During Nokian Tyres’ product testing event held Jan. 13-17 in Colorado at the Copper Mountain ski resort outside of Denver, Tire Review had the opportunity to sit down with CEO Hille Korhonen and Mark Earl, senior vice president for North America, to chat about the company’s new initiatives and focus on serving its dealers. Through this exclusive executive interview, we bring you insights into Nokian’s new production facility and what that means for new product turnaround time, as well as how the tiremaker plans to tailor product introductions for the U.S. marketplace. We also share the company’s culture of safety and sustainability—the foundation of all Nokian initiatives, processes and products.
TR: Congratulations on your new production facility in Dayton, Tenn. – what a terrific accomplishment. Bring us up to speed on the progress there since its grand opening last October.
Hille: “We are extremely proud of the factory and how it has been started because it’s a huge, huge thing, not only in terms of the construction work, but also putting in place all the processes, recruiting people and getting everything up and running. It was on time and on budget, which is quite extraordinary.
So at the moment, we have roughly 100 people working [there], and we have our support team from Finland and Russia who are there to support the local team to ramp up the process. And, we are now focusing on getting all the process parts to the quality level and reducing the variation that is always there in the process. We are working on that now for the coming months, and at the same time, we are producing tires that we are able to sell.
Mark: Now we’re more at the part where we’re ramping up; we’re being very careful about how we ramp it so that the quality will be really second to none, right out of the box. All throughout this year, we’re going to be taking it step by step, so we’re happy with everything we do.
Hille: So, every single tire that we produce there to be sold is being checked several times. Normally, we quality check every single tire. But now in the first year [for this factory], we check it several times.
Mark: Take a typical passenger tire that we have, we might have 35 or 40 sizes of that tire and we’re treating each one of them like a separate product. So, in the end, we’re probably going to have 400 or 500 SKUs that we’re building by the end of the year, but we have to do each one of them separately.
TR: How soon will Nokian tires be available for commercial sale in the U.S. through this new factory once trial production has commenced?
Hille: We are already producing tires [certain SKUs] every day that we can sell to the market. We are ramping up SKU by SKU, so we will be having new products all the time.
Mark: So, for instance, we already have thousands of tires that we’ve built. We have only five or six SKUs of those tens of thousands of tires. And then, probably in late January or February, those will come to the market; some of them will come from Dayton and some of them will come from our other factories. Over the course of the next couple of years, it’ll just keep moving more and more until a substantial volume of tires we’re selling in North America are coming out of Dayton.
TR: Mark was quoted as saying, “the decision to do this has been driven by the demand of our dealers.” So, how does a global company from Finland even begin to put this idea on the map and put the wheels in motion for the huge undertaking of building a facility in the U.S.?
Hille: Well, we have been in the North American market for 30-plus years, and we have been successful in that our customers have been demanding and asking us to build more tires that would be suited to these markets. So, we have been gradually growing—not only in winter tires, but also in the all-season and all-weather segments; the critical mass is already there. With our loyal customer base, we know them and the market, [we made] the decision to build on that and support our customers in providing locally-produced products and the flexibility to serve them even better. Having more capacity means that we are able to have more SKUs that have been designed and crafted for this market.
Mark: Our movement toward all season really started with our dealers years and years ago, as Hille mentioned, in Canada. They said, ‘we’ve developed all these customers, consumers who really like your products and buy them in the winter. Do you have anything we could sell when they’re changing back out of their winter tires?’ And, so, we started developing all-season tires, and that’s really taken off and it’s grown from our customers, the consumers who purchase our winter tires. And they say, ‘I love these tires. Can I get some to drive on the rest of the year?’
Hille: And, as we know, the consumer demand in North America is different from other markets. This makes it possible for us to really put all the effort in developing the type of tires that are needed in this market. And, at the same time, keeping in mind our heritage and core competencies. So as the inventor of winter tire, we know the demanding conditions and we are able to develop products to be [able] to drive safe on ice and snow and build on that. There are other demanding conditions that we can tackle, hydroplaning, potholes or off-road conditions. We are not like any other tire company that wants to be in all the categories and all the segments, but we are focusing on the tires that work best in demanding conditions.
TR: This “listening to the voice of customers” mentality will obviously pay dividends with greater product availability and help fuel your goal of doubling sales in North America by 2023. That is quite an ambitious goal — but you’ve got several new products, and now new capacity, to keep you on track. How will all of this fuel your momentum to reach that goal?
