Nucor Steel : Competitive Analysis

Topics: Steel, Steelmaking, Pig iron Pages: 27 (9373 words) Published: August 11, 2008
. Executive Summary
Upon Review of Nucor Corporation’s current findings, analysis of internal strengths and weaknesses, as well as a comparative analysis at the industrial level of the steel industry, the following includes a summary of findings and recommendations for Nucor Steel Corporation: •We recommend to have an on staff legal team

The steel industry has a very hazardous work environment, which in return arises many cases of workman’s compensation issues. An on staff legal team at Nucor allows a more adept knowledge about the steel industry and therefore assists in helping safeguard Nucor from many lawsuits. •Bring back the Organic Hierarchy

Seeing that autonomy is one of the most important factors for this company, it is best if Nucor brings back the organic hierarchy that made the company what it is today. In doing so, it helps Nucor to keep their communication channels short so they are able to make quick and decisive decisions. •Restructure the Incentive Systems

Nucor, like many other companies, has a relatively high cost of goods sold. In order to reduce their COGS, it would be beneficial to the company if they would rethink restructuring their incentive system. Restructuring would allow Nucor to make the changes that are necessary in this highly competitive industry. •Decrease to five week rolling cycles

Nucor needs to cut back the casting cycles from sixteen weeks to five weeks in order to regain the lost market share. This is important to implement because it will help keep contractors from buying their steel from warehouses, even if they have to pay a slightly higher price for their products. •Tap into the scrap producing industry

If Nucor taps into the scrap producing market they will be able to cap the price increase, as well as eliminate the markups that scrap producers are putting on their steel. •Stick to what they do best

While we believe the above recommendations will strengthen the company, we encourage them to stick to what they know best or maintain their overall direction and focus.

A. General Environment
1. Technology
Within the technological dimension of the general environment of the steel industry there are three important technological advances made by Nucor. These advances include mini-mills, “strip-casting” and other production technologies.

First, Nucor developed computer programs to help prepare designs for their customers, as well as to keep up with bids made based on current prices and labor standards. One of the programs developed was a mini-mill. “In 1987 Nucor was the first steel company in the world to begin to build a mini-mill, which was capable of manufacturing steel sheet, raw materials for the auto industry and other major manufacturing, such as these. This particular project alone opened up fifty percent of the total steel market.” One of the reasons mini-mill emerged was to compete with the integrated mill. Nucor is known as one of the leading United States companies who incorporated the mini-mill into their production process.

The second technological change made in Nucor is the “strip-casting” technology. This particular piece of advanced technology may prove to be the next leap forward for the steel industry. Strip casting’s main objective is, “to produce thin strips of steel, which would eliminate the slab-casting stage, as well as all of the rolling that now takes place in a hot mill.”

Thirdly, other signs of a productive steel making would include, “metallurgical practices, sophisticated process control sensors, state-of-the-art computer controls, and the latest refinements in continuous casting and rolling mill technology.” Steel plants like Nucor should and will continue to be significantly modernized and expanded with advanced technologies such as these. Michael Shot, Vice President for manufacturers at Carpenter Technology Corporation in Reading, Pennsylvania, producer said, “You don’t survive in this industry unless you...
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