The Ukraine war changed this company forever
This 50-acre plot in Oradea, Romania, close to the border with Hungary, beat out scores of other sites in Europe to become the home of Nokian Tyres’ new 650 million-euro ($706 million) factory. Like an industrial-minded Goldilocks, the Finnish tire company had searched for the just-right combination of real estate, transport links, labor supply and pro-business environment. Yet the make-or-break feature that every host country had to have would not have even appeared on the radar a few years ago: membership in both the European Union and the North Atlantic Treaty Organisation.
Geopolitical risk “was the starting point,” said Jukka Moisio, CEO and president of Nokian. That was not the case before Russia invaded Ukraine on Feb. 24, 2022.
Nokian Tyres’ altered business strategy highlights the transformed global economic playing field that governments and companies are confronting. As the war in Ukraine drags on and tensions rise between the United States and China, critical decisions about offices, supply chains, investments and sales are no longer primarily ruled by concerns about costs. As the world re-globalises, assessments of political threats loom much larger than before.
“This is a world that has fundamentally changed,” said Henry Farrell, a political scientist at Johns Hopkins. “We cannot just think in terms of innovation and efficiency. We have to think about security, too.” For Nokian Tyres, which first sold shares on the Helsinki stock exchange in 1995, the new reality struck like a hammer blow.
Roughly 80% of Nokian’s passenger car tires were manufactured in Russia. And the country accounted for 20% of its sales. The perils of over-concentration hit home, Moisio said, “when your company loses billions.” Within
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