Mark: We actually doubled our sales in the last five years. So, it’s kind of the growth rate that we’re on, but we can’t continue that growth rate without having the support of the factory, without bringing the new products to market. It kind of all works hand in hand.
Hille: We want to make [our dealers] successful as well by selling our products, so that’s driving the growth as well in a big way.
TR: What can dealers expect in terms of outreach to them in the coming year? In our December issue, Mark mentioned P.O.S. materials, online marketing solutions and geo-targeted digital solutions to attract drivers to shops. Sounds like a solid “push-pull through” strategy. Are there any other initiatives on the drawing board?
Mark: What we do every year is we reach out to our dealers and we say, ‘what would help you the most this year?’ And, we try to work on programs with our dealers that are meaningful to them. We’re concerned about not only ‘sell in’ but ‘sell out.’ In fact, most of our focus is on sell out, but not necessarily with the consumer. We do drive some consumer marketing, but it’s really helping our tire dealers sell out, giving them the tools to sell out … they have a really good idea how to sell the values and features of our products.
Hille: As part of our collaborative culture, we want to be very close to our dealers and have a continuous dialogue about what they need in order to be successful because this is a people business. [We are] helping them to be successful and listening to what is needed in the market and delivering on that promise.
TR: Talk about Nokian’s culture of safety and sustainability, and how the new facility and team will carry out those values?
Hille: Starting from our values, we are talking about innovativeness because that’s the core of the company to come up with new high-tech, innovative products for these demanding conditions. It’s not only the innovation done by R&D. We have been talking about entrepreneurship, and it means that everybody should take responsibility and ownership of the work and also teamwork. So, [we’re] working together and solving issues, and in the end having fun at work through all the teamwork. Regarding safety, we take workplace safety very seriously. And, of course, the safety feature is driving our R&D.
Mark: Our company, going way back to the beginning, is first and foremost concerned about the safety of the driver. Our engineers start every day with this idea of safety. You know, ‘how do we make sure that somebody is not stuck on the side of the road because their car has been punctured by a pothole. How do we make sure when there’s water all over the road that the tires grip and you can get home safely? How can we make sure when it’s icy or when it’s snowy that you’ve got the right kind of tires?’ And that’s what our R&D team wakes up thinking about every day.
Hille: It’s part of the mission of the company. We are saying that we want to give the consumers a peace of mind when they are driving, and they can be confident they can get safely home. So, when Nokian Tyres’ employees come to work every morning, we work for safety. We work for saving lives. The sustainability is also visible in everything we are doing in the company. We have been awarded for being one of the most sustainable companies in the tire industry, and, of course, we intend to move forward on that path.
TR: Your factory is state-of-the-art and will have the capacity to produce as many as four million tires per year. Describe some of its attributes and technological advancements that position it for this task.
Mark: There’s a really high level of automation. Our laborers in the factory are at a higher level because their job primarily is to keep these really sophisticated machines up and running. Instead of actually touching the tires themselves (although the inspectors do touch them all the time), most of the time the workers are monitoring the equipment, troubleshooting and just making sure that the variability that Hille talked about earlier is ‘nothing,’ and that’s how you can make a quality product. That’s how automation provides consistent quality and flexibility.
The thing that’s really encouraging to me, because I’ve been with the company only a couple of years, [is that] I can see the heritage of the company, in that as new technology becomes available, the company keeps investing in the older factories in Finland and Russia and bringing them up to the latest technology. That’s something that’s really a great investment. A lot of companies would just say, well, I’ll leave that factory alone and only focus on the new stuff that I’m developing. But, we always have projects going on … if you went to Finland and saw the factory in Nokia, it’s one of the oldest tire factories in the world, but it’s also one of the most modern at the same time.
Hille: When you talk to the people in the factory, they are happy about it. Of course, they understand that the share of labor is lower in those factories where you have high automation, but they see that there’s much more content involved and it’s much more meaningful; when they began to develop themselves and adapt to the new technology.
TR: Any closing remarks on your outlook for success in 2020?
Mark: You’ll hear from everybody who you talk to, whether it’s the marketing team or from Hille or me, that we’re on a journey … and 2020 is just one more step in that journey. And, as long as we remain focused on this collaboration that Hille was talking about, don’t do any kind of short-term reactive kinds of things, and we’re working for this longer-term goal and doing it step by step and listening to our customers, we feel like 2020 is going to be a great year and just one more step in that journey.
Hille: And, we feel that we have the right products in the pipeline to come, and we are looking very much forward to the new launches that we will have.
Check out the rest of the February digital edition of Tire Review here.