Nucor Corporation in 2001: Pursuing Growth in a Troubled Steel Industry
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Nucor Corporation in 2001: Pursuing Growth in a Troubled Steel Industry
Table of Contents
Introduction
Nucors History
Current Strategy and Future Expectation
Analysis and evaluation
Dominant Economic Characteristics of the Steel Industry Environment
Competition analysis in the Steel Industry
SWOT Analysis
Recommendations
Introduction
Nucors History
Nucor Corporation is the second-largest steel producer in the United States and has had net sales of $4.6 billion in 2000. Nucor recycles approximately 10 million tons of scrap steel. It operates in 9 states and produces carbon and alloy steel in bars, beams, sheet, and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing. The company emerged from near Bankruptcy in 1966 to become one of the fastest-growing steel. Despite the recession in 1991, Nucor grew into one of the biggest and best-known global producers of steel.
Nucors origins are with auto manufacturer Ransom E. Olds, who founded Oldsmobile and then Reo Motor Cars. Through a series of transactions, the company Olds founded eventually became the Nuclear Corporation of America. Nuclear Corporation was involved in the nuclear instrument and electronics business in the 1950s and early 1960s.
The company suffered through several money-losing years, and when facing bankruptcy in 1964, installed F. Kenneth Iverson as President and Samuel Siegel as Vice President of Finance. This change in management led to a restructuring and a decision to rebuild the company around the major profitable operations; the steel joist businesses in Florence, South Carolina and Norfolk, Nebraska called Vulcraft.
The company moved its headquarters from Phoenix, Arizona to Charlotte, North Carolina in 1966, and expanded the joist business with new operations in Texas and Alabama. Management then decided to integrate backwards into steel making by building its first steel bar mill in Darlington, South Carolina in 1968. In 1972 the company adopted the name Nucor Corporation. Since that time, Nucor has built three more Vulcraft facilities, eight steel mills, and expanded into other steel products.
Current Strategy and Future Expectation
Nucor is pursuing long-term growth and wants to improve its position from the second-largest U.S. steelmaker by overtaking U.S. steel, who is the industry leader. Its current strategy is to be the lowest cost provider of steel by finding opportunities to reduce cost. It emphasizes on technological leadership by aggressive pursuit of innovation and technical excellence. It puts strong emphasis on employee relations and provides fair compensation and egalitarian benefits. Nucor has a simple, streamlined organizational structure to allow employees to innovate and make quick decisions. The company is highly decentralized, with most day-to-day operating decisions made by the division general managers and their staff. Nucor is committed to uncompromising quality, responsive service, and competitive pricing through dedication to the customer, and concentration on productivity from a highly motivated work force.
Analysis and evaluation
Dominant Economic Characteristics of the Steel Industry Environment
The steel industry worldwide has a huge excess capacity, forcing many companies to operate in red. An unprecedented number of steel producers have filed for bankruptcy. Among them are Bethlehem Steel Corporation and LTV, who were the country’s third- and fourth-largest steel producers respectively. With a lot of world’s economies in recession in late nineties, there was a surge in the import of steel. With unfair subsidies from their governments, foreign steel producers were dumping steel in the U.S. market at cut-rate prices. In 1999, the United States had decided not to impose any import restrictions.
With 75% capacity utilization, a level too low for many companies, three European companies decided to merge to form the world’s largest steel producer. Two Japanese companies did the same to form the second-largest steel producer. These new mega-steelmakers could easily outmuscle their U.S. competitors. The largest steel producer in the