Background Nucor Corporation is a leading American steel company with a headquarters’ staffs of less than 95 people and just 5 layers of management, from the CEO to the front-line employee1. It managed to make profit for decades in America despite the period of slow demand for steel, and the stiff competition in the industry. So, what are Nucor’s competencies that enable it to enjoy continual success? To explore its sources of competitive advantage, value chain analysis is constructed. Value-Chain Analysis Inbound Logistics Scrap metal is one of the main inbound logistics. To better control the raw materials inputs, Nucor took a backward integration approach and acquired David J. Joseph Company (DJJ), which had been the primary supplier of scrap to Nucor since 1969. DJJ also provided Nucor 2000 railcars for transportation of raw materials. Electricity is also Nucor’s main inbound logistic. Nucor is able to reduce its energy consumption through innovative mini-mill and Castrip technologies. Castrip process consumes just 0.17 decaderms of energy compared to 2 decaderms at conventional mills, a savings of $25 to $30 a ton at current energy costs2. Operations Nucor’s production is excellent with innovative technology, which allows them to cut out some manufacturing processes. As the first scrap-based electric arc furnace mini mill operator, Nucor benefits from better productivity, lower unit operating costs, and capital efficiency compared to integrated producers, relying on iron ore mines, coke batteries, and
Nucor Corporation | Our Story | Chapter 3: Culture. Retrieved September 7, 2011, from http://www.nucor.com/story/chapter3/ 2 Nucor Adds Second Castrip Facility. (2005). Metal Center News, 45(12), 56-57. Retrieved from EBSCOhost.
blast furnaces3. Nucor has also developed thin-strip casting technology which is trademarked under the name of Castrip. This involves direct casting of molten steel into its final shape and thickness without further hot or...