Nokian Tyres to get $28.42 million to build tire factory

Contributed rendering / The planned Nokian Tyres factory in Dayton, Tenn., is slated to be in full production by early 2020, according to the company.

NASHVILLE - Tennessee officials are living up to their end of a commitment to Finnish manufacturer Nokian Tyres, approving a $28.42 million state infrastructure grant in support of the company's $360 million planned Dayton, Tenn., tire factory.

State Building Board Commission members last week unanimously approved the nearly $30 million, which will go to the city of Dayton's Industrial Development Board to be spent as the company constructs the plant.

Nokian and the state announced in May the manufacturer would build its first U.S. tire plant in Dayton, north of Chattanooga. Scheduled to open in 2020, the 830,000-square-foot plant initially would employ some 400 workers.

The facility, which will focus on manufacturing passenger, SUV and light-truck tires, represents the largest investment ever by a foreign manufacturer in Rhea County.

State Economic and Community Development Commissioner Bob Rolfe told Building Commission members the state money is going toward plant infrastructure, site development, equipment, facility construction "and all required related work." Nokian will be operating under the legal name Nokian Tyres U.S. Operations LLC.

"This grant will incorporate also an accountability agreement with 'clawback' provisions that permit reimbursements of expenses that occurred after May 15, 2017," Rolfe said.

Tennessee uses clawbacks to recoup public dollars in the event a company does not follow through on its commitment. The grant includes a requirement that the grantee provide a 25 percent payment bond securing Tennessee's grant funding.

Lt. Gov. Randy McNally, R-Oak Ridge, the state Senate speaker who serves as chairman of the State Building Commission, said he had been in "consistent communication" with Sen. Ken Yager, R-Kingston, in whose district the new plant is going.

"The approval will allow yet another excellent company to provide high-quality jobs in our state," McNally said. "I appreciate that Nokian Tyres has chosen Tennessee and look forward to them growing and expanding in our state."

The bulk of the state's share of funding - $23.75 million - came out of previously approved capital improvement dollars. The remaining $4.674 million is coming from state Fast Track grant funding approved as part of the fiscal year 2018 budget that took effect July 1.

In other action last Thursday, Tennessee Building Commission members also gave approval to yet another major economic grant involving a planned $250 million manufacturing plant in Middle Tennessee.

That involves $22.3 million for the deal struck by the Haslam administration and South Korean manufacturer LG Electronics USA Inc. to build a manufacturing plant in Clarksville, north of Nashville.

Just as with Nokian, the money doesn't flow directly from the state to the company - that's a legal no-no under the Tennessee Constitution. Instead, the deal relies on the state's standard work-around - sending the grant dollars in this case to the Industrial Development Board of Montgomery County.

The plant will manufacture household appliances and employ about 600 people.

It also contains clawback provisions.

In both instances, Republican Gov. Bill Haslam's Improve Act played a role. The bill raised road funding by increasing gas taxes, which had been lagging. But at the same time it also slashed three taxes for general state government that have been booming. Among them was a decrease in state corporate taxes for manufacturers operating in Tennessee.

Contact staff writer Andy Sher at or 615-255-0550. Follow on Twitter @AndySher1.