Nucor

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  • Topic: Steel, U.S. Steel, ArcelorMittal
  • Pages : 12 (3679 words )
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  • Published : January 31, 2013
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Strategic Management
Case solution

Nucor
March 7, 2008
Nile TecleMariam
Business 499

By
Pankaj Agarwal
Praxis Business School

Table of Content

I.

Strategic Profile and Case Analysis

II.

Situation Analysis
A.
B.
C.
D.

III.

SWOT
A.
B.
C.
D.

IV.

General Environmental Analysis
Industry Analysis
Competitor Analysis
Internal Analysis

Strengths
Weaknesses
Opportunities
Threats

Conclusion

2

Strategic Profile and Case Analysis
Steel is the backbone of many industries. Steel goes into thousands of products, which could be grouped, in the broad sense, into a few groups. The semi-finished products that are at least eight to ten inches thick and require more processing is one group. Another group is the flat-rolling, which yield plates (more than 0.25 inches in thickness) and sheets or strips. Another group is one where bars and thins rods are made. The United States in the 1960s produced most of the steel used in the world. By the 1980s, the United States lost the role of world’s steel produced and imported more than what it exports. Nucor Corporation is the second-largest steel producer in the United States and had net sales of $4.6 billion in the year 2000. Nucor recycles approximately ten million tons of scrap steel a year. It operates in nine states and produces carbon and alloy steel in bars, beams, sheet, and plate; steel joists and joist girder; steel deck; cold finished steel; steel fasteners; metal building systems; and light gauge steel framing. Nucor was started by an auto manufacturer Ransom E. Olds, who founded Olds Motor Vehicle Company in 1897. Ransom sold the manufacturing operation. A group of shareholders challenged the liquidation Ransom was trying to do and forced Ransom to take over a tiny nuclear service company called Nuclear Consultants, Inc. Nuclear Consultants was not very successful; however, it was able to purchase the Vulcraft Corporation, a steel joist manufacturer located in Florence, South Carolina from the founder’s widow. Kenneth Iverson was hired as general manager for Vulcraft == the only business division making money. The board of directors made Iverson President and Samuel Siegel as Vice President of Finance. Iverson moved the corporate headquarters from Phoenix to Charlotte, North Carolina. All the other business not related to steel were either sold or liquidated. The company decided to integrate backwards into steel making by building its first steel bar mill in Darlington, South Carolina in 1968. The company was rename Nucor Corporation in 1972 and expanded steadily through 1986, thus starting the Nucor Era.

Situation Analysis
A. General Environmental analysis
Nucor over took US Steel to become the second-largest steel producer. The corporate strategy is focused on being the lowest cost provider of steel by finding opportunities to reduce cost. It emphasizes technological leadership by aggressive pursuit of innovation and technical excellence. In addition, employee relations with fair compensation and egalitarian benefits were just as important as technological advances. The simple, streamlined organization structure to allow employees to innovate and make quick decisions works very well for Nucor. The company is highly decentralized, which makes them able to make uncompromising quality, responsive service, and competitive pricing. The standard unwritten practice of equalizing freight was stopped by Nucor which was unheard of in the steel industry. The production cost is the most important if the company is going to be profitable and survive.

3

B. Industry Analysis
The steel industry is undergoing consolidation and there are many companies filing for bankruptcy. Among them are Bethlehem Steel Corporation and LTV, who were the country’s third- and fourth-largest steel producers, respectively. The imported steel in many cases were subsided by their governments, foreign steel producers were dumping steel in the US...
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