Finnish tire maker rolls into East Tennessee
Finnish tire maker Nokian Tyres joined the stream of tire makers launching U.S. plants when it marked the opening of its East Tennessee factory.
Drawn by either tariffs, rising rubber costs abroad or the expense of shipping foreign-made tires to the United States, a wave of tire makers relatively new to North America have committed $3 billion in recent years to manufacturing in the Southeastern U.S.
Nokian, which already brings in 2 million tires every year, located its first U.S. plant off Interstate 75 at Dayton, Tennessee, a town with 7,300 people 80 miles southwest of Knoxville.
The U.S. tire industry, long based in the industrial North, gradually has shifted to the multi-state automotive region stretching more than 200 miles around Nashville along the interstate highway corridors. Nokian’s North American headquarters, with about 35 employees, is located in Nashville.
Industry analysts say more tire producers coming to the United States promise heavier competitive pressure for the nation’s Big Four tire makers — Cooper, Goodyear, Michelin and Nashville-based Bridgestone Americas.
The new wave is following the example of South Korean manufacturer Hankook Tire America, which opened an $800 million tire plant two years ago near Nashville at Clarksville, Tennessee.
In recent years Hankook graduated from a relatively unknown brand among American consumers to a leading supplier for the largest automakers. The company recently said its tires will go on the 2020 Toyota Corolla, produced in plants including the Toyota assembly line at Blue Springs, Mississippi. Hankook Clarksville is equipped to make 5.5 million tires per year.
“It’s bringing significant amounts of pressure,” Bruce Harrison, tire industry analyst in the suburban Boston office of market researcher IHS Markit, said of the new wave. “What is driving investment in the U.S. market is that many of these companies have recognized the U.S. is a target-rich market.”
With the typical auto on U.S. roads lasting about 11 years, and more than 225 million licensed motorists driving more than 3 trillion miles every year, replacement tires accounted for about 80% of the 352 million tires sold last year in the nation.
Nokian’s reputation was made in snow tires. Consumer Reports’ New Cars edition, a buying guide for American drivers, recently rated the Nokian WRG3 highly among winter tires and cited its quiet ride.
Nokian’s largest customer in North America is Canadian wholesaler Kal Tire of Vernon, British Columbia. The firm operates more than 250 stores.
While snow tires are common in the continent’s upper tier, Nokian is also developing an all-weather tire for use in warmer areas. It will be produced in Dayton, where construction began two years ago on the $360 million plant. The factory presently employs about 100 workers and is being scaled for 400 employees and full output of 4 million tires per year.
“We want to grow in North America,” said Hille Korhonen, Nokian chief executive officer, in an interview Wednesday, noting the highly-automated Dayton plant will ramp up gradually to full production over two years or more. “All the big companies are our competitors.”
Nokian aims to win market share from other tire makers supplying replacement tires for cars and trucks. Plans call for building a distribution depot at Dayton to ship tires throughout the continent, Korhonen said. Sales volumes will help determine whether the present distribution centers, including the major facility at Chicago, remain open.
“One of the bottlenecks for growth in the past has been product developed for the North American market,” Korhonen said.
Nokian will continue to center its engineers and research and development teams in Europe, where it operates the world’s largest permanent cold-weather tire testing facility. Korhonen lauded the workforce in southeast Tennessee. Rather than recruit from other tire makers in the region, she said the company sought out workers unschooled in tire production so they could learn Nokian’s own techniques unencumbered by the processes of rivals. Forty workers recently were flown to Finland and Russia to train with their counterparts in Nokian’s two other plants.
Nokian recruited Mark Earl to head its North American business. He had been president of Hennessy Industries, a manufacturer of servicing equipment for automotive wheels based at LaVergne, Tennessee. Betsy Phillips was hired as associate general counsel. Phillips came from Franklin-based automaker Nissan North America.
Nokian produced its first tire in 1932 in its hometown, Nokia, Finland. The 4,000-employee company sold 17 million tires last year, including 2 million in North America. For its Dayton plant, Nokian incentives included a $28.42 million state infrastructure grant and city and county property tax exemptions for 20 years, a company official said.
Nokian’s arrival in Tennessee coincides with a wave of other tire industry ventures.
Last year, Bridgestone Americas and Goodyear responded to the competition. The pair opened Tire Hub LLC, a tire distribution network intended to make certain tire dealers throughout the nation have quick access to their brands. The response came amid a wave of activities in the Southeast’s tire industry. These include:
❚ Giti Tire USA’s $560 million tire plant at Richland, South Carolina. Singapore-based Giti opened the 5million tire capacity plant two years ago. German automaker Volkswagen selected Giti as a tire supplier on the 2019 VW Passat sedans assembled at Chattanooga.
❚ Kumho Tire USA’s $450 million plant opened at Macon, Georgia, in 2016 with an annual capacity for 4 million tires. China’s Qingdao Doublestar Tire Industrial Co. last year agreed to buy Kumho.
❚ China’s Qingdao Sentury Tire Co. has put on hold plans for a $530 million plant at Lagrange, Georgia, scaled for making 12 million tires per year. Sentury had considered the Memphis Regional Megasite, a stateowned industrial park planned 40 miles east of Memphis, before selecting Lagrange.
❚ Triangle Tire USA plans to make tires next year at Tarboro, North Carolina. Triangle is part of China’s Triangle Tyre Co. The $580 million plant is being scaled to make 6 million tires per year.
Source: Knoxville News Sentinel
The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit www.eteda.org
Published October 4, 2019