Nokian Tyres has a production plant in Nokia, Finland and two plants in Vsevolozhsk near St. Petersburg in Russia. In connection with the Head office, the Nokian plant manufactures passenger car tyres, heavy tyres and truck tyre treads.
Product development and the manufacture of prototypes and test batches happen centrally in Nokia. The annual production capacity of the Nokia plant at the end of 2012 was around 4 million passenger car tyres and 18.5 thousand tonnes of heavy tyres.
The state-of-the-art Vsevolozhsk plant started operations in 2005, and the second Russian plant next to the first one commenced production in 2012. The first line in the new plant commenced production in June, and the second line (line 12), which will increase the Russian plants’ annual capacity to approximately 14 million passenger car tyres, was installed at the end of the year. The company’s investments in the Russian production plants exceed EUR 700 million. Tyres from Vsevolozhsk are delivered to over 40 countries, and Nokian Tyres is the largest exporter of consumer goods in Russia.
Boosted by the increasing capacity in Russia, the overall production output grew by 11% compared with the previous year. The combined output of the Nokia and Vsevolozhsk plants in 2012 was 15.7 million tyres and the annualised capacity at year-end was 18 million pcs. Capacity will increase further as line 13 will be installed in Russia in 2013.
The production costs of tyres are clearly lower in Russia than in Finland and other western countries. Production in Russia has been supported by tax relief based on the amount of investment and the location of the factory within customs barriers. By Russia joining WTO, the tyre duties will go down gradually; duty of car and van tyres will decrease from 20% to 18% in 2013 and gradually to 10% in 5 years.
In addition to its own production facilities, the company has contract manufacturing in factories whose quality level meets Nokian Tyres’ high requirements. The share of contract manufacturing in tyre sales in 2012 was around 3%.