In 2015, we implemented many changes and improvements throughout our group for supporting our profitable growth and improving transparency. In connection with reorganising our work on sustainability, we prepared a comprehensive sustainability development programme for the next three years, which comprises more than 50 separate work packages.
Last year, product development was one of the focus areas of internal auditing at Nokian Tyres. The audit uncovered some problems concerning our magazine testing policies. Once we had verified the results, we took the responsibility and published the findings ourselves in early 2016. We apologised because our past actions are against our principles. Transparency and sustainability lay the best foundation for the further development of our company.
We have revised our procedures and will not submit any tyres for magazine tests that are not intended for commercial production. I deeply apologise for our errors and guarantee that this will not happen again. We are working even harder than before on reinforcing trust and improving our work on sustainability in general. In addition to setting an example, we want to do everything that we can in order to establish transparency in terms of testing throughout the industry.
I have confidence in the future. In the past few years, our tyres that have succeeded in the independent comparison tests by motoring magazines are the same tyres that you can buy at our dealers.
Our strategy supports profitable growth – flexibility agreement improves competitiveness at the Nokia factory
Based on our strategic goals, we carried out several changes in our organisation late last year in order to strengthen our product and innovation leadership, our entire supply chain, sales and the management of our distribution chain and to ensure better opportunities for expansion, harmonise our processes and develop them further. Our revised strategy guides us to develop all the areas of our operations and incorporating the Premium aspect in everything that we do. Each of these is fundamental for Nokian Tyres’ future success.
Unfortunately, we had to make some tough decisions last year. The weakened economic situation and production cuts at the Nokia factory created the need to carry out permanent structural changes in our organisations. At the end of the statutory negotiations, we offered training and support programmes above the legally required minimum level to the persons who were laid off from the Nokia factory in order to support their re-employment.
In early 2016, we signed a significant work time flexibility agreement with the personnel of the Nokia factory. The agreement improves the flexibility of our production and our company’s competitiveness. It also ensures job security until June 2018 for our production personnel, during which time there will be no temporary or permanent layoffs due to financial or production-related reasons.
Developments in sustainability
Circular economy and efficient use of materials are currently two key themes in sustainability. We have always strongly invested in recycling and ensured the resource efficiency of our processes. One counterforce that naturally increases waste volumes is the increasing need for several different product types. In the past two years, we have managed to reduce waste generation in our production more than 25% while growing our portfolio. Most of the waste that we generate is reused as construction materials, for instance.
More than 80% of a tyre’s environmental impacts are generated during use. Fuel consumption alone accounts for more than half of this. The rolling resistance of a tyre significantly affects fuel consumption. We have conducted focused long-term product development efforts in order to reduce the rolling resistance of our tyres. In 2015, we introduced three different tyre models with the best class A wet grip and rolling resistance according to the EU tyre label. The proportion of the best class A–C tyres in our gross sales has already exceeded 90%.
These are some of the measures that enabled us to improve our performance in the 2015 DOW Jones Sustainability Index, where our score exceeded the average of the Automobiles & Components industry group in all 18 assessment criteria.
We are supporting the positive developments in various areas of sustainability. In December 2015, we signed the UN Global Compact sustainability initiative, whose ten principles are consistent with our ethical guidelines. We maintain open interaction with our stakeholders.
We are building our future success in an honest way while further improving the quality and eco-friendliness of our products and services. Together with our competent and hard-working personnel, we are making Nokian Tyres the best and most sustainable tyre manufacturer in the world. We humbly hope that we can restore the trust of our customers and other stakeholders through our actions and open communication.
We are already a tyre industry pioneer and we aim to be a forerunner in sustainability as well.
I hope you enjoy our report,
President and CEO