The Finland-based Nokian Tyre Co. opened its tire production plant in Dayton, Tennessee, in 2019 to better serve its growing North American market, where Nokian replacement tires have been gaining market share for more than a decade with even more growth expected as the company expands into more light truck tires for the American market.
The $360 million factory in Rhea County now has more than 350 employees and is projected to make about 1.5 million tires this year, up from about 1 million tires made at the Dayton plant last year, company officials said.
Nokian Tyre North American Sales Vice President Tommi Heinonen said he hopes the Dayton plant can boost production to make even more tires in the future, both to meet the growing U.S. market and to replace some of the tire exports Nokian is losing this year from its Russian plant.
"We need to grow our production here," Heinonen said during an interview this week with the Times Free Press in Chattanooga. "The Dayton plant is up and running on schedule, and it is our hope is that we can make even more tires there because the demand is certainly there."
The Dayton plant, which is only the third production factory built by Nokian since it entered the tire business nearly a century ago, has taken on new production urgency this year as Nokian and other tire makers adjust to export restrictions placed by the European Union and Western allies on Russian-made goods.
Nokian opened its Russian tire plant in 2005 in Vsevolozhsk, near St. Petersburg, to help supply the Russian market, and the plant grew over the next decade and a half to make passenger car tires shipped to 40 countries around the globe, including the U.S.
But those foreign shipments have been halted, and Nokian has suspended new investments in Russia after Russia invaded Ukraine and the EU imposed trade restrictions on companies doing business in Russia.
On April 8, the EU announced sanctions against Russia, which prohibit the import of tires from Russia to the EU, prohibit the export of certain raw materials from the EU to Russia, and limit transportation from and to Russia. Last year, the 1,600-employee plant Nokian operates in Russia produced about 80% of the Nokian's passenger car tires.
"To reduce reliance on the Russian production and to diversify our manufacturing footprint, we have continued to increase capacity at our factories in Finland and in the U.S., and we are expediting our plans to invest in new capacity in Europe," Nokian President Jukka Moisio said in the company's first-quarter earnings report this spring. "The sanctions have a significant impact on our ability to manufacture tires in Russia, and thus our ability to sell tires in Russia and in Central Europe."
Nokian is one of seven international tire companies with factories in Russia. Bridgestone Corp., Continental A.G., Michelin Group, Pirelli Tyre, Titan International Inc. and Yokohama Rubber Co. Ltd. also have Russian tire production plants that have been hit by the trade sanctions against Russia.
Moisio said Nokian "unequivocally condemns the war, which has caused unspeakable suffering to so many."
Moisio said the Ukraine war "started to impact our operating environment in late February" and has since forced the company to cut its dividend and shift more of its production to other plants.
Heinonen said Nokian's reliability, design and value make its tires attractive for the replacement market in North America that continues to grow as motorists keep their vehicles longer. Nokian also is expanding its light truck tire production to serve the U.S. market.
Heinonen, who was part of the selection team that chose Dayton from among about 80 competing U.S. cities vying for the tire plant, said the Dayton facility "has worked out well" and offers the tire maker cost-effective shipping, energy and labor options.
"We're highly committed to this region, and I think Tennessee has really been a great fit for us," he said.