HELSINKI (Reuters) - Finland’s Nokian Tyres NRE1V.HE has begun commercial production at its new U.S. factory in Dayton, Tennessee, the company said on Monday, as it seeks to diversify its business away from reliance on tyres for winter conditions.
The $360 million investment in a new North American production plant was announced in 2017 and completed on schedule by Nokian, which also has a large factory in Russia and a smaller one in Finland.
Winter tyres account for around 70% of the Finnish company’s sales but as mild winters dent its profits, Nokian is trying to step up its all-season and all-weather tyre production.
Nokian said the complex would produce premium all-season and all-weather tyres tailored to the needs of North American drivers and production should reach four million tyres per year by 2023.
Nokian reiterated its previous plan to double the value of its sales in North America by 2023, from 194.5 million euros ($217 million) and just over 12% of its total sales in 2018.
Nokian said the facility would eventually employ as many as 400 workers 40 miles north of the town of Chattanooga in Tennessee, with some 100 people so far working at the factory.
Mark Earl, the company’s senior vice president in charge of the Americas said in a statement the factory would allow shorter delivery times and meet rising demand.
The announcement did little to cheer investors as the coronavirus drove a sell-off across markets because of predictions of a shrinking global economy and falling demand for all kinds of products.
Nokian shares fell 7.2% by 1400 GMT.
Reporting by Anne Kauranen, editing by Louise Heavens and Barbara Lewis