Nucor Case Study

Topics: Management, Steel, ArcelorMittal Pages: 12 (3405 words) Published: December 6, 2010
Case Background
The Industry

Nucor Corporation has been moving in a very challenging industry which has faced various problems in recent years. The steel industry experienced slowed demand for steel which resulted from substitution of alternative materials. Furthermore, it also had to cope up with increased foreign competition and strained labor relations.

But despite all these obstacles, Nucor Corp. still managed to have a five-year sales growth average of 23%, which is 11 percentage points higher than the nearest fast-growing competitor. The company even had a 5-year ROE average growth of 18% which is more than double than the industry average while maintaining a healthy financial condition having 7% debt to capital percentage, the lowest among steel producers in 1998.

The Company

The story of Nucor Corporation is such a success story. Nucor Corporation had its humble beginning in the 1950s as Nuclear Corporation of America which was involved in the production of nuclear and other electronics instrument. Today, Nucor Corporation, a Fortune 500 company is the second-largest steel maker in the country with nine steel-related businesses and 25 plants all over America. The company is focused on its commitment to produce high-quality steel and steel-related products at competitive prices. It has been at the forefront of innovation as its President Ken Iverson was awarded with the National Medal of Technology in 1991, the country’s highest award for technological achievement and innovation.

Come 1998, despite the many challenges that the steel industry faced such as foreign competition, strained labor relations and slowed demand for steel, Nucor Corporation has sustained an annual growth of 17%. The company’s key financial ratios – sales, ROE, debt-capital ratio, and profit margin were even way beyond the industry median. This made Nucor corporation America’s second largest steel-maker with an annual compounded sales growth rate of 17%.

And yet the company was never contented with just being number 2 in the industry.  As the company president Ken Iverson said, business is like a flower; you either grow it or die. To wit, they are challenged to become America’s largest steel maker, to become number 1.

Problem Statement
What are the strategic improvements that Nucor Corporation should implement to achieve their target annual growth rate of 15-20% in the next few years? Case Analysis
Despite of a very challenging industry situation that the firm is facing, Nucor Corporation was able to withstand these challenges and even become stronger. This section will primarily focus on analyzing how Iverson turned around such a losing company.

PEST Analysis

The steel industry has been subjected to various political factors particularly through the laws and legislations enacted by the policy makers. This includes taxes, wage rates, labor requirements, and environmental regulations among others. One particular government policy that can greatly affect the steel industry is the use of patents and trademarks which encourages continuous innovation for the steel companies. Furthermore, the government’s trade policy can affect industry competition and influence market conditions.


Aside from economic policies implemented by the government, the main economic factor that can influence the steel industry is the fact that it moves in a cyclical pattern. Generally, when economic conditions are good, the steel industry also gets good profits. On the other hand, when economic conditions get worse, the industry also experiences a reduction in its profits. Also, foreign currency exchange rates can affect the industry particularly export of finished goods and import of raw materials.


Social issues such as wage increases and management-employee relations may also affect the industry as labor unions continuously advocate for increased employee rights and privileges. Labor policies of...
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