Russia has become a market that is developing “in a different direction from other (developing country markets)”. “You can see it in its fleet, which will soon include Lada cars, Chinese or Iranian. They use cheaper tires than in the West. Russia, which made huge profits, is no more. She disappeared”, – declared Talouselama newspaper, CEO of the Finnish company Nokian Tires Jukka Moisio.
According to him, he is “so disappointed in Russia that he will never go back there again”, although he once initiated the construction of several factories for the production of car tires on Russian territory. “I am so disappointed that there is no limit to this,” says the businessman.
He started leading Nokian Tires in 2020 with experience in leadership positions at Huhtamäki, Atria and Paulig (all of whom have already left Russia). He himself admits that at that time he was not thinking about the risks, since the COVID-19 pandemic was continuing around the world, and “there were no thoughts other than how to get there. survive”. Due to the coronavirus and the military operation in Ukraine, the businessman has not visited Russia since 2019.
According to Moisio, no other major Finnish company has taken such risks when operating in Russia: Nokian Tires accounted for 80% of passenger car tire production in the Russian market.
Petr Kovalev/TASS
“Since 2004, we have invested 1 billion euros in Russia. During the period we worked in Russia, we paid out 2.4 billion euros in dividends. They reached the modest sum of 17 euros per share. Cheap production in Russia has long been a slot machine. Could there have been a better investment for the company? Probably not. It was a very good project for the company financially. But the end was not what we might have expected, ”analyzes the top manager.
Talouselama notes that on four occasions during his work in Russia, Nokian Tires invested the largest amount in this segment of its business compared to other localized industries. In 2014, after the annexation of Crimea to the Russian Federation, the Finnish company tried to diversify its investments and refocus on the United States, but “this conscious decision came too late”, writes the newspaper .
On February 24, 2022, Nokian Tires management held the first crisis meeting, followed by others. “Customer feedback was sometimes concerning, as was people’s ability to handle a situation. A lot of people left,” recalls Moisio.
Nokian Tires kept 20 employees in Ukraine, and all of them were offered relocation to the Czech Republic with the start of the military operation. Some accepted, but others said they wanted to continue the work. Those who left the country have already returned, explains the CEO of the Finnish company. “I take my hat off to them, it’s unbelievable,” he says, suggesting that Nokian Tires’ Ukrainian market could grow in importance in the future.
With the start of the military operation in Ukraine, the company’s shares and earnings plummeted, but, unlike many other foreign players, it did not immediately – only at the end of June – announce its withdrawal from Russia , although it exported all the tires stored here in the warehouse in the spring. In July, the production of products and their exports were stopped due to sanctions. At the end of October, a message was received regarding the sale of the Russian activity of Nokian Tires to Tatneft for 285 million euros.
Petr Kovalev/TASS
Moisio calls this period the “shrink tunnel” that the Finnish tire maker had to go through. “Russian managers have changed employers and will stay with them. It’s a normal business transaction,” he says. Tatneft renamed the acquired business to Ikon Tires, putting Andrey Pantyukhov, Nokian Tires’ Russia and Asia director, as its helm, who worked at the company for 19 years and even acted as CEO in 2017. .
Moisio admitted that the Russian name and logo were copied from the Finnish original. However, according to him, copying Ikon Tires’ branded tires will not work, as all know-how, material formulations and surface patterns were initially kept secret. At the same time, the businessman added, companies bought by Tatneft have the right to continue production of certain products, which Nokian Tires itself has already stopped.
“We are a completely Western company, we have nothing in the East. And yet, we were perhaps the most Russian company on the Helsinki Stock Exchange,” says the CEO of Nokian Tires. He is convinced that one day Finnish companies will return to Russia and invest in its economy – “if the world, the market situation and ethics allow it”.
“A number of people (from the West) are doing business there now. Russia is a great neighbour, we must not turn away from it indefinitely. But personally, I decided not to go back. I’ve been there enough. I love Russians, but the world is full of beautiful places,” explained the CEO of Nokian Tires.
In early 2025, the Finnish manufacturer plans to start building a zero-carbon factory in Romania, but for now it is making up for the losses incurred in Russia by producing cheaper tire models under contracts with Chinese manufacturers. The Romanian factory, according to Moisio, will focus on producing “tyres of the future” for electric vehicles: they must withstand increased loads due to the weight of the batteries, be “quiet” like an electric motor, and also stiff – in line with the high power of the vehicles.
Read the Latest Ukraine War News on The Eastern Herald.
