We are a cyclical business... Basically when you are at the peak of the cycle—times are good, interest rates are low, people are building—our margins increase. When we go to the trough, of course, the margins are squeezed. But over the last 25 years Nucor has never had a losing quarter. Not only a losing quarter, we have never had a losing month or a losing 1
week. —John D. Correnti, President and CEO, Nucor In 1998, Nucor was a Fortune 500 company with 6,900 employees and had sales of $4.3 billion in steel and steel-related products. Its chairman, F. Kenneth Iverson, had headed the company for more than 30 years. During his tenure, the steel industry faced a number of problems, including foreign competition, strained labor relations, and slowed demand for steel (related in part to the substitution of alternative materials). Despite these industry challenges, Nucor’s sales during Iverson’s tenure grew at an annual compound rate of about 17 percent per annum. Selected comparative financial data are shown in Exhibit 1. In different years, both Iverson and Nucor CEO John Correnti were named Steelmaker of the Year by New Steel magazine.
Nucor traced its origins to auto manufacturer Ransom E. Olds, who founded Oldsmobile and, later, Reo Motor Cars. Through a series of transactions, the company Olds founded eventually became the Nuclear Corporation of America, a company involved in the nuclear instrument and electronics business in the 1950’s and early 1960’s. The firm suffered several money-losing years, and in 1965, facing bankruptcy, installed 39-year-old Ken Iverson as president.
Richard Franklin, “An Interview with John D. Correnti, President and CEO, Nucor Corporation,” The Wall Street Corporate Reporter, September 9-15, 1996, pp. 19-20.
This case was prepared by Vijay Govindarajan of the Tuck School of Business at Dartmouth. The cooperation and help provided by F. Kenneth Iverson, Chairman, Nucor Corporation in preparing this case study is greatly appreciated. It was written for class discussion and not to illustrate effective or ineffective management practices. © 2000 Trustees of Dartmouth College. All rights reserved. To order additional copies please call: 603-646-0898
Nucor Corporation (A)
Iverson had a bachelor’s degree in aeronautical engineering from Cornell and a master’s degree in mechanical engineering from Purdue. He began his professional career as a research physicist and held several technical and management positions in the metals industry. He joined Nuclear Corporation of America as a vice president in 1962 and was appointed president three years later. Iverson focused the failing company on two businesses: making steel from recycled scrap metal and fabricating steel joists for use in nonresidential construction. In 1972, the firm changed its name to Nucor Corporation. By 1998, it had become America’s second-largest steel maker.
Nucor located its diverse facilities in rural areas across the United States, establishing strong ties to its local communities and its work force. As a leading employer with the ability to pay top wages, it attracted hard-working, dedicated employees. These factors also allowed Nucor to select from among competing locales, sitting its operations in states with tax structures that encouraged business growth and regulatory policies that favored the company’s commitment to remaining union-free. By 1998 Nucor and its subsidiaries consisted of nine businesses, with 25 plants. These businesses included the following: Nucor Steel Products: steel sheet, bars, angles, light structural carbon and alloy steels. Plants: Darlington, S.C; Norfolk, Nebr.; Jewett, Tex.; Plymouth, Utah; Crawfordsville, Ind.; Hickman, Ark.; Mt. Pleasant, S.C. Nucor-Yamato Steel Company Products: wide-flange steel beams, pilings, heavy structural steel products. Plant: Blytheville, Ark. Vulcraft Products: steel joists, joist girders...