio.

Describing the Covid impact as a "temporary setback", Moisio said he was “comfortable with where we are” for the long-term. 

“If recovery continues, we are in a good position," said Moisio, who took over Nokian’s leadership 27 May.

In addition to output increase, the Finnish tire maker is also planning to expand its network by adding more distributors and dealers, as well as new promotions and marketing efforts.

Furthermore, the manufacturer is looking to update some products and add others to fill gaps in its lineup.

"Clearly, moulds for new products is an important part of the investment plan moving forward," he said.

"… We have gaps in our lineup, especially in North America, and filling those gaps is important. And we want to make sure we remain competitive in Russia and Europe."

Financially, Moisi said, the company has set itself a “conservative but good” target of 5% growth through the rest of the year. 

"We have an established system in place," he said. "We need to maintain what we are doing. Increasing productivity and new products will be where we will grow."

To curb the Covid impact, Nokian had to cut costs significantly and temporarily idled production earlier in the year. 

The Finnish tire maker reported a net loss of €13.7 million in the first half of the year, compared with a net profit of nearly €148 million the year before.

Nokian expects to conduct a more thorough review of its longer-term growth strategy once the market has stabilised.