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Nokian Tyres value chain

A tire is a truly global product whose value chain extends throughout the world. 

1. Raw materials

The main raw material groups in tire manufacturing are synthetic rubber, fillers, chemicals, reinforcing materials, and natural rubber, which makes up for approximately one fourth of a tire’s raw materials. We use more than a hundred different raw material suppliers that all follow the same rules. The cultivation of natural rubber mostly takes place on small farms. Its complex path to becoming a raw material for tires have a significant role in terms of the producing countries’ social structure.

Here is an example of the natural rubber value chain:

1.1. Rubber production

Natural rubber forms one fourth of a tire’s raw materials. As an agricultural product, its production differs from the other raw materials. Most of the natural rubber that we use comes from Malaysia and Indonesia. Natural rubber is cultivated in forests, often on small farms. More than 85% of the world’s natural rubber is produced on farms smaller than two hectares in size whose daily output may be just a couple
of kilograms of crude rubber. The crude rubber that Nokian Tyres purchases from traders comes from family farms and some larger plantations.

1.2. Wholesalers

Family farms sell crude rubber to local wholesalers. Rubber is produced on a day-to-day basis: wholesalers go around small farms to buy their daily production. To get an idea of the number of these small streams, consider that natural rubber production in Indonesia exceeded 3 million tons in 2017*. Wholesalers, in turn, sell the crude rubber to processors.
(Source: Association of Natural Rubber Producing Countries)

1.3. Processors

Processing plants purify the natural rubber, process it as specified, and pack it for further use.

1.4. Traders

From the processors, the rubber is taken to the international market via traders from who companies, including Nokian Tyres, purchase the rubber. The price of rubber is determined, among others, by the Singapore Commodity Exchange. Nowadays, even family farms are using their mobile phones to check the daily market rate.

2. TRANSPORTATION

Most of the raw materials for tires are transported by sea to large ports in Europe – Hamburg and Rotterdam – from where they are shipped to Finland and Russia. Both of our factories use similar raw materials that come from the same sources. This allows us to ensure the quality of our tires regardless of the site of manufacture: we market our tires everywhere in the world, and we can only guarantee the same high level of quality to consumers anywhere in the world through consistency in terms of the raw materials and manufacturing methods.

3. SUBCONTRACTORS

We work globally with several subcontractors in various fields, such as construction, security, cleaning, data administration, maintenance, and logistics. Especially our factories in Finland and Russia are frequented by dozens of subcontractors. All of our subcontractors agree to
comply with our sustainability policy and ethical principles.

Before subcontractors’ employees are allowed to start working in our factories, they must pass induction training on safe working practices. We compare and select our subcontractors carefully. Close partnership with our subcontractors ensures strong relationships that benefit
everyone.

4. GROUP FUNCTIONS

We produce tires in two locations: Nokia, Finland and Vsevolozhsk, Russia. In addition, we have sales companies in our key markets, such as the Nordic countries, Central Europe, and North America. Every day, our approximately 4,800 employees contribute to our continuous development efforts with their competence and ideas according to our way of conducting sustainable business.

5. SOCIETY

Our impact is directly seen in our factory locations of Finland and Russia. There, we are locally a significant job creator and a permanent part of the surrounding community: in Finland, we offer work practice and thesis opportunities, and the Hakkapeliitta Village is a concrete example of our impact in Russia. Our purchases, salaries, and taxes as well as the dividends to shareholders contribute to wellbeing throughout the world.

6. TRANSPORTATION

The requirements of the car market and expansion of the Vianor chain have led us to change our tire logistics and consumer insight. We used to deliver tires to large wholesalers but, nowadays, distribution is divided more into smaller product lots and smaller warehouses. As the number of individual transport operations grows, logistics planning becomes increasingly important.

7. WHOLESALERS

Nokian Tyres’ products are sold globally via our branded distribution network as well as through car dealerships and tire stores. Nokian Tyres’ growth is supported by the branded distribution network, which includes the Vianor and Vianor Partner chains, Nokian Tyres Authorized Dealers (NAD) network and the N-Tyre network. Vianor’s mission is to maintain Nokian Tyres’ market share and to support its brand in the Nordic countries. The purpose of our own Vianor chain is to help in the development of concepts for driving our customers’ sales and to provide deeper insight about our customers’ business and consumer needs.

At the end of 2018, the Vianor network included a total of 1,318 service centers in 24 countries. The NAD network operated in 26 countries with 2,162 stores, while the N-Tyre network covered 127 stores in Russia and the CIS countries.

8. CONSUMERS

Consumers – the users of our tires – are the most important link in our value chain. The purpose of the safety, premium quality and unique innovations of our tires is to ensure consumers trouble-free and safe trips under all conditions. More than 85% of a tire’s carbon footprint is generated during its use, which means that our product development efforts for improving the tires’ safety and reducing their environmental impacts are measured during their use by consumers.

9. RECYCLING

A part of recycled tires is utilized for their material; they are shredded or granulated to replace rock materials in various road construction and civil engineering applications. Rubber chips are light, insulate moisture and maintain their form. They support the road surface and make asphalt quieter. The flexible properties of rubber are put to use once more when it is reused as a base material for sports venues, including horseriding arenas.

Retreading is one of the best recycling methods. If the carcass of a tire is undamaged, it can be retreaded – bus and truck tires can be retreaded up to two or even 4 times.

Another way to utilize recycled tires is to combust them for energy, as the heating value of tires is close to that of oil. The use of recycled tires as an energy source has been growing for years and, today, approximately half of the tires recycled in Europe are used in waste-to-energy applications.

As one of the original founders of Finnish Tire Recycling Ltd we are involved in their work of looking for new ways to recycle and utilize tires.