Nokian Heavy Tyres considering layoffs amid softer market

Finish tyre producer Nokian Heavy Tyres Ltd. has launched ‘change negotiations’ affecting approximately 160 employees at the company’s factory in Nokia.

All Nokian Tyres port and terminal tyres are made in the factory.

The company said that discussions are aimed at adapting production to the market situation, which has been facing weaker demand.

The adjustment measures that are being considered by the company include layoffs of Heavy Tyres factory employees and shortening of their daily and weekly working time.

“Heavy machinery OEM market has been softer in the beginning of the year and the outlook is short. Despite of the possible layoffs we will ensure our service capability and aftermarket availability for our customers,” a company spokesperson told WorldCargo News.

The measures are preliminary and they are planned to be implemented as temporary layoffs due to productional and financial reasons for a maximum period of 90 days per employee. The measures are planned to be implemented during the rest of 2024 and the first quarter of 2025.

The negotiations are expected to last for two weeks.

In the first quarter of 2024, Nokian Tyres’ Heavy Tyres reported €55.1 million in net sales against €68.2 million in the same period last year. Operating profit was €6.3 million, down from €9.6 million reported in Q1 2023.

The company’s net sales decrease of 18.5% was ascribed to a weak market, and lower volumes. Nokian’s biggest off-road customer segments is Finnish forestry equipment, and this market has been in sharp decline for the past 18 months or so.

“During the first quarter, we faced additional disadvantages due to the Red Sea crisis as well as the political strikes in Finland. Due to the strikes in February–April, we lost in total approximately three weeks of production in Passenger Car Tyres and one week in Heavy Tyres,” Jukka Moisio, President and CEO, said. ” The negative financial impact of the political strikes and the Red Sea crisis is approximately €20 million in EBITDA, of which more than half in Q1.”

“Tyre sell-in is expected to grow in 2024, and with our increasing capacity and competitive product portfolio, we are ready to seize this opportunity.”

The company is building a new passenger car tyre factory in Romania, described as the world’s first zero CO2 emission tyre factory. The first tyres are expected to be produced during the second half of 2024. In addition, the company is finalising the ramp-up of the US factory, which is expected to reach its full capacity in 2024.