November 1 (SeeNews) - Finnish manufacturer Nokian Tyres said on Tuesday it plans to build a passenger car tyre factory in Romania - a greenfield investment project worth some 650 million euro ($646 million) that is part of the company's plans to secure supply of its products after exiting Russia last month.
The new factory will be located in the northwestern city of Oradea, near the Hungarian border, and will have a production capacity of 6 million tyres per year, which can be expanded in the future, Nokian Tyres said in a press release.
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The planned headcount of the Romanian factory is about 500 employees. The site will also house a distribution facility for storage and distribution of tyres.
Construction is scheduled to begin in early 2023 and the first tyres are expected to be produced in the second half of 2024, while commercial production is expected to start in early 2025.
"This investment is a significant strategic decision enabling our future growth. A world-class manufacturing facility in Europe is a key step in getting additional capacity and creating a balanced manufacturing platform as we start building the new Nokian Tyres without Russia," Nokian Tyres president and CEO Jukka Moisio said.
In October, Nokian Tyres signed an agreement to sell its Russian operations after its board of directors decided to initiate a controlled exit from the country due to the war in Ukraine and subsequent tightening sanctions. In order to secure supply of its products, Nokian Tyres decided earlier this year to expedite its plans to invest in a new production capacity in Europe, and the Romanian factory is a key element of these plans, it said.
The factory in Oradea will concentrate on the production of larger rim size passenger and SUV tyres that will be primarily sold in the Central European market.
"After a thorough evaluation of over 40 locations and several factors, such as skilled workforce availability, logistical advantages and stable business environment, it was clear that Oradea was the best choice for our new factory," Nokian Tyres SVP for supply operations Adrian Kaczmarczyk said.
"The site location in Romania supports this target as we can utilize green energy produced near the site," Kaczmarczyk added.
Founded in 1988 in Nokia, Finland, Nokian Tyres produces tyres for cars, trucks, buses, and heavy-duty equipment.
In 2021, Nokian employed some 4,900 people and booked 1.7 billion euro net sales, according to its website. The company is listed on Nasdaq Helsinki.
Nokian Tyres currently operates factories in Finland and the U.S.
($=1.0068 euro)