Capacity for growth
Nokian Tyres’ production plants are located in Finland and Russia. At the headquarters in Nokia, Finland, centralized product development is carried out and prototypes and test runs are completed. The Nokia factory manufactures car tyres, heavy-duty tyres, and retreading materials for truck tyres.
In 2016, the capacity utilization increased year-over-year, and the production output (pcs) increased by 5%. Production output (metric tons) increased vs. 2015, and continuous investments into production technology improved productivity.
In January 2016, an agreement was reached regarding flexible working time for personnel in forthcoming years. The agreement will enable production to become more flexible and the company’s competitiveness to improve. The agreement supports the plant in Nokia, enabling it to continue to play a significant role in producing tyres and in developing new products and production methods.
Tyres are delivered from Vsevolozhsk to over 35 countries and Nokian Tyres is Russia’s largest exporter of consumer goods. Using shift arrangements, the annual capacity of the factories in Finland and Russia can be more than 20 million tyres. Manufacturing in Russia represents a competitive advantage for Nokian Tyres. Tyre production costs are considerably lower in Russia than in Finland and other western countries.
Approximately 70% of the production in Russia is exported, and the margin between eurodenominated export income and production costs paid in rubles has increased along with the depreciation of the ruble. If demand begins to increase, the company’s production capacity in Russia enables production to be quickly ramped up to address the demand without requiring major investments. In 2016, approximately 86% of the company’s passenger car tyres were manufactured in Russia.
The operations in Russia have also been supported by tax agreements based on investment volumes, as well as the factory being situated within tariff barriers. In addition to having its own production plants, the company has contract manufacturers with factories that are able to meet Nokian Tyres’ strict quality requirements. In 2016, contract manufacturing for Nokian Heavy tyres accounted for approximately 3% of the company’s tyre sales